CPIM Sample 5 — Questions and Answers
Question 1: Which of the following is an example of a 'level production strategy' in aggregate planning?
- Hiring and laying off workers to match demand fluctuations each month
- Maintaining a constant workforce and production rate while using inventory to absorb demand variation (Correct answer)
- Outsourcing production during peak demand periods
- Adjusting prices to shift demand away from peak periods
Correct answer: Maintaining a constant workforce and production rate while using inventory to absorb demand variation
A level strategy maintains a stable workforce and production rate, using inventory buildup during slow periods and depletion during peak periods to absorb demand variability.
Question 2: In distribution requirements planning (DRP), what triggers a replenishment order from the central warehouse to a field distribution center?
- When actual sales exceed the annual forecast
- When projected on-hand inventory falls below the reorder point or safety stock (Correct answer)
- When the field DC receives a customer order exceeding available stock
- When the central warehouse builds excess inventory above target levels
Correct answer: When projected on-hand inventory falls below the reorder point or safety stock
DRP generates planned replenishment orders at each level of the distribution network when projected on-hand inventory is expected to fall below the safety stock or order point.
Question 3: Which quality management tool is MOST appropriate for identifying and prioritizing the root causes of a production defect?
- Control chart
- Pareto chart (Correct answer)
- Scatter diagram
- Histogram
Correct answer: Pareto chart
A Pareto chart ranks defect causes by frequency or impact, illustrating that roughly 80% of problems stem from 20% of causes, helping teams prioritize corrective action.
Question 4: A company wants to reduce its order-to-delivery lead time without changing its production process. Which strategy would MOST effectively achieve this?
- Switching from MTO to assemble-to-order (ATO) (Correct answer)
- Increasing safety stock at raw material level
- Implementing lot-for-lot ordering in MRP
- Reducing the planning time fence in the MPS
Correct answer: Switching from MTO to assemble-to-order (ATO)
ATO moves the customer order decoupling point later by pre-building sub-assemblies, allowing final assembly to begin immediately upon order receipt, dramatically reducing customer-facing lead time.
Question 5: In supplier management, a 'vendor-managed inventory' (VMI) arrangement means:
- The customer sets reorder points and the vendor executes the replenishment
- The vendor monitors the customer's inventory and independently triggers replenishments (Correct answer)
- The customer and vendor jointly set safety stock levels
- The vendor consigns inventory that remains on the vendor's books until consumed
Correct answer: The vendor monitors the customer's inventory and independently triggers replenishments
In VMI, the supplier takes responsibility for monitoring the customer's inventory levels and initiating replenishment orders, reducing the customer's ordering burden and improving supply responsiveness.
Question 6: Which of the following BEST describes the concept of 'available to promise' (ATP)?
- The total finished goods inventory currently on hand
- The uncommitted portion of inventory and planned production that can be promised to new customers (Correct answer)
- The maximum capacity available for new customer orders in the next period
- The difference between forecasted demand and actual customer orders
Correct answer: The uncommitted portion of inventory and planned production that can be promised to new customers
ATP is calculated by subtracting existing customer order commitments from on-hand inventory and planned production receipts, representing what can be committed to new orders.
Question 7: A company is evaluating two suppliers. Supplier A has lower unit cost but higher demand variability impact; Supplier B has higher cost but superior delivery reliability. In a lean environment, which factor should receive GREATEST weight?
- Unit purchase price, as it directly impacts product cost
- Delivery reliability, as lean systems have minimal buffer to absorb supply disruptions (Correct answer)
- Annual sales volume potential offered by each supplier
- Proximity to the manufacturing facility to reduce freight cost
Correct answer: Delivery reliability, as lean systems have minimal buffer to absorb supply disruptions
Lean environments operate with minimal safety stock, making delivery reliability paramount — an unreliable low-cost supplier can cause line stoppages that far outweigh any unit cost savings.
CPIM Sample 5
Which of the following is an example of a 'level production strategy' in aggregate planning?