Free Practice Questions for APICS CPIM-8.0 Exam

A reduction in purchased lot sizes means ordering smaller quantities of materials more frequently. This reduces the average inventory level and the carrying cost of inventory. However, it also increases the frequency of orders and the ordering cost. The reorder point (ROP) is the level of inventory that triggers a new order, and it depends on the demand rate, the lead time, and the safety stock. The ROP is not affected by the lot size, unless the demand or the lead time changes. The setup time is the time required to prepare a machine or a process for production, and it is not related to the purchased lot size. References: EXAM CONTENT MANUAL PREVIEW, page 14, section 6.1.2. Manufacturing Planning and Control for Supply Chain Management: The CPIM Reference, Second Edition, page 433, section 12.4.

A supplier certification program is a formal process of evaluating and approving potential suppliers based on certain criteria, such as quality, delivery, cost, and service. The purpose of a supplier certification program is to ensure that the suppliers meet the standards and expectations of the company and to reduce the risks and costs associated with poor supplier performance. A supplier certification program should start with the suppliers of “A” classified items, which are the most critical and valuable items for the company. These items have the highest impact on the company’s profitability and customer satisfaction, and therefore require the highest level of supplier reliability and quality. By certifying the suppliers of “A” classified items, the company can improve its supply chain performance and reduce its dependence on inspection and corrective actions. This aligns with CPIM’s focus on plan and manage supply and plan and manage distribution. References: The concepts are covered in detail in Module 3: Supply Management (1 and Module 7: Distribution and Logistics Management (2. You can also find more information about supplier certification programs from these sources: 3, 4, and 5.

 Improvements in an input/output control (I/O control) system will most likely lead to a reduction in queue size and queue time. An I/O control system is a method of managing the flow of work orders in a production system by matching the input rate to the output rate. The input rate is the number of work orders that are released to the shop floor in a given period. The output rate is the number of work orders that are completed and shipped to the customers in a given period. An I/O control system aims to keep the input rate equal to the output rate, or slightly lower, to avoid overloading the system and creating excess inventory. By improving the I/O control system, the production system can achieve a smoother and more balanced flow of work orders, which reduces the queue size and queue time at each work center. Queue size is the number of work orders that are waiting to be processed at a work center. Queue time is the amount of time that a work order spends in the queue before being processed. A reduction in queue size and queue time can improve the production efficiency, quality, and flexibility, as well as the customer service and satisfaction. The other options are not correct, as they are not the most likely outcomes of improvements in an I/O control system, but rather possible effects of other factors or methods:

Flattened bills of material (BOMs) are the result of simplifying the product structure and reducing the number of components or levels in a BOM. Flattened BOMs can reduce the complexity and lead time of the production process, but they are not directly related to the I/O control system.

A change in operation sequencing is the result of altering the order or priority of the work orders or operations in a production system. A change in operation sequencing can affect the production flow and capacity, but it is not necessarily caused by the I/O control system.

Fewer engineering change notifications are the result of minimizing the changes in the product design or specification during the production process. Fewer engineering change notifications can reduce the disruption and cost of the production process, but they are not directly related to the I/O control system. References:

[CPIM Part 2 - Section A - Topic 2 - Capacity Planning]

Input/Output Control | SpringerLink

Input/Output Control - an overview | ScienceDirect Topics

Input/Output Control - InventoryOps.com

ABC classification is a method of inventory management that categorizes items based on their annual consumption value, which is the product of the annual demand and the unit cost. Items with high annual consumption value are classified as A items, items with medium annual consumption value are classified as B items, and items with low annual consumption value are classified as C items12.

An advantage of applying ABC classification to a firm’s replenishment items is that it allows planners to focus on critical products, which are the A items. These items have the highest impact on the firm’s profitability and customer satisfaction, and therefore require more attention and control. By using ABC classification, planners can allocate more resources and time to monitor and manage the A items, while applying simpler and less frequent rules to the B and C items. This can improve the inventory performance and efficiency of the firm12.

The other options are not correct because:

•A. it distinguishes independent demand from dependent demand. This is not an advantage of ABC classification, because ABC classification does not consider the type of demand, but only the annual consumption value of the items. Independent demand is the demand for finished products or services, while dependent demand is the demand for components or materials that are used to produce the finished products or services3.

•C. it provides better order quantities than the economic order quantity (EOQ). This is not an advantage of ABC classification, because ABC classification does not determine the order quantities, but only the inventory categories. EOQ is a formula that calculates the optimal order quantity that minimizes the total inventory costs, such as ordering costs and holding costs.

•D. it allows the firm to utilize time-phased order point (TPOP). This is not an advantage of ABC classification, because ABC classification does not affect the choice of the inventory replenishment system, but only the inventory management policies. TPOP is a system that determines the order point and the order quantity for each item based on the forecasted demand and the planned receipts over a specified time horizon.

References := 1 ABC Inventory Analysis & Management | NetSuite1 2 What Is ABC Inventory Classification? | Business.org2 3 Independent Demand vs Dependent Demand: What’s the Difference? Economic Order Quantity (EOQ) - Overview, Formula, and Example Time-Phased Order Point (TPOP) - an overview | ScienceDirect Topics