CPIM Certification Exam! MCQ Quiz

Pareto analysis is used to rank the frequency of problems by applying the Pareto principle, also known as the 80/20 rule. This principle states that 80% of the effects come from 20% of the causes. In the context of problem-solving, Pareto analysis helps identify and prioritize the most significant issues that contribute to the majority of the problems. By focusing on these vital few causes, organizations can allocate their resources more effectively and address the root causes that have the most impact on overall performance.

Senior Management should be the first to receive education on six-sigma concepts because they are responsible for setting the overall strategic direction of the organization. By understanding and implementing six-sigma concepts, they can effectively lead the organization towards achieving quality improvement and operational excellence. Additionally, senior management plays a crucial role in allocating resources, making key decisions, and driving change within the organization, making it essential for them to have a deep understanding of six-sigma concepts to effectively support and guide the implementation process.

Transportation is typically the largest element of physical distribution costs because it involves the movement of goods from one location to another. This process includes various expenses such as fuel costs, vehicle maintenance, driver wages, and insurance. Additionally, transportation costs can be influenced by factors such as distance, mode of transportation (e.g., air, sea, road), and the volume of goods being transported. Therefore, due to the significant expenses associated with transportation, it is usually the largest element of physical distribution costs.

Six sigma is unique in its focus on the reduction of defects by reducing variation. It is a disciplined, data-driven approach and methodology for eliminating defects in any process, from manufacturing to service industries. By using statistical analysis and problem-solving techniques, six sigma aims to identify and reduce the causes of defects, ultimately improving quality and reducing costs. Lean/JIT, ERP systems, and the theory of constraints may also focus on improving efficiency and reducing defects, but six sigma specifically emphasizes reducing variation as a means to achieve this goal.

Product families should be established based on the similarity of manufacturing process because this allows for efficient production planning. When products within a family have similar manufacturing processes, it becomes easier to allocate resources, schedule production, and optimize the use of machinery and labor. It also enables economies of scale, as the same equipment and techniques can be used for multiple products, reducing costs and improving productivity. By grouping products based on their manufacturing process, companies can streamline operations and enhance overall efficiency in production planning.

The objective of an MPS (Master Production Schedule) is to maintain the desired level of customer service. This means that the MPS aims to ensure that customer orders are fulfilled in a timely manner and that there is minimal delay or disruption in meeting customer demands. By effectively managing production schedules and resources, the MPS helps to optimize customer satisfaction and maintain a high level of service.

The correct answer is c. Owner’s equity = assets – liabilities. This equation represents the fundamental accounting equation, which states that the owner's equity is equal to the assets minus the liabilities. It shows the relationship between what the business owns (assets), what it owes (liabilities), and the owner's investment in the business (owner's equity).

Sole sourcing is the type of sourcing set up when a product is unique and available from only one source. This means that there is no alternative supplier or option available for the product, making it necessary to rely solely on the single source for procurement.

MRP schedules a planned order receipt when a net requirement exists. Net requirement is the difference between the gross requirement and the quantity already on hand or on order. It represents the actual quantity needed to fulfill the demand. When a net requirement exists, MRP calculates the timing and quantity of the planned order receipt to ensure that there is enough inventory available to meet the demand.

EI+Sales-open inv=quantity to produce

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Stockkeeping units (SKUs) are unique identifiers used to track and manage inventory. Each SKU represents a specific product or item. In this case, the statement that best describes SKUs is option d. Two white shirts in the same inventory but of different sizes or styles would be different SKUs. This is because SKUs are used to differentiate between different variations of a product, such as size or style. Therefore, even though the shirts are the same color, they would have different SKUs because they have different sizes or styles.

The correct answer is c. Quality. This category of a supplier agreement covers specifications, allowable defects, and grade. It focuses on the standards and requirements that the supplier must meet in terms of the quality of their products or services. This includes details such as the specific features, measurements, and performance expectations of the products, as well as the acceptable level of defects or deviations from the specified standards.

In a lean/JIT environment, the supplier is viewed as an upstream work center. This means that the supplier is considered an integral part of the production process and is responsible for delivering materials or components just in time for production. The supplier is seen as a partner and collaborator, rather than just a provider of goods. This relationship is important in order to ensure a smooth and efficient flow of materials and to minimize inventory and waste.

Manufacturing has a primary responsibility for ensuring that products meet the required specifications and standards, which is known as conformance. This involves producing goods that consistently meet the desired quality and performance expectations. While product performance and aesthetics are important dimensions of quality, they are not solely the responsibility of manufacturing. Aftermarket service, on the other hand, refers to the support and assistance provided to customers after the sale, which is not directly related to manufacturing. Therefore, conformance is the correct answer as it pertains to the manufacturing process and its role in maintaining quality standards.

The level production strategy is a basic production planning strategy that aims to build inventory and avoid the costs of excess capacity. This strategy involves producing goods at a constant rate, regardless of fluctuations in demand. By maintaining a steady production level, companies can keep inventory levels stable and minimize the need for excess capacity, which can be costly. This strategy is particularly effective in industries with stable and predictable demand patterns.

Pegging relates to demand... where-used is all items

When planning the flow of work, it is essential to ensure that the necessary materials and tooling are available. This is important because without the required resources, the production process may be delayed or disrupted. By confirming the availability of materials and tooling in advance, the production activity control can effectively plan and schedule the work to ensure smooth operations.

Wait time is an element of manufacturing lead time because it refers to the time spent waiting for materials, equipment, or resources to be available for production. This can include waiting for raw materials to be delivered, waiting for machines to be set up, or waiting for other processes to be completed before production can begin. Wait time directly impacts the overall time it takes to manufacture a product, making it an important factor to consider in managing and improving manufacturing processes.

Regular shipment of cut flowers direct to a florist shop would most likely be shipped by truck because it is a time-sensitive and delicate item that requires careful handling and a shorter transportation time. Shipping by truck allows for faster delivery and reduces the risk of damage to the flowers. Additionally, trucks are equipped with temperature-controlled environments, which is essential for preserving the freshness and quality of cut flowers during transportation.

B... super costly... no way

The correct answer is b. Value starts with the customer. This means that the value of a product or service is determined by the customer's perception of its worth. It emphasizes the importance of understanding and meeting customer needs and preferences in order to create value. This approach puts the customer at the center of the value creation process and helps businesses focus on delivering what customers truly value.

Anticipation inventory refers to the stock that is accumulated in advance of expected seasonal demand. This type of inventory acts as a buffer to meet the increased demand during peak seasons or periods of high customer demand. By having anticipation inventory, businesses can ensure that they have enough stock on hand to meet customer needs without experiencing stockouts or delays in delivery. This helps to maintain customer satisfaction and prevent lost sales opportunities. Therefore, anticipation inventory is a suitable option for providing a buffer for seasonal demand.

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The master production schedule- look at what they require for the end item and scale it back for production

A bottleneck refers to a point in a process where the flow of work is constrained, causing a delay in the overall throughput. Option d states that a bottleneck will control the throughput of all products processed by it, which means that the bottleneck determines the maximum rate at which products can flow through the system. This is the most accurate statement because the presence of a bottleneck limits the overall capacity of the process and can impact the efficiency and productivity of the entire system.

Lot-size inventory refers to inventories of items that are purchased or manufactured in quantities greater than needed immediately. This type of inventory is typically used to take advantage of economies of scale in production or transportation, where ordering or producing in larger quantities can result in lower costs per unit. By purchasing or producing items in larger quantities, companies can reduce costs and improve efficiency in their supply chain.

The correct answer is b. The DMAIC methodology is a six-sigma process-improvement methodology. DMAIC stands for Define, Measure, Analyze, Improve, and Control, which are the five phases of the methodology used to improve processes and reduce defects in a systematic and data-driven manner. This methodology is widely used in industries to identify and eliminate variations in processes, leading to improved quality and efficiency.

A long-term customer-supplier relationship provides the supplier with an improved ability to plan. This is because having a stable and consistent customer allows the supplier to anticipate and forecast demand more accurately. With this knowledge, the supplier can plan their production, inventory, and resources more effectively, leading to better efficiency and cost savings. Additionally, a long-term relationship fosters better communication and understanding between the parties, enabling the supplier to align their plans and strategies with the customer's needs and requirements.

Point-of-use inventory refers to storing materials or supplies directly at the location where they are needed, such as near a production line or workstation. This approach offers the advantage of reduced material handling because the materials are easily accessible and do not need to be transported from a central storage location. This can save time and effort in moving materials around, leading to increased efficiency and productivity.

The seasonal index is an estimate of how much the demand during the season will be above or below the average demand. This statement accurately describes the concept of seasonal index, which is used to quantify the variation in demand during different seasons compared to the average demand. It helps in forecasting and planning for seasonal fluctuations in demand.

Independent demand items refer to items that are sold directly to customers and are not dependent on the demand of other items. Forecasting for these items is important in order to determine the quantity and timing of production or procurement. On the other hand, the statement about forecasts for sales next year not being as accurate as forecasts for a year from now is not necessarily true, as forecast accuracy can vary depending on various factors. Additionally, while building forecasts for families of products from individual product forecasts can be useful, it may not always be the most accurate approach. Lastly, the statement that forecasts are almost always accurate is not true, as forecasting involves making predictions based on available information and assumptions, which can sometimes lead to inaccuracies.

The term used for calculating (available time) × (utilization) × (efficiency) is rated capacity. Rated capacity refers to the maximum output that a system, machine, or process can achieve under ideal conditions. It takes into account the available time, utilization (the percentage of time the system is actually used), and efficiency (the percentage of the rated capacity that is achieved).

If the order quantity is increased, the annual cost of carrying inventory will also increase. This is because ordering a larger quantity will result in higher inventory levels, which in turn will require more storage space and incur additional costs such as insurance, handling, and maintenance. Additionally, carrying a larger inventory for a longer period of time can lead to higher holding costs, such as obsolescence and spoilage. Therefore, increasing the order quantity will directly impact the annual cost of carrying inventory.

A purchase requisition originates with the department or person who will be the ultimate user. This is a formal document that is used to request the purchase of goods or services. It outlines the details of what is being requested, including the quantity, description, and any specific requirements. The purchase requisition is then typically reviewed and approved by the appropriate individuals or departments before a purchase order is issued to the selected vendor.

The term that indicates the percentage of time the work center is active compared to the available time is "utilization". Utilization refers to how effectively the work center is being utilized and measures the amount of time it is being used for productive activities. It is a measure of efficiency and productivity, showing how well resources are being used to complete tasks within the available time frame.

The question asks for the throughput, which is calculated by subtracting the true variable costs from the sales revenue. In this case, the sales revenue is $250 million and the true variable costs are $100 million. By subtracting $100 million from $250 million, we get a throughput of $150 million. Therefore, the correct answer is b.

Line haul costs are associated with variable transportation cost because they directly depend on the distance traveled and the quantity of goods being transported. These costs include expenses related to fuel, maintenance, and driver wages, which can vary based on the specific transportation requirements. On the other hand, pickup and delivery, terminal handling, and billing costs are more fixed or independent of the distance or quantity being transported, making them less variable in nature.

The objective of maximum customer service and low-cost plant operation are in conflict because providing maximum customer service often requires additional resources and expenses, while low-cost plant operation focuses on minimizing costs and maximizing efficiency. These two objectives may require different strategies and allocation of resources, creating a conflict in achieving both simultaneously.

The correct answer is d. All of the above assumptions are made in developing the standard economic order quantity (EOQ) formula. The EOQ formula assumes that the demand for the item is relatively uniform, replenishment is in lots or batches that arrive all at once, and ordering and carrying costs are constant and known. These assumptions help to simplify the calculation and make it easier to determine the optimal order quantity that minimizes total costs.

Machine operators take responsibility for most of the routine machine maintenance. This means that the operators are trained and equipped to perform regular maintenance tasks on the machines they operate. This approach increases efficiency and reduces downtime as operators can quickly address any minor issues or perform routine maintenance without relying on skilled mechanics. It also promotes a sense of ownership and responsibility among the operators for the machines they operate.

Monitoring the forecast is important because it allows us to assess the accuracy of our predictions and identify any discrepancies between the actual sales and the forecast. By analyzing these differences, we can identify areas where our forecasting methods may need improvement. This helps us refine our forecasting techniques and make more accurate predictions in the future, leading to better planning and decision-making. Additionally, monitoring the forecast also enables us to utilize actual sales data, which is crucial for evaluating the effectiveness of our marketing strategies and meeting the needs of the marketing department.

The objective of material requirements planning is to keep priorities current. This means that the system aims to ensure that the production schedule and inventory levels are aligned with the current demands and priorities of the business. By keeping priorities current, the company can effectively manage its resources and meet customer demands in a timely manner.

THINK--MATERIAL req planning-not item or family req planning

Efficiency is the correct term used for the ratio of standard hours of work produced to hours actually worked. Efficiency measures how well resources, such as time and labor, are utilized to produce output. It indicates the productivity and effectiveness of a process or system by comparing the actual output to the expected or standard output.

Statement b is the best because it highlights the Pareto principle, which states that roughly 80% of the effects come from 20% of the causes. In the context of inventory management, this means that about 50% of the items usually account for only 5% of the value. This statement suggests that focusing on the most valuable items in inventory management is more important than managing all items in the same way.

A. Pareto analysis, B. Shows statistical control limits

The inventory turnover ratio is calculated by dividing the cost of goods sold (COGS) by the average inventory. In this case, the COGS is given as 10 million and the average inventory is given as 2.5 million. Dividing 10 million by 2.5 million gives a ratio of 4.0. This means that the company sells and replaces its inventory 4 times during the given period.

A cycle count program is designed to identify the causes of inventory errors. By regularly counting a subset of items in inventory, the program can help identify discrepancies between the physical count and the recorded count. This allows businesses to pinpoint the reasons behind inventory errors, such as theft, misplacement, or inaccurate record-keeping. By understanding the causes, businesses can implement corrective measures to improve inventory accuracy and minimize errors in the future.

Competitive pricing is typically the most important factor in projecting demand for a standard design commodity. This is because customers are often price-sensitive and tend to choose products that offer the best value for their money. While post-sales service, product features, and quality controls are also important considerations, competitive pricing plays a significant role in attracting customers and influencing their purchasing decisions.

The product layout (continuous process) is characterized by a continuous flow of production, where workstations are arranged based on the type of machinery. This layout is designed for mass production of a standardized product, which results in a smooth workflow. Additionally, due to the continuous flow, there is little buildup of work-in-process inventory as products move seamlessly from one workstation to another. This helps in minimizing inventory costs and improving efficiency.

The correct answer is b. Capital costs and storage costs. Carrying inventory involves capital costs, as money is tied up in inventory that could be used for other purposes. Additionally, storage costs are incurred to store and maintain the inventory, such as rent or utilities for warehouse space.

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Reduced material movement is an advantage of work cells because it allows for a more efficient and streamlined production process. By organizing the work area in a way that minimizes the need for materials to be moved around, there is less time wasted and fewer opportunities for errors or accidents. This can lead to increased productivity and cost savings for the company.

Input/output control is used to manage queues and lead times. It involves monitoring and controlling the flow of materials, information, and resources in a production or service system. It ensures that inputs are processed efficiently and outputs are delivered on time. By managing queues and lead times, input/output control helps to optimize the overall performance and productivity of the system.

Seasonal variation is a characteristic of demand that refers to the regular pattern of fluctuations in demand over a specific time period, such as a year. It is caused by factors like holidays, weather, or cultural events that influence consumer behavior. Understanding seasonal variation is crucial for businesses to effectively plan production, inventory management, and marketing strategies to meet the changing demand patterns throughout the year.

MPS=master production schedule
a. It facilitates forecasting-WRONG, it is MADE from the forecast
b. It works with families of products- WRONG, end item level
c. It is an agreed-upon plan between production and marketing/sales
d. It cannot be used for order promising- WRONG, IT CAN BE USED

KNOW THISSSSS

A. is just the available work center capacity, not required.

A product focused layout is typically characterized by a fixed flow of work. This means that the production process follows a predetermined sequence of steps, with each workstation performing a specific task in a specific order. This layout is efficient for mass production of standardized products, as it ensures a smooth and consistent workflow. Large queues at workstations, production to a work order, and general purpose workstations are not necessarily associated with a product focused layout.

A lean production 5S System is designed to create a visual workplace by organizing and arranging items in a way that is easily visible and accessible to all employees. This helps to improve efficiency, reduce waste, and enhance communication within the workplace. By visually representing the workflow and processes, it becomes easier for employees to identify any deviations from the standard work methods and quickly address them. Additionally, a visual workplace promotes a clean and organized environment, which can contribute to improved productivity and employee morale.

T= D(R+L) +SS

In a decentralized distribution system, the central supply organization is responsible for responding to demands from the distribution centers. This means that when the distribution centers require additional stock or have specific needs, the central supply organization is the entity that addresses these demands. They play a crucial role in ensuring that the distribution centers have the necessary resources and supplies to meet customer demands effectively. This helps to maintain a smooth flow of goods throughout the distribution system and ensures that each center is adequately supported.

The master production schedule (MPS) is an anticipated build schedule. This means that it is a plan that outlines the expected production quantities and timing for each finished product. It takes into account factors such as customer demand, available resources, and production capacity. The MPS serves as a guide for the production plan, which includes detailed information on how the products will be manufactured. It is not a statement of forecast demand or driven by material requirements planning, although these factors may be considered when creating the MPS.

The equipment handles a wide variety of products

KNOW THISS

What is MBO?

When the ordering costs for an item are doubled, it becomes more expensive to place an order for that item. As a result, businesses tend to increase the order quantity to reduce the frequency of orders and minimize the impact of the increased ordering costs. By ordering larger quantities, they can stock up on inventory and reduce the number of orders they need to place, thereby saving on ordering costs. Therefore, the most likely impact of doubling the ordering costs for an item is that the order quantity will increase.

Work in process inventory serves to decouple an operation from succeeding operations. This means that it helps to create a buffer between different stages of the production process, allowing each operation to work at its own pace without being dependent on the speed or efficiency of the preceding or succeeding operations. This decoupling helps to prevent bottlenecks and allows for smoother production flow.

Capacity requirements planning is used to determine the feasibility of a material requirements plan. This process involves analyzing the production capacity and resources available to meet the material requirements. By considering factors such as available labor, machinery, and time, capacity requirements planning helps to ensure that the material requirements can be met within the given constraints. It helps in identifying any potential bottlenecks or capacity issues that may arise during the production process, allowing for adjustments and optimization of resources to meet the required demand.

In a make-to-order environment, forward scheduling is the best approach as it starts from the current date and works forward to determine the best delivery date for the customer. This ensures that the customer promise dates are realistic and achievable. Finite loading is also preferred as it considers the capacity and resources available, ensuring that the production schedule is balanced and not overloaded. This combination of forward scheduling and finite loading allows for effective planning and meeting customer expectations.

Production activity control is concerned with very short-term detailed planning of the flow of orders through manufacturing. It involves activities such as dispatching, expediting, and monitoring the progress of work orders to ensure that they are completed on time and according to the schedule. This function is responsible for coordinating and controlling the actual production activities on the shop floor, making adjustments as necessary to ensure efficient and timely production.

The balance sheet for a firm shows the long- and short-term debt. This is because the balance sheet provides a snapshot of a company's financial position at a specific point in time, including its liabilities. Long-term debt refers to obligations that are due in more than one year, such as bonds or mortgages, while short-term debt refers to obligations that are due within one year, such as bank loans or accounts payable. By including these debt obligations on the balance sheet, stakeholders can assess the company's ability to meet its financial obligations and manage its debt levels.

Which of the following statements is most accurate about the MPS?
a. It is an agreed-upon plan between finance and manufacturing
b. If it is poorly done, we can expect past-due schedules and unreliable delivery
promises
c. It is a plan for families of products that manufacturing expects to make over some
period in the future--FOR END ITEMS
d. It provides input to the production plan-PRODUCTION PLAN PROVIDES INPUT TO MPS

Driver costs usually appear as variable transportation costs because they can vary depending on factors such as distance traveled, fuel consumption, and time spent on the road. These costs are directly related to the level of activity or volume of goods being transported. As the volume of transportation increases, the driver costs also increase proportionally. Therefore, driver costs are considered a variable expense in transportation operations.

Quality management and lean are closely related because both focus on providing customers with what they want at a low cost. Quality management ensures that products or services meet or exceed customer expectations, while lean principles aim to eliminate waste and increase efficiency in processes. By implementing quality management practices and lean principles, organizations can improve customer satisfaction, reduce costs, and enhance overall performance.

In the five focusing steps, the step "Elevate the constraint" represents the likely point where an organization would add more resources to the capacity-constrained resource. This step involves increasing the capacity of the constraint to meet the demand. By adding more resources, the organization can alleviate the constraint and improve overall productivity and efficiency.

Option b specifies the flow of material through the production process of manufacturing an orbital satellite.

The correct statement is that the lot size affects the product mix cycle. This means that the quantity of products produced in each lot affects the variety and combination of products available to customers. A larger lot size may allow for more variety in the product mix, while a smaller lot size may limit the available options. Therefore, the lot size plays a crucial role in determining the product mix cycle.

A decentralized distribution center offers the advantage of reducing coordination and communication expenses. This is because when distribution centers are decentralized, they are located closer to their respective markets or customers. This proximity allows for more efficient and direct coordination between the distribution center and the local demand, eliminating the need for excessive communication and coordination across long distances. As a result, the expenses associated with coordinating and communicating between different centers are reduced, leading to cost savings for the organization.

The correct answer is d. Promotion. Promotion plays a crucial role in influencing physical distribution planning and execution. It helps in creating awareness about the product, generating demand, and influencing the location of demand. By effectively promoting the product, companies can strategically plan their physical distribution to meet the volume of products required in specific locations and to address demand fluctuations.

Planned order receipts show when the order is needed. This means that planned order receipts indicate the specific time at which an order should be received in order to fulfill the demand or requirement. It is an important aspect of production planning and scheduling as it helps in determining the timing and quantity of orders to be placed with suppliers.

To accurately forecast demand, it is important to record the circumstances relating to demand data. This means taking into account factors such as seasonality, market trends, economic conditions, and any other variables that may impact demand. By recording these circumstances, businesses can make more informed decisions and create more accurate forecasts. Simply using past sales or making forecasts in dollars for total sales may not take into account these important contextual factors, leading to less accurate predictions. Therefore, recording the circumstances relating to demand data is the most accurate statement.

The control department concept was key to breaking down the silos in the Toyota Production System. This concept involves establishing a centralized control department that oversees and coordinates the activities of different departments within the organization. By centralizing control and communication, this concept helps to eliminate the silo mentality and encourages collaboration and information sharing across departments. This allows for a more efficient and integrated workflow, leading to improved overall organizational performance.

ORDER COSTS= production control costs, steup & teardown, lost capacity, purchasing costs

In a simplified drum-buffer-rope system, the throughput-based constraint refers to the market. This means that the system is designed and optimized based on the demands and requirements of the market. The market determines the rate at which products or services are sold, and therefore sets the maximum throughput that the system can achieve. The system must align its operations and processes to meet the market demand in order to maximize throughput and overall system performance.

Longer production runs increases investment in inventory because creating more materials!! LEARN THIS ONE!!