cpim

Question Number: 551

Question Number: 1

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

The basic elements of the supply chain include:

A) supply, manufacture, distribution.

B) design, manufacture, inventory.

C) engineer, design, manufacture.

D) supply, engineer, manufacture.

The correct answer is: A

Even though different companies produce different products, the basic elements are the same: supply, manufacture, and distribution.

(Arnold, Introduction to Materials Management, Chapter 1).

Question Number: 2


In order to maximize profit, a company must have all of the following objectives except:

A) Best customer service

B) Most accurate production forecast

C)Lowest inventory investment

D)Lowest distribution cost

The correct answer is: B

A company, to maximize profits, must have the lowest production cost, best customer service, lowest inventory investment, and lowest distribution costs. While an accurate production forecast will contribute to low production costs, it will not guarantee the lowest production costs.


Question Number: 3


The inventory turns ratio measures:

A)

the amount of inventory needed to support sales growth.

B)

obsolete inventory as a percent of sales.

C)

how effectively inventory is being used.

D)

the amount of space needed to store inventory.

The correct answer is: C

The inventory turns ratio measures how effectively inventories are being used. It is calculated by dividing annual cost of goods sold by average inventory in dollars.


Question Number: 4


Process specifications can be best defined as a document which:

A)

shows how the product will appear.

B)

shows the steps needed to produce the end item.

C)

details the capacity available at a work center.

D)

flow charts various processes.


Process specifications describe the steps needed to make an end product. They are usually printed on a routing sheet or kept in the database for online access.


Question Number: 5


A company's strategic plan:

A)

provides the manufacturing plan for families of end items.

B)

outlines the sales plan for the next year.

C)

is a statement of goals and objectives for a long range period.

D)

outlines new products for the next year.


While strategic plans do provide for manufacturing, sales, and new product plans, they really provide the overall direction for the company. The result is a statement of goals and objectives for 2-5 years, and sometimes 10 years.


Question Number: 6


In which of the following manufacturing environments would consumer products, such as film, food, etc. be classified?

A)

Assemble-to-order

B)

Engineer-to-order

C)

Make-to-order

D)

Make-to-stock

The correct answer is: D

Consumer products are generally considered make-to-stock. There are a few standard items assembled from many components.


Question Number: 7


Many different end items are made from a small number of components. What manufacturing environment would this be?

A)

Make-to-stock

B)

Make-to-order

C)

Assemble-to-order

D)

Engineer-to-order


Make-to-order companies typically make many end items from a small number of components. The schedule is developed from actual customer orders.


Question Number: 8


The purpose of a strategic business plan is to:

A)

plan production by product family.

B)

plan for business changes which take a long time.

C)

establish customer requirements over the long term.

D)

establish order promising strategies.


Strategic plans are used for long term planning (2-10 years). They are used to allow time to plan for changes which take a long time to occur. These might include new plants or distribution centers.


Question Number: 9


Aggregate inventory management is concerned with:

A)

managing inventory items and how they are used.

B)

establishing the production plan.

C)

the cost and benefits of carrying the different classes of inventory.

D)

the distribution network and the movement of inventory.


Aggregate inventory management is concerned with the cost and benefit of carrying raw materials, work-in-process, and finished goods inventory. It is financially oriented.


Question Number: 10


Which of the following are objectives of inventory?

I.

Maximize customer service

II.

Efficient transaction

III.

Low cost plan operations

IV.

Minimum inventory investment

A)

I, II, and III

B)

I, III, and IV

C)

I, II, and IV

D)

II, III, and IV


In order to maximize profits, a company must manage inventories, provide great customer service, and have efficient plant operations, while minimizing the amount of capital used for inventory.


Question Number: 11


Which of the following would be included in the cost of carrying inventory?

I.

Heating and lighting a warehouse

II.

Obsolete inventory

III.

Labor to move material

IV.

Damaged inventory

A)

I, II, and III

B)

II, III, and IV

C)

I, III, and IV

D)

I, II, III, and IV


All of the above costs would be included in the cost of inventory. Any costs incurred as the result of having inventory should be included.


Question Number: 12


Which of the following best describes a normal distribution?

A)

Most values clustered near a central point

B)

Warehouses centrally located to markets

C)

Values accumulated at six sigma

D)

A critical ratio of 1.0


Normal distribution refers to the statistical distribution of values where the majority of values will accumulate around the mean. The resulting graph is shaped like a bell. It is often known as a "bell curve".


Question Number: 13


Based on the following information, what would the safety stock need to be to ensure product is in stock 99.9999% of the time?

MAD = 100

On hand = 200

Weekly demand = 400

A)

100

B)

300

C)

500

D)

600


To ensure coverage of product 99.9999% of the time, it would require 5 MAD for safety stock.

Therefore: 5 * 100 = 500.


Question Number: 14


Each distribution center places orders from central supply as they are needed. This is called:

A)

pull system.

B)

push system.

C)

Just-in-Time delivery.

D)

supply chain management.


When each distribution center orders from central supply or the factory independently of what other distribution centers are doing, it is called a pull system. The advantage is that coordination and communication is less expensive. The disadvantage is that the lack of coordination causes problems with customer service and inventories.


Question Number: 15


A company makes all decisions regarding forecasting and orders centrally for its distribution network. This company is using which of the following systems?

A)

Pull system

B)

Push system

C)

Just-in-Time

D)

Time phased order point


The push system "pushes" inventory to distribution centers by making stocking decisions centrally. The advantage is that inventory is sent where it is needed most. The disadvantage is that the coordination is more expensive than the pull system.


Question Number: 16


A company wants to store 15,000 cartons with 20 cartons on each pallet. The warehouse is set up to store pallets 5 high. How many pallet positions are needed?

A)

150

B)

500

C)

750

D)

3000


The number of pallet positions can be calculated by dividing the number of cartons of storage needed by the number of cartons per pallet which equals the total number of pallets needed.

Divide the total number of pallets needed by the number of pallets stacked height which equals the number of positions needed.

For this problem:

15,000/ 20 = 750 pallets needed;

750/ 5 = 150 positions.

(Arnold, Introduction to Materials Management, Chapter 12.)

Question Number: 17


All of the following are basic grouping methods to store and locate stock in a warehouse except:

A)

Items related functionally

B)

Items in sequential SKU number

C)

Items which are physically similar

D)

Items which are fast moving


The purpose of grouping items in a warehouse is to be more productive in storage and in the picking process. Items which have sequential SKU numbers may have nothing to do with each other. As a result, this would not be a criteria for grouping.


Question Number: 18


What is the major disadvantage of a fixed location warehouse?

A)

Put away time is increased

B)

Cube utilization is poor

C)

Dock time is increased

D)

Material handling costs rise


Fixed location warehouses offer poor cube utilization because pallet locations are left empty when the product assigned to the location is out of stock. Generally, fixed locations are used in small warehouses with low throughput.


Question Number: 19


Which of the following are advantages of point of use storage?

I.

Ease of control

II.

Material handling is reduced

III.

Storage costs are reduced

IV.

Material is accessible at all times

A)

I, II, and III

B)

II, III, and IV

C)

I, III, and IV

D)

I, II, III, and IV


All are advantages of point-of-use storage except ease of control, which is an advantage of central storage.


Question Number: 20


Which of the following are advantages of using central storage?

I.

Ease of control

II.

Costs are reduced

III.

Inventory record accuracy is easier to attain

IV.

Safety stock is reduced

A)

I, II, and III

B)

I, III, and IV

C)

II, III, and IV

D)

I, II, III, and IV


Costs are not reduced with central storage. There are labor costs, racking, paper system, and other costs associated with central storage.


Question Number: 21


Which of the following best describes cycle counting?

A)

A process to reduce cycle time

B)

Set up reduction to shorten the production cycle

C)

Counting inventory on a pre-determined schedule

D)

Conducting a time study at a work center


Cycle counting is used to count inventory on a pre-determined schedule for the purpose of identifying errors and taking corrective action so the error will not occur again.


Question Number: 22


The movement of finished goods from production to the customer is:

A)

physical supply.

B)

supply chain.

C)

physical distribution.

D)

conversion cycle.


Physical distribution is the actual movement of goods from production to the customer. Physical supply is the movement of raw material from the supplier to manufacturing.


Question Number: 23


All of the following activities are part of the physical distribution system except:

A)

Transportation

B)

Warehousing

C)

Material handling

D)

Forecasting of customer orders


Physical distribution includes the activities of transportation, distribution, inventory, warehousing, material handling, packaging, and order processing. Forecasting is not a physical distribution activity.


Question Number: 24


Trucks, as a mode of transportation, are best suited for:

A)

moving small quantities to widely dispersed markets.

B)

moving large quantities to widely dispersed markets.

C)

moving small quantities to narrowly dispersed markets.

D)

moving large quantities to narrowly dispersed markets.


Trucks are best when there is a need to move small quantities to widely dispersed markets. Trains are better for moving large quantities.


Question Number: 25


For a given product, the line haul cost is $1.50 per mile. The product will move 400 miles. If 40,000 pounds are being shipped, what is the cost per hundred weight?

A)

1.00

B)

1.50

C)

2.00

D)

2.50


The truck will cost $600 to move 400 miles ($1.50 * 400 miles).

To calculate the cost per hundred weight:

Divide the total cost for the truck by 400. (40,000 pounds divided by 100).

Therfore:

$600 divided by 400 = $1.50/cwt.


Question Number: 26


Which of the following best describes the purpose of a distribution warehouse?

A)

A warehouse to store goods for long periods of time

B)

A storage warehouse for floor stock

C)

A warehouse to move and mix goods

D)

A supply chain warehouse for regional storage


A distribution warehouse is used primarily to break down large lots into smaller lots for shipment. A general warehouse is used for long term storage.


Question Number: 27


Which of the following are the roles which warehouses serve?

I.

Transportation consolidation

II.

Inventory efficiency

III.

Product mixing

IV.

Customer service

A)

I, II, and III

B)

I, III, and IV

C)

II, III, and IV

D)

I, II, III, and IV


Warehouses serve three important roles:

1) Transportation consolidation - consolidate small shipments (LTL) into large shipments (TL)

2) Product mixing - group a variety of products into one order

3) Customer service - allows products to be placed closer to the customer

Inventory will typically rise with an increase in the number of warehouses.


Question Number: 28


A market boundary can be defined as the:

A)

geographic boundary of a region.

B)

line where the laid down cost is the same from two supply sources.

C)

line where shipments in one distribution center equals another.

D)

mileage boundary where shipment costs exceed the margin to be gained.


A market boundary is the line where the laid down cost from two supply sources is equal. The laid-down cost is the delivered cost of a product to a geographic point.


Question Number: 29


As a company increases the number of warehouses from one to two, there is an impact on safety stock. Safety stock will:

A)

increase by a factor of 2.

B)

decrease by half.

C)

increase, and the percent can be calculated.

D)

decrease by a calculated percentage.


The safety stock will increase by an amount which can be calculated, but it will not double automatically. The amount of the increase will depend on service levels by part, the demand variation, and other factors. As the number of warehouses increases, demand at each will decrease, causing greater variations in product demand. Therefore, safety stock will increase appropriately.


Question Number: 30


The Just-in-Time philosophy can be best defined as:

A)

Delivering goods just before they are needed

B)

Fulfilling customer orders just as they are needed

C)

Manufacturing without inventory

D)

Elimination of waste


The Just-in-Time philosophy is concerned with the elimination of waste or non-value activities. Maintaining large inventories is just one of many non-value added activities.


Question Number: 31


The Toyota Motor Company identified seven sources of waste in manufacturing. Which of the following represent those sources of waste?

I.

Process

II.

Overproduction

III.

Wait-time

IV.

Movement

A)

I, II, and III

B)

I, II, and IV

C)

II, III, and IV

D)

I, II, III, and IV


The seven sources of waste identified by Toyota are Process, Methods, Movement, Product Defects, Waiting times, Overproduction, and Inventory.


Question Number: 32


To achieve necessary quality levels in a JIT environment, quality must be:

A)

built into the product by operators.

B)

inspected at multiple points.

C)

ensured by the quality control lab.

D)

an inspectors function.


Quality must be the operators responsibility. They are the only ones who can make sure defects are not built into the product. They must be allowed to stop the process when defects are found.


Question Number: 33


In order to reduce the number of transactions which occur in a JIT environment, companies use a system called:

A)

transaction prevention.

B)

pre-deduct.

C)

backflushing.

D)

bar coding.


Backflushing is a system for doing inventory and labor transactions based on the finished goods production. With this system, one transaction will create the many issues transactions for inventory. This process works best when the lead time for the product is short and the product flows down a production line.


Question Number: 34


The annual cost of goods sold for a company is $40 million and the average inventory is $10 million. By how much would the inventory need to be reduced to have annual inventory turns equal 20 turns?

A)

$2 million

B)

$4 million

C)

$6 million

D)

$8 million


In order for a company with cost of goods sold of $40 million to turn the inventory 20 times annually, the inventory would have to be valued at $2 million (40/20). Since the average inventory is currently valued at $10 million, the inventory would need to be reduced by $8 million.


Question Number: 35


A company wants to produce 1000 units over the next four months using a level strategy. The months have 20, 21, 19 and 22 working days in each one. Based on this strategy, how much would be produced in the first month?

A)

244

B)

254

C)

260

D)

262


To find the answer:

Divide the planned production (1000) by the number of days available in the four months (82) to find the daily production rate (12.2).

Multiply the daily production rate (12.2) by the number of days in the first month (20) to obtain the first month's production (244).


Question Number: 36


System nervousness is caused by:

A)

the inability of the planner to remain calm.

B)

requirements changing rapidly.

C)

constant demands by manufacturing for long production runs.

D)

purchased materials which do not arrive on time.


System nervousness is caused by requirements which change rapidly and usually by small amounts. The planner must, in these cases, apply judgement to the situation before changing the plans to accommodate the change.


Question Number: 37


A component has a fixed cost of $1,000 and a variable cost of $5.00 per unit to produce. What would the average cost per unit be if the company produces 4,000 units?

A)

$5.00

B)

$5.10

C)

$5.25

D)

$5.50


To produce 4,000 units, the total cost would be $21,000.

($5 * 4,000 units + $1,000 fixed cost = $21,000).

Divide the $21,000 by the number of units (4000) to find the cost per unit.

( $21,000/4,000 = $5.25).

An alternative way to calculate the cost per unit would be to divide the fixed cost ($1,000) by the units produced (4,000) which equals $.25.

Add the fixed cost to the variable cost to get the cost per unit.

($5.00 + $.25 = $5.25).


Question Number: 38


Which of the following best defines throughput?

A)

The number of bottlenecks slowing production

B)

The total capacity which a factory can produce

C)

The speed of a work center to produce

D)

The total volume of production passing through a facility


Throughput is the total volume of production passing through a facility. Bottlenecks control the throughput in the facility and must be eliminated in order to increase the throughput.


Question Number: 39


Forecasts are typically more accurate for the near future than they are for the longer future. This occurs because:

A)

the near term holds less uncertainty than the long term.

B)

more data is available in the near term.

C)

aggregate data is easier to forecast.

D)

the future is more dynamic in the near term.


The near term is more predictable than the long term. Most companies can easily predict what they are going to do next week compared to next year. This allows forecasts to be more accurate in the near term.


Question Number: 40


Forecasts are usually wrong but we continue to use them. They are necessary because:

A)

forecasters provide a service to the organization.

B)

forecasts are a prelude to business planning.

C)

the master production schedule (MPS) needs one.

D)

materials requirements planning (MRP) cannot operate without one.


Forecasts are the prelude to business planning. They provide an estimate of what conditions will look like in the future. So even though we know they are wrong, by measuring how wrong they are, forecasts can be constantly improved for use by the business.


Question Number: 41


Even in an intermittent manufacturing shop, certain JIT principles can be applied. Which of the following principles can be used in an intermittent manufacturing shop?

I.

Employee involvement

II.

Total preventive maintenance

III.

Inventory reduction

IV.

Continuous flow lines

A)

I and III

B)

II and IV

C)

I, II, and III

D)

I, II, III, and IV


An intermittent manufacturer is characterized by processing in batches, and large variation in design and order quantities. At the extreme, every job could be made to customer specification. The product lacks a continuous flow. However, JIT principle can be applied for employee involvement, workplace layout, total quality control, preventive maintenance, setup time reduction, supplier partnerships, and inventory reduction.


Question Number: 42


Which of the following manufacturing types would typically have the longest delivery time?

A)

Make-to-order

B)

Engineer-to-order

C)

Make-to-stock

D)

Assemble-to-order


Delivery time is defined as the time elapsed from receipt of the customer's order to the delivery of the product to the customer. Engineer-to-order companies will generally have the longest delivery time due to the design and engineering time required to create a product. In contrast, make-to-order companies will make a product from existing components after an order is received. Make- to-stock companies will ship to the customer from stock. Assemble-to-order companies will assemble a customer order from existing sub-assemblies.


Question Number: 43


Which of the following statements would be true regarding the delivery time in an engineer to order company?

A)

Delivery time is shorter than a make-to-order company.

B)

It would be the same as a make-to-stock item.

C)

It would be longer than an assemble-to-order company.

D)

It would be shorter than an assemble-to-order company.


Delivery time is defined as the time elapsed between receipt of the customer's order and the delivery to the customer. Engineer-to-order companies have the longest delivery time due to the engineering which must occur before the product can be manufactured for delivery.


Question Number: 44


Which of the following would be considered a function of physical distribution?

A)

Material handling

B)

Routings

C)

Kanban size

D)

Pull signal


Physical distribution includes all the activities associated with physically moving goods; from the supplier to the start of production, and from the end of production to the consumer. Material handling is involved with physically moving the goods. The others are functions within manufacturing.


Question Number: 45


Which of the following would be considered part of the physical distribution system?

A)

Moving materials between work centers

B)

Receiving goods from suppliers

C)

Planning the transfer of goods to outside contractors

D)

Forecasting inventory levels to support manufacturing


Physical distribution is defined as the physical movement of goods from suppliers to the beginning of production and from the end of production to the consumer. Receiving would be included as part of the function of physical distribution.


Question Number: 46


Which of the following would most likely be an independent demand item?

A)

Inventoried subassembly for a printer

B)

Manufactured subassembly in a car

C)

Purchased component for a fork truck

D)

Spare part for a jet engine


Independent demand is defined as demand for an item which is unrelated to the demand for another item. Service parts would typically be forecast independently from their use during the manufacture of the jet engine. Therefore, the jet engine might have independent and dependent demand.


Question Number: 47


Production planning is generally a direct input to:

A)

material requirements planning.

B)

purchase order planning.

C)

capacity load at a work center.

D)

master production scheduling.


Production plans are agreed upon management plans for manufacturing, shipping and inventory/backlog. These plans are developed at the aggregate level (e.g. monthly, product families). The plan provides management approval for the master scheduler to develop the detailed master schedule (end products, weekly).


Question Number: 48


Which of the following would most likely be a dependent demand item?

A)

Safety gloves

B)

Office supplies

C)

Purchased component

D)

Item being shipped to customer


Dependent demand is defined as "demand that is directly related to or derived from the bill of material structure for other items or end products." (APICS Dictionary) Therefore, a purchased component would be part of a bill of material structure and demand would be related to the demand for other parts in that structure.

Question Number: 49


If a company is going to establish a cycle count program, a primary objective should be to:

A)

correct the inventory records.

B)

reduce the headcount.

C)

identify the causes of inventory errors.

D)

eliminate the physical inventory.


The primary objective of a cycle count program is to identify the causes of inventory errors and eliminate them permanently. Only by correcting the causes of error will the records stay accurate for the system to operate properly and, perhaps in the future, eliminate the physical inventory.


Question Number: 50


A company needs to increase production in the current week to meet a customer request. The quickest way to accomplish this is to:

A)

work overtime.

B)

hire more workers.

C)

hire temporary workers.

D)

subcontract the work.


Working overtime allows skilled workers to finish the customers job. This would be quicker than hiring workers which can take a great deal of time. Temporary workers can be hired quickly, however, the quality would suffer, and finding a short term subcontractor would not generally be feasible.


Question Number: 51


Which of the following does a tracking signal identify in a forecast?

A)

Mean absolute deviation

B)

Standard deviation

C)

Bias

D)

Aggregate summarization


Bias occurs when the cumulative actual demand varies from the forecast on a consistent basis. A tracking signal provides a mathematical method to determine if the forecast error is truly biased or if random error is occurring. Random error will correct itself while bias will not. A tracking signal is calculated by dividing the algebraic sum of the forecast errors by the MAD (Mean Absolute Deviation).


Question Number: 52


An income statement of a company will show which of the following?

A)

Inventory levels

B)

Long term debt

C)

Cost of products sold

D)

Net cash available


Income statements reflect the revenues and expenses of a company generating either a profit or loss. Cost of products sold is subtracted from the revenue to obtain a gross profit. From the gross profit, expenses are deducted to arrive at a net income or loss.

Question Number: 53


Which of the following is a reason to maintain inventory?

A)

Improve customer service

B)

Reduce transportation costs

C)

Increase machine operating time

D)

Reduce costs


One of the primary reasons to maintain inventory is to provide competitive customer service. By having inventory, a company can avoid costly stockouts, lost sales, and lost customers. In some industries, such as consumer goods, it is imperative that the product be in stock when the customer orders.


Question Number: 54


Which of the following best describes the ABC approach to inventory control?

A)

Maintain a high inventory of "A" parts.

B)

Have plenty of "C" parts.

C)

Keep the "B" parts to a minimum level.

D)

Always keep plenty of inventory.


The ABC method of inventory control operates on the assumption that a company's limited resources should be used to maintain the high priority items, or A items. The C parts have less value and should therefore be maintained at a very high level of inventory so inaccuracies will not impact the operation. This would allow less resources to be committed managing the low priority items.


Question Number: 55


The law which states that a small percentage of the group usually accounts for a large percent of the results is which of the following?

A)

Fredo's law

B)

Newton's first law

C)

Pareto's law

D)

Nielsen's law


Pareto was an Italian economist who developed the observation that 80% of the Italian wealth was concentrated in 20% of the population. This observation can apply to many areas and is used to analyze the inventory for classifying A, B, and C items. Generally, 80% of the inventory dollars rest with 20% of the parts.


Question Number: 56


Inventory is used to decouple:

A)

production plans from master schedules.

B)

rough cut capacity from capacity plans.

C)

supplier orders from supplier deliveries.

D)

supply from the demand.


Inventory is used to separate supply from demand. This allows the manufacturing to occur smoothly without as much disruption caused by fluctuating demand. The inventory acts like a shock absorber so the spikes in demand are not reflected in the manufacturing schedule.


Question Number: 57


A supervisor's primary role in a total employee involvement company is:

A)

controlling.

B)

cheerleading.

C)

coaching.

D)

quality control.


Total employee involvement allows employees to participate in decision making which was previously reserved for management. In this environment, the supervisor's role is to help employees succeed by assisting employees in a decision making process rather than telling employees what to do. This coaching process helps employees improve the decisions they make.


Question Number: 58


Conformance can be best described as:

A)

making the highest quality products.

B)

meeting the specified requirements.

C)

working together as a team.

D)

flowing product through cells.


Conformance, as defined by the APICS Dictionary, is "an affirmative indication or judgement that a product or service has met the requirements of a relevant specification, contract, or regulation." This does not mean that a manufacturer is necessarily making the highest quality products in the marketplace.


Question Number: 59


The objective of scheduling is to:

A)

ensure work centers are properly loaded.

B)

meet delivery dates.

C)

provide capable to promise information.

D)

meet cost targets.


The primary objective of scheduling is to meet delivery dates while utilizing manufacturing resources effectively.


Question Number: 60


If a variety of products are made in a factory, the most common unit of capacity is:

A)

machine turns.

B)

inventory turns.

C)

time.

D)

dollars.


When factories make a variety of products, the most common unit of capacity is time or hours. In factories which make common units, a measure of capacity will be the unit of output. For example, beer is measured in barrels, automobiles are measured in cars produced, etc.


Question Number: 61


Which of the following best defines the term break even point?

A)

The point at which a product fails

B)

Current assets = current liabilities

C)

Required capacity = available capacity

D)

Revenues = total costs


The break-even point occurs when revenues equal total costs. When volume is less than the break even-point, a loss occurs. Conversely, when volume exceeds the break even point, a profit occurs.


Question Number: 62


The throughput of a manufacturing process is determined by:

A)

overloaded work centers.

B)

first work center in the process.

C)

underloaded work centers.

D)

last work center in the process.


The factory throughput is regulated by the constraint work center. The constraint work center is by definition the work center that has no available capacity. Therefore, the overloaded work center regulates the throughput.


Question Number: 63


In a JIT manufacturing environment, waste can be described as:

A)

component scrap.

B)

overtime.

C)

any process which does not add value.

D)

any overhead process.


In Just-in-Time manufacturing, waste can be best described as any process which does not add value. The processes can be overtime, scrap, paperwork, approvals, etc. which do not add any value to the product for the customer.


Question Number: 64


A key element in selecting a site for a factory is:

A)

availability of water.

B)

access to rail sidings.

C)

cost and availability of transportation.

D)

warehouse space and cost.


In siting a factory, low cost and availability of transportation are key components. This ensures that raw materials to keep the factory supplied are available. Additionally, finished goods leaving the factory can be delivered reliably to customers.


Question Number: 65


The particular channel in which goods move describes:

A)

manufacturing channel.

B)

marketing channel.

C)

capacity channel.

D)

distribution channel.


The distribution channel is the path that goods move through distribution centers, to wholesalers, and retailers.


Question Number: 66


Inventory areas should be locked except for during normal business hours because:

A)

people are apt to steal.

B)

storeroom personnel know where parts are stored.

C)

transactions might not be completed.

D)

it's the right thing to do.


Inventory locations should be kept secure so the transactions are completed and inventories are maintained accurately. If people are allowed to access the inventory without a proper transaction being completed, inventory accuracy will suffer, and the system will become less reliable.


Question Number: 67


A company has its warehouse divided so order pickers only pick in their area. This warehouse is operating under which of the following systems?

A)

Zone system

B)

Area system

C)

Consolidated pick system

D)

Modified pick system


In a zone system, the warehouse is divided into zones and the order pickers only pick the items in their zone. The items are sent to the marshalling area to be combined with other items from other zones for that customer. An area system allows the picker to pick a complete order by moving through the warehouse.


Question Number: 68


In a fixed location warehouse system, each SKU has an assigned location. While this has many positives, the negative aspect to fixed location warehousing is that:

A)

warehouses can get messy.

B)

cube utilization is poor.

C)

inventory accuracy suffers.

D)

items can be damaged in put away.


In fixed location warehouses, cube utilization is poor because if a location has no stock, the space remains empty.


Question Number: 69


The balance to cube utilization is:

A)

pallet positions.

B)

accessibility.

C)

put away speed.

D)

material handling costs.


Cube utilization must always be balanced with accessibility to the goods when they are needed. For example, a warehouse could have one hundred per cent cube utilization but the warehouse pickers could not pick the goods. Therefore, warehouses do not operate at 100% cube utilization.


Question Number: 70


A normal distribution can be graphed as a :

A)

parabolic curve.

B)

trend seasonal curve.

C)

positive bias curve.

D)

bell shaped curve.


In a normal distribution, the actual points are concentrated around the average (mean). The further from the average the data is, the fewer data points emerge.


Question Number: 71


Which of the following manufactured product types are best suited for flow manufacturing?

A)

Wide range of disparate products

B)

Limited range of similar products

C)

Low volume of similar products

D)

High volume of disparate products


In a flow manufacturing environment, the workstations required to make a product or family of similar products are positioned closely together in the sequence necessary to make the product. Work flows from one work station to the next in a sequential flow. Because they tend to be inherently inflexible, flow lines are best suited to a high volume of similar products.

Question Number: 72


The key component to quick changeovers is:

A)

dramatically reduced set up times.

B)

availability of materials to run when the changeover is complete.

C)

expensive machines which changeover automatically.

D)

large enough lot sizes so changeovers are not critical.


Reducing setup times are the key component to making changeovers quicker. The quicker the changeover, the smaller the lot size can be. The smaller the lot size, the less inventory that needs to be maintained. This leads to much lower costs of operations.

Question Number: 73


A company which can adapt swiftly to changes in the volume and mix of their products is:

A)

good at sales and operation planning.

B)

forecasting accurately.

C)

process flexible.

D)

six sigma certified.


Companies which are process flexible are able to adapt quickly to changes in the product mix and volume. They have modified their sales, manufacturing and supplier processes so they are machine flexible, have small lot sizes, have constant communication with the sales force, have suppliers who are involved in the planning and design of their products and have developed real time collaboration with all the parties involved. They may not forecast their product at all but are able to adapt to the ongoing changes brought on by market forces.

Question Number: 74


The key driver in a Total Quality Management (TQM) company should be:

A)

lower costs.

B)

training employees.

C)

problem solving tools.

D)

customer needs.


The customer needs should drive all of the focus of employees in a TQM environment. By focusing on the customer, all of the processes to support the customers expectations will be improved. While training and problem solving tools are key methods for developing employee empowerment, the customer should be in the center of all the process improvements.

Question Number: 75


Quality can best be defined as:

A)

job one.

B)

meeting or exceeding the users' expectations.

C)

the best product produced.

D)

zero defects.


Quality is best defined by the user of the product. The user sets the expectation for a company's products and services by buying initially and repeating the purchase. While zero defects is a measure of the quality produced, there are customers who are buying off quality products which are perfect for their ultimate use. Again, it depends on the expectations.

Question Number: 76


In a flow manufacturing environment, product will generally flow consistently and constantly. As a result, there is little time to do inventory transactions to record the movement of parts through the line. To overcome this, many companies record their inventory by using:

A)

pre flushing.

B)

kanban.

C)

cycle counts.

D)

backflushing.


Backflushing is a method for recording the usage of inventory at a standard quantity when the finished unit is completed. Backflushing can also be completed at various points (paypoints) in the routing. This process eliminates the need to record issue transactions for materials and time entry for labor.

Question Number: 77

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning

Production plans have all of the following except:

A)

Shipment plan

B)

Product families

C)

Inventory plan

D)

Weekly production


Production plans are generally monthly statements of shipments, production, and inventory (or backlog), broken down by product families, not end items.


Question Number: 78


Which of the following statements is most correct?

A)

The MPS shows families of products.

B)

The MPS has more detail than the production plan.

C)

The production plan has more detail than the MPS.

D)

The production plan rolls up to equal the MPS.


The MPS is a weekly build plan that contains more detail than the production plan. However, the MPS should add up to equal the production plan.


Question Number: 79


A closed loop MRP system can be best defined as:

A)

action taken by a planner to approve planned orders.

B)

re-planning of capacity to accommodate restraints.

C)

integrated planning and control system with feedback from the bottom-up.

D)

integrated systems which include financial software, finite capacity, and logistics.


Closed loop MRP systems operate from the top down with feedback throughout the system. These feedback mechanisms allow changes to occur in the top level planning.


Question Number: 80


You are working as a Master Scheduler in a discrete manufacturing company. A large customer has asked if you can deliver an order, but you have some short term capacity constraints. Which of the following actions could be taken so the order can be delivered?

I.

People could be hired

II.

Overtime could be worked

III.

Inventory could be built in slow times

IV.

Work could be subcontracted

A)

I, II, and III

B)

II, III, and IV

C)

I, III, and IV

D)

I, II, and IV


Short term capacity can be increased by overtime, inventory, or subcontracting. Often, hiring qualified people takes much longer than the other three options.


Question Number: 81


Which of the following are strategies to use in developing a production plan?

I.

Chase strategy

II.

Delphi strategy

III.

Level strategy

IV.

Backlog strategy

A)

I and II

B)

I and III

C)

II and IV

D)

III and IV


The chase strategy means production will vary with demand (inventory stays level). The level strategy establishes production at the average demand. Fluctuations in demand are absorbed by inventory. The third strategy is subcontracting. Production is kept at the minimum demand level. Variations in the demand level are absorbed by subcontracting production.


Question Number: 82


Which of the following are inputs to a realistic MPS?

I. Production plan

II. Forecasts for end items

III. Product costs for end items

IV. Capacity constraints

A)

I, II, and III

B)

I, II, and IV

C)

II, III, and IV

D)

I, III, and IV


The production plan, forecasts, and capacity constraints are all inputs to the MPS. While costs are nice to have, they are not a necessary input.


Question Number: 83


Which of the following are objectives when establishing the MPS?

I. Efficient use of resources

II. Efficient final assembly

III. High customer service levels

IV. Efficient use of inventory

A)

I, II, and III

B)

I, II, and IV

C)

I, II, III, and IV

D)

I, III, and IV


The master scheduler, when developing the MPS, must make sure labor, material, equipment, and inventory are being used efficiently in order to maintain high levels of customer service. Efficient final assembly would be developed by a final assembly schedule.


Question Number: 84


Final assembly scheduling usually occurs when:

A)

a customer order is received.

B)

planning a build schedule.

C)

the MPS is established.

D)

capacity is constrained.


Final assembly scheduling occurs only after the customer order is received. The FAS is the actual build schedule which ensures that the customers get what they want. Generally, FAS occurs when there are a variety of options for the customer to order.


Question Number: 85


In make to stock requirements, customer orders are satisfied from:

A)

available capacity.

B)

work in process inventory.

C)

finished goods inventory.

D)

raw material inventory.


Make-to-stock companies ship customer orders from finished goods. Make to order companies ship from available capacity.


Question Number: 86


Independent demand can be defined by all of the following except:

A)

Demand not related to demand from higher level assemblies

B)

Forecasted demand

C)

Demand calculated based on present demand

D)

Demand from customer orders


Demand calculated from present demand would be dependent demand. Its demand is dependent upon a higher level assembly.

(Arnold, Introduction to Material Management, Chapter 4).

Question Number: 87


Which of the following would best define dependent demand?

I. Demand which is dependent on the forecast

II. Demand which is dependent on demand for a higher level assembly

III. Demand which is calculated

A) I

B) I and II

C) II and III

D) III


Dependent demand is calculated based on demand for higher level assemblies. Forecasted demand is independent.

(Arnold, Introduction to Material Management, Chapter 4).

Question Number: 88


Which of the following is not an input to MRP?

A)

Master Production Schedule

B)

Inventory records

C)

Bill of materials

D)

Capacity planning


Capacity planning is not an input to MRP. In fact, MRP assumes infinite capacity is available in its calculation.


Question Number: 89


Planning bills can be best described as:

A)

bills of material based on forecast demand.

B)

bills of material for new products.

C)

bills of material which represent average products.

D)

bills of material for expected usage.


Planning bills are an artificial grouping of components established for planning purposes. They are used to simplify forecasting and scheduling. They are not buildable products.


Question Number: 90


A firm planned order is used to:

A)

freeze the planned order against changes in quantity and time.

B)

convert the planned order to a scheduled receipt.

C)

simulate the projected inventory balance.

D)

manipulate the data and quantity of the customer order.


Firm planned orders are used by planners when it is necessary to "freeze" the planned order. This might be necessary due to material shortages or capacity problems, e.g., strikes.


Question Number: 91


Which of the following would be included in demand management?

I. Forecasted requirements

II. Service parts requirements

III. Branch warehouse requirements

IV. Inter-plant orders

A) I, II, and III

B) II, III, and IV

C) I, III, and IV

D) I, II, III, and IV


All of the answers would be part of demand management, plus order entry and order promising.


Question Number: 92


All of the following are principles of forecasting except:

A)

Forecasts are usually wrong

B)

Forecasts are more accurate for end items

C)

Forecasts should include an estimate of error

D)

Forecasts are more accurate in the near term


Forecasts are more accurate for product families or groups. The reason is that aggregate numbers tend to be more accurate than detailed numbers. So although the sales forecast error may be very small in a company, predicting the shipments of an end item will have more error associated with it.


Question Number: 93


When a company has historical data available for use in forecasting future demand, the technique for utilizing this data is called:

A)

qualitative forecasting techniques.

B)

extrinsic forecasting techniques.

C)

intrinsic forecasting techniques.

D)

causal forecasting techniques.


Intrinsic forecasting techniques use internal historical data to forecast future demand. It is used based on an assumption that historical patterns can predict future patterns.


Question Number: 94


The following formula represents which forecasting technique?

New forecast = (alpha)(latest demand) + (1-alpha)(previous forecast)

A)

Weighted moving average

B)

Double exponential smoothing

C)

Exponential smoothing

D)

Focus forecasting


Exponential smoothing uses a smoothing constant called alpha. It smoothes the variation between latest actual demand and the forecasted demand.


Question Number: 95


The annual demand for a product is 1200 but during July, the product sells 150 units. What is the seasonal index for the product in July?

A)

1.0

B)

1.5

C)

1.75

D)

2.00


The seasonal index is calculated by dividing the period average demand by the average demand for all periods.

For this problem:

The seasonal index equals 150 units/100 units or 1.5; where 100 units is the average demand for all periods (1200 units/12 months).


Question Number: 96


Which of the following best describes the term bias?

A)

Actual demand consistently varies from forecast; either above or below.

B)

The standard deviation is consistently positive.

C)

The mean absolute deviation equals the forecast error.

D)

The sum of the errors is less than the MAD.


Bias occurs when actual demand varies consistently higher or lower than the forecast. When bias occurs in the forecast, the forecast must be adjusted.


Question Number: 97


A tracking signal is used to:

A)

monitor the quality of the forecast.

B)

determine the variation in the production plan.

C)

measure whether the schedule is being met.

D)

measure the material plan.


Tracking signals are used to measure the quality of the forecast to determine whether to adjust the forecast. They usually measure the sum of the errors against a deviation measure such as MAD.


Question Number: 98


Based on the following information, what is the mean?

Period

Demand

1

1000

2

500

3

700

4

600

A)

500

B)

600

C)

700

D)

800


The mean is calculated by adding the values and dividing by the number of periods.

For this problem:

X= (1000+500+700+600)/4

X= 2800/4

X= 700


Question Number: 99


Demand on a work center is caused by the next work center. Product is not made unless signaled by the next work center. This is called:

A)

push system.

B)

pull system.

C)

demand system.

D)

MRPII system.


A pull system starts with demand from a customer and signals each preceding operation. Work is not done on a product unless a signal for demand is generated, thus "pulling" a product through the manufacturing process.




Which of the following best describes the Master Production Schedule?

A)

It is the actual build schedule for manufacturing.

B)

It is the final assembly schedule.

C)

It is driven by materials requirements planning.

D)

It is the planned build schedule for manufacturing.


The Master Production Schedule is the planned build schedule for manufacturing. A final assembly schedule is generally separate from the MPS and the actual build schedule may vary from what was planned.




A company wants to produce at a level rate. Based on the following information, what production rate will provide a projected inventory of 20 at the end of period five?

Period

1

2

3

4

5

Forecast Demand

20

10

15

15

10

Planned Production

Planned Inventory

10

A)

14

B)

15

C)

16

D)

17


The total forecasted demand is equal to 70 for the five periods. In addition to the forecasted demand, the company wants to raise the inventory from 10 to 20 by the end of period five, therefore the total requirement is for 80 units. To produce 80 units over five periods in a level manner, the company must produce 16 units per period in order to achieve its objective.




Which of the following are steps in developing a Master Production Schedule?

I.

Develop a preliminary MPS

II.

Check the schedule against the capacity available

III.

Check MPS against the production plan to ensure they are equal

A)

I and II

B)

I and III

C)

II and III

D)

I, II, and III


The three steps in developing a Master Production Schedule are:

1. Develop a preliminary MPS.

2. Check the preliminary MPS against available capacity.

3. Resolve differences between the preliminary MPS and capacity available.




Over the past three months, the demand for a product has been 240, 260, and 280. Calculate the three month moving average forecast for month four.

A)

240

B)

260

C)

280

D)

300


The three month moving average is calculated by adding the demand for the three months (240+260+280 = 780) and dividing by the number of data (3).

Therefore:

780/3 = 260.

This would be used as the forecast for the fourth month.




The material requirements system receives direct input from:

A)

production planning.

B)

capacity requirements planning.

C)

master production scheduling.

D)

purchasing.


The master production schedule, once established, is submitted to the MRP system for use in calculating demand for the components.




Based on the following data, what should the monthly production be to achieve level production?

Beginning inventory = 300 units

Ending inventory = 400 units

Sales forecast

Month

1

2

3

4

5

Quantity

300

400

200

300

200

A)

200

B)

250

C)

300

D)

350


The company is beginning with 300 units and wants to increase the inventory level by 100 units. In addition, the sales forecast calls for 1400 units to be sold over the 5 periods. Therefore, 1400 + 100 units need to be produced for a total of 1500 units over 5 periods, or 300 units per period.




Based on the following data, what should the monthly production be to level production?

Beginning inventory = 500 units

Ending inventory = 200 units

Sales forecast

Month

1

2

3

4

5

Quantity

400

300

400

400

300

A)

250

B)

300

C)

350

D)

400


The company has a beginning inventory of 500 units and will be decreasing the inventory by 300 units over the 5 periods. During the 5 periods, they will be selling 1800 units. Therefore, the company will need to produce 1800-300 or 1500 units over 5 periods which equals 300 per period.




Which of the following best describes a master production schedule?

A)

Product families, monthly

B)

End items, monthly

C)

End items, weekly

D)

Product families, weekly


The master production schedule plans end items on a weekly basis. This detailed production schedule ties directly to the production plan which is a plan for product families, monthly.




The forecast for a part is 200 units per week. The actual shipments for the last 5 weeks have been 250, 260, 210, 240, and 220. If the MAD is 20, what would the tracking signal equal?

A)

3

B)

6

C)

9

D)

12


Tracking signals measure the bias in a forecast. The above demand would reflect a negative bias in the forecast, as the forecast is consistently less than the actual demand.

To calculate a tracking signal, divide the sum of the forecast errors by the MAD.

Therefore:

50+60+10+40+20 = 180

180/20 = 9




Based on the following data, what would the projected forecast for month 5 be, using a 3 month moving average?

Month

1

2

3

4

Forecast

200

200

200

200

Actual Demand

190

210

190

170

A)

170

B)

180

C)

190

D)

200


The three month moving average is found by taking the actual demand for the last three months divided by three.

Therefore, the calculation would be:

(210+190+170)/3 = 570

570/3 = 190




What is the Mean Absolute Deviation for the following data?

Period

1

2

3

4

5

Forecast

100

100

150

150

150

Demand

90

105

140

160

170

A)

3

B)

9

C)

11

D)

15


The mean absolute deviation is calculated by adding the absolute value of the difference between the actual demand and the forecast, divided by the number of periods.

For this example, the absolute deviation is calculated by adding 10+5+10+10+20=55.

Divide 55 by the number of periods (5) to equal 11.




In order for a forecast to signal negative bias, the tracking signal would be:

A)

less than zero but greater than -1.

B)

more than zero but less than +1.

C)

equal to one.

D)

equal to zero.


The tracking signal measures the algebraic deviations of the actual demand to the forecast. It then divides those deviations by the MAD. If the deviations divided by the MAD are greater than zero, then the forecast exhibits positive bias; lass than zero, the forecast exhibits negative bias. Most companies will only adjust the forecast when the tracking signal reaches an arbitrary target, such as +/- 0.5.



An anticipated build schedule can be best described as:

A)

production plan.

B)

capacity plan.

C)

materials requirements plan.

D)

master production schedule.


As defined by the APICS dictionary, the master production schedule is "the anticipated build schedule for those items assigned to the master scheduler."



In which of the following manufacturing environments are forward scheduling and finite loading best suited for providing customer promise dates?

A)

Make-to-stock

B)

Make-to-order

C)

Assemble-to-order

D)

Configure-to-order


Forward scheduling assumes that materials are not ordered and operations are not scheduled until the customer order is received, regardless of the due date. In a make-to-order environment, work does not begin until the order is received from the customer. The order is then scheduled forward from the order date and considers the load on the finite capacity of each work center through which the order must move.




Planning bills can be best described as:

A)

grouping like items together for planning.

B)

products which the factory plans to build.

C)

indented bill of materials.

D)

phantom bill of materials.


A planning bill is an artificial grouping of components for planning purposes. They are used to simplify planning, forecasting, master production scheduling, and material requirements planning. They do not represent products which are buildable.




The portion of a company's inventory and planned production which is not already committed is:

A)

inventory allocation.

B)

inventory commitment.

C)

available to promise.

D)

multi-plant planning.


Available-to-promise is the portion of inventory and planned production not already committed to orders. It allows accurate delivery promises to be made to the customer.




The primary reason for a time fence is to:

A)

determine how to use the forecast.

B)

manage schedule changes most effectively.

C)

provide a stable schedule for the suppliers.

D)

maintain a steady shipment schedule.


Time fences are mainly used to manage the changes that invariably occur in the master schedule. The frozen zone usually can be changed only with senior management approval due to the high cost of changes. The liquid zone can routinely have changes made because resources have not been committed. The slushy zone usually requires negotiated trade-offs between marketing and manufacturing. If capacity is available, then changes can usually be made.




A bill of materials contains:

I.

Components used to make a product

II.

Labor needed to build the product

III.

Assemblies at various stages of production

IV.

Safety stock by item

A)

I and II

B)

I and III

C)

II and III

D)

III and IV


A bill of materials contains all of the components used in the manufacture of end items. In addition, the subassemblies at various stages of manufacture are described. Labor is defined in the routing, generally in standard hours, and safety stock is not generally maintained on the bill of materials.




The term value can be best defined as:

A)

total revenue of products and services.

B)

total inventory available for shipment.

C)

amount buyers are willing to pay for a product or service.

D)

gross margin on a product or service.


Value is defined as the amount buyers are willing to pay for a product or service. Total revenue would be the measure of the value.

( Operations Management, Concepts in Manufacturing and Services, Chapter 1).



The term, Value Chain, refers to the:

A)

total value generated by a company's activities.

B)

total revenue for all the products and services.

C)

supplier network for providing goods and services.

D)

margin associated with the activities.


The Value Chain refers to the total value generated by a company. It is comprised of value activities and margin. Value activities can be broken into two types; primary and support. Primary activities are those concerned with the physical creation of the product or service which a company sells. Support activities are those which help brace the primary activities such as technology, human resources, accounting, etc.



The primary advantage of the concurrent engineering process is that:

A)

inventory needs are reduced.

B)

engineers work with other departments on projects improving communication.

C)

project costs for the development are accurately accounted for.

D)

product development time is reduced.


Concurrent Engineering is the process of forming product teams for the purpose of developing a new product(s). Generally the teams are cross-functional and include representatives from all areas in the company. The teams will often include suppliers as well.

Because the product team is focused on delivery of a new product and is constantly interacting with each other, products can be delivered faster, with higher quality at a lower cost. Additionally, the manufacturability of the product will be improved, lowering the ongoing cost of quality.



Which of the following would NOT be considered a source of demand?

A)

Customer orders

B)

Interplant orders between facilities

C)

Forecasts

D)

Goods due in from a supplier


Goods from suppliers would be included as a supply. Demand must incorporate all sources of the demand whether they are forecasts, customer orders, dependent demand, spare parts orders, etc. Only by aggregating all the demands for a part can planning properly occur.



A responsive company will incorporate the customers' desires for product improvements into their goods and services. The ability to do this effectively is described as listening to the "voice of the customer." The phrase "voice of the customer" can be best described as:

A)

conducting focus groups with potential customers to see what features are best.

B)

obtaining actual customer descriptions in word for the features and functions they desire.

C)

getting feedback to a survey on the company website.

D)

sending out surveys to all important customers regarding the goods and services.


The Voice of the Customer is a process for helping customers define their desires for the features and functions of a supplier's goods and services. It involves defining their desires and translating those desires into actual product and service designs. This is done through a series of meetings and cross communication.



Which of the following is the primary benefit of a customer partnership?

A)

Higher prices can be charged because the customer is not buying from other sources

B)

Reduced paperwork between the two parties

C)

Lower costs in the supply chain for both companies because of the mutual sharing of information

D)

Higher margins for the supplier


A customer partnership (similar to a supplier partnership) will have an overall effect of lowering costs in the supply chain for both partners. These savings can be shared by the companies. The costs are lowered because the partners share information collaboratively. Information on new designs, forecasts, customer orders, consigned inventory, shared contracts, etc. all contribute to the lower costs.



The attributes of the product or service that cause a customer to buy from a company are called the:

A)

order winners.

B)

order qualifiers.

C)

buyers criteria.

D)

order modifiers.

The correct

cpim

Documents

d supply

question number

b obsolete inventory

correct answer

average inventory

order b engineer

materials management

b design