CPIM Supply Planning and Management 5 — Questions and Answers
Question 1: Which technique is used to convert a family-level production plan into individual end-item schedules in the MPS?
- Capacity requirements planning (CRP)
- Planning bill of materials (planning BOM) (Correct answer)
- Available-to-promise (ATP) logic
- Distribution requirements planning (DRP)
Correct answer: Planning bill of materials (planning BOM)
A planning BOM (or super BOM) distributes aggregate family demand across individual end items using historical option percentages.
Question 2: A distribution network has warehouses in Chicago, Dallas, and Seattle. Which supply planning tool would best coordinate replenishment from the central plant to these locations?
- Material requirements planning (MRP)
- Distribution requirements planning (DRP) (Correct answer)
- Manufacturing resource planning (MRP II)
- Rough-cut capacity planning (RCCP)
Correct answer: Distribution requirements planning (DRP)
DRP is specifically designed to manage the replenishment of finished goods across a distribution network from central supply points.
Question 3: When calculating the economic order quantity (EOQ), which assumption is most critical and also least realistic in practice?
- Demand rate is known and constant (Correct answer)
- Ordering costs are fixed per order
- Holding cost is proportional to average inventory
- Purchase price is independent of order quantity
Correct answer: Demand rate is known and constant
EOQ assumes constant, deterministic demand, but real demand is variable and uncertain, making this the most limiting assumption in practice.
Question 4: A planner is using a 'min-max' inventory system. The minimum is 100 units and maximum is 400 units. Current on-hand is 80 units. What should the planner order?
- 100 units (the minimum)
- 300 units (max minus min)
- 320 units (max minus on-hand) (Correct answer)
- 400 units (the maximum)
Correct answer: 320 units (max minus on-hand)
In a min-max system, when inventory falls below the minimum, an order is placed to bring inventory up to the maximum (400 − 80 = 320 units).
Question 5: Which supply planning technique specifically addresses the problem of translating end-item demand into requirements for purchased and manufactured components?
- Sales and operations planning
- Material requirements planning (MRP) (Correct answer)
- Demand management
- Capacity requirements planning
Correct answer: Material requirements planning (MRP)
MRP uses the bill of materials and MPS to explode end-item demand into time-phased component requirements for purchasing and manufacturing.
Question 6: A company operating in a highly seasonal business uses a 'hybrid' aggregate production strategy. What does this strategy combine?
- Make-to-stock and make-to-order approaches
- Elements of both chase and level strategies to balance costs (Correct answer)
- Outsourcing and in-house production in fixed proportions
- Long-range planning and short-range scheduling
Correct answer: Elements of both chase and level strategies to balance costs
A hybrid strategy blends the workforce stability of a level strategy with some output variation of a chase strategy to minimize total production and inventory costs.
Question 7: Which of the following is a key benefit of implementing vendor-managed inventory (VMI) with strategic suppliers?
- The buyer retains full control of replenishment decisions
- The supplier bears all inventory carrying costs permanently
- Reduced buyer administrative burden and improved supplier visibility into consumption (Correct answer)
- Eliminates the need for a safety stock policy at the buyer's location
Correct answer: Reduced buyer administrative burden and improved supplier visibility into consumption
VMI transfers replenishment responsibility to the supplier who, with consumption visibility, can better optimize delivery frequency and quantities, reducing buyer workload.
CPIM Supply Planning and Management 5
Which technique is used to convert a family-level production plan into individual end-item schedules in the MPS?