CPIM Sample 4

Question 1

Which of the following best describes the difference between 'efficiency' and 'utilization' in capacity management?

Accepted Answer

Efficiency measures actual output vs. standard output; utilization measures actual hours worked vs. available hours

Answer

Efficiency compares actual output to the standard (expected) output for hours worked, while utilization compares actual hours worked to total hours available.

Question 2

A company is experiencing high levels of work-in-process (WIP) inventory. According to Little's Law, which action would MOST directly reduce WIP?

Accepted Answer

Reducing cycle time in the system

Answer

Little's Law states WIP = Throughput Rate × Cycle Time; reducing cycle time directly reduces WIP for a given throughput rate.

Question 3

The Sales and Operations Planning (S&OP) process is PRIMARILY designed to:

Accepted Answer

Balance supply and demand at an aggregate level across the business

Answer

S&OP aligns demand plans with supply capabilities at an aggregate (family/group) level, coordinating across sales, operations, finance, and executive leadership.

Question 4

In the Theory of Constraints (TOC), what is the term for the step of making the most effective use of the system's constraint?

Accepted Answer

Exploit the constraint

Answer

Exploiting the constraint means maximizing the output of the bottleneck resource without spending additional money, such as eliminating downtime and scrap at the constraint.

Question 5

Which inventory valuation method results in the HIGHEST reported profit during a period of rising prices?

Accepted Answer

FIFO (First In, First Out)

Answer

Under FIFO, the oldest (lowest-cost) inventory is sold first, leaving newer (higher-cost) inventory on the balance sheet, which results in lower COGS and higher reported profit during inflation.

CPIM - Certified in Production and Inventory Management Practice Test

CPIM - Certified in Production and Inventory Management Practice Test

CPIM Sample 4