CPIM Supply Planning and Management 4 — Questions and Answers
Question 1: Which metric best measures supply planning execution effectiveness in terms of meeting the production schedule?
- Manufacturing cycle time
- Master schedule adherence (MSA) (Correct answer)
- Overall equipment effectiveness (OEE)
- Supplier on-time delivery rate
Correct answer: Master schedule adherence (MSA)
Master schedule adherence measures the percentage of planned MPS quantities actually completed on time, directly reflecting planning execution quality.
Question 2: In supply planning, 'demand time fence' (DTF) refers to the period during which:
- Only customer orders are used to drive the MPS, with forecast ignored (Correct answer)
- Production orders cannot be released to the shop floor
- Suppliers must confirm delivery within this window
- Safety stock replenishment is frozen
Correct answer: Only customer orders are used to drive the MPS, with forecast ignored
Within the demand time fence, actual customer orders replace forecast in the MPS calculation because demand is considered firm.
Question 3: A company is evaluating whether to produce a component in-house or outsource it. Which factor most strongly favors in-house production?
- The component uses the same equipment as other high-volume products (Correct answer)
- The component requires highly specialized technology not core to the business
- Supplier costs are lower than internal production costs
- The component has stable, predictable demand
Correct answer: The component uses the same equipment as other high-volume products
When a component leverages existing equipment and skills used for core products, in-house production maximizes capacity utilization and reduces unit cost.
Question 4: Which of the following correctly describes the relationship between 'net requirements' and 'gross requirements' in MRP?
- Net requirements = Gross requirements + Safety stock
- Net requirements = Gross requirements - On-hand inventory - Scheduled receipts (Correct answer)
- Net requirements = Gross requirements × Lead time factor
- Net requirements = Gross requirements + Open purchase orders
Correct answer: Net requirements = Gross requirements - On-hand inventory - Scheduled receipts
Net requirements are calculated by subtracting available inventory (on-hand plus scheduled receipts) from gross requirements to determine what must be ordered.
Question 5: A supply planner is reviewing a part with an 8-week cumulative lead time and high demand variability. Which action would most effectively reduce supply risk for this item?
- Switch to a periodic review replenishment system
- Qualify a second supplier with a shorter lead time (Correct answer)
- Increase the production batch size
- Reduce the safety stock to free up working capital
Correct answer: Qualify a second supplier with a shorter lead time
Adding a qualified alternative supplier with shorter lead time reduces dependence on a single source and decreases lead time, both reducing supply risk.
Question 6: Which planning approach is most appropriate for a product with very short life cycles and highly unpredictable demand?
- Make-to-stock with statistical forecasting
- Assemble-to-order with modular postponement
- Engineer-to-order based on firm commitments
- Make-to-order to avoid obsolescence risk (Correct answer)
Correct answer: Make-to-order to avoid obsolescence risk
Make-to-order eliminates finished goods inventory risk for short-lifecycle products with unpredictable demand by building only against confirmed customer orders.
Question 7: In S&OP (Sales and Operations Planning), what is the primary output of the process?
- A detailed shop floor schedule for each work center
- A balanced production plan aligned with business strategy, demand, and supply (Correct answer)
- An approved purchasing plan for the next fiscal year
- A customer order backlog prioritization list
Correct answer: A balanced production plan aligned with business strategy, demand, and supply
S&OP produces a consensus plan that balances demand and supply at an aggregate level and aligns operations with the overall business strategy.
CPIM Supply Planning and Management 4
Which metric best measures supply planning execution effectiveness in terms of meeting the production schedule?