CPIM Supply Planning & Procurement Processes 2 — Questions and Answers
Question 1: A company's supplier delivers 480 units when 500 were ordered. What is the supplier's fill rate?
- 92%
- 94%
- 96% (Correct answer)
- 98%
Correct answer: 96%
Fill rate = units delivered / units ordered = 480/500 = 96%.
Question 2: Which procurement strategy involves a long-term agreement with a single supplier to obtain favorable pricing and priority service?
- Spot buying
- Sole sourcing (Correct answer)
- Dual sourcing
- Competitive bidding
Correct answer: Sole sourcing
Sole sourcing establishes a long-term relationship with one supplier, often yielding better pricing and service levels.
Question 3: In MRP, what triggers a planned order release for a purchased component?
- When safety stock falls below reorder point
- When net requirements exceed available inventory after offsetting by lead time (Correct answer)
- When the master production schedule is approved
- When a supplier sends a delivery confirmation
Correct answer: When net requirements exceed available inventory after offsetting by lead time
MRP offsets net requirements by lead time to determine when a planned order must be released.
Question 4: Which of the following best describes a blanket purchase order?
- A one-time order for a large quantity at a negotiated price
- An open order authorizing repeated deliveries of a commodity over a set period (Correct answer)
- An emergency order placed outside normal procurement channels
- A contract requiring the supplier to hold consignment inventory
Correct answer: An open order authorizing repeated deliveries of a commodity over a set period
A blanket PO authorizes the supplier to make multiple deliveries of a specified item over a defined period at agreed-upon terms.
Question 5: A buyer negotiates a 2/10 net 30 payment term. What does '2/10' mean?
- A 2% penalty if paid after 10 days
- A 2% discount if paid within 10 days (Correct answer)
- Payment is due in 2 installments over 10 days
- The invoice must be disputed within 10 days for a 2% credit
Correct answer: A 2% discount if paid within 10 days
2/10 net 30 means a 2% discount is available if the invoice is paid within 10 days; otherwise full payment is due in 30 days.
Question 6: Which supply planning input directly converts the MPS into time-phased material requirements?
- Capacity Requirements Planning (CRP)
- Material Requirements Planning (MRP) (Correct answer)
- Distribution Requirements Planning (DRP)
- Sales and Operations Planning (S&OP)
Correct answer: Material Requirements Planning (MRP)
MRP explodes the MPS through the bill of materials to generate time-phased component requirements.
Question 7: What is the primary purpose of a vendor-managed inventory (VMI) arrangement?
- To transfer legal ownership of inventory to the supplier
- To allow the supplier to monitor stock levels and replenish without buyer-initiated purchase orders (Correct answer)
- To eliminate safety stock requirements at the buyer's facility
- To outsource the entire procurement function to a third-party logistics provider
Correct answer: To allow the supplier to monitor stock levels and replenish without buyer-initiated purchase orders
VMI gives the supplier visibility into the buyer's inventory and authorizes them to replenish automatically, reducing buyer administrative burden.
CPIM Supply Planning & Procurement Processes 2
A company's supplier delivers 480 units when 500 were ordered.
What is the supplier's fill rate?