APICS CPIM-Part-2 Certified in Planning and Inventory Management (Part 2) Exam Practice Test

Answer : A

The cumulative available-to-promise (ATP) method is based on an assumption that available inventory in a period can be committed to demand in that period and any future period in the planning horizon.The planning horizon is the time span for which plans are made and executed1.The cumulative ATP is a running total of the ATP figure in the master schedule, which shows the planned production or purchase of a product over a series of time periods2.The cumulative ATP method allows the company to account for future shortages and build up inventory for large or seasonal orders3.

The other options are not correct.The demand time fence (DTF) is a point in the near future, usually equal to the cumulative lead time, beyond which changes to the master schedule are not allowed4. The cumulative ATP method does not depend on the DTF, as it considers all future periods in the planning horizon, regardless of whether they are inside or outside the DTF.Future periods with a planned receipt are periods where there is an expected supply of inventory from production or purchase orders2. The cumulative ATP method does not only commit inventory to these periods, but also to any other periods where there is demand.

Answer : B

A buffer in the theory of constraints (TOC) is a level of inventory that is placed before the governing constraint or the bottleneck to prevent it from being starved or idle. Buffers are used to immunize the system's performance from variability in demand or production. Buffers are part of the drum buffer rope method of scheduling and managing operations that have constraints. The purpose of a buffer in TOC is to prevent unplanned idleness of the resource, which is the most important factor that determines the throughput of the system. Throughput is the rate at which the system generates money through sales. If the resource is idle, then the system loses potential throughput and profit. Therefore, buffers are designed to ensure that there is always enough work available for the resource to process, regardless of any fluctuations or disruptions in the upstream or downstream processes.

Answer : A

The results from responding to uncertainty in the supply chain by exaggerating lead times and increasing lot sizes is called the bullwhip effect. The bullwhip effect is a phenomenon that occurs when small changes in demand at the downstream end of the supply chain (such as retailers or customers) cause larger and larger fluctuations in demand at the upstream end of the supply chain (such as wholesalers, distributors, or manufacturers). The bullwhip effect can create inefficiencies, waste, and costs in the supply chain, as well as reduce customer satisfaction and profitability.

One of the causes of the bullwhip effect is the response to uncertainty in the supply chain by exaggerating lead times and increasing lot sizes. Lead time is the time between placing an order and receiving it from a supplier. Lot size is the quantity of units ordered or produced at a time. When there is uncertainty or variability in demand or supply, such as due to seasonality, promotions, disruptions, or forecasting errors, some supply chain members may try to cope by exaggerating lead times and increasing lot sizes. For example, a retailer may increase its safety stock or reorder point to avoid stockouts or delays, or a manufacturer may produce more than needed to take advantage of economies of scale or discounts. However, these actions can have unintended consequences, as they can distort the demand information and amplify the demand variability along the supply chain. This can result in excess inventory, low inventory turnover, high holding costs, poor service levels, lost sales, obsolete products, or capacity issues.

To prevent or reduce the bullwhip effect caused by responding to uncertainty in the supply chain by exaggerating lead times and increasing lot sizes, some possible solutions are:

Improving communication and collaboration among supply chain members to share accurate and timely demand information and forecasts.

Reducing lead times and lot sizes by using lean production techniques, just-in-time inventory systems, or quick response methods.

Implementing vendor-managed inventory (VMI) systems, where suppliers are responsible for managing and replenishing the inventory of their customers based on their actual consumption data.

Adopting advanced technologies, such as radio-frequency identification (RFID), artificial intelligence (AI), or blockchain, to enhance visibility, traceability, and coordination in the supply chain.

Answer : C

The horizon for forecasts that are input to the sales and operations planning (S&OP) process should be long enough that required resources can be properly planned. The S&OP process is a cross-functional process that aligns the demand and supply plans of an organization. The S&OP process consists of several steps, such as data gathering, demand planning, supply planning, pre-S&OP meeting, executive S&OP meeting, and S&OP implementation. The output of the S&OP process is the production plan, which is a statement of the resources needed to meet the aggregate demand plan over a medium-term horizon. The production plan can be stated in different units of measure depending on the type of manufacturing environment, such as hours, units, tons, or dollars. The horizon for forecasts that are input to the S&OP process should be long enough that required resources can be properly planned, meaning that the organization can anticipate and allocate the necessary capacity, materials, labor, equipment, and facilities to meet the expected demand. The horizon for forecasts should also match the lead time for acquiring or changing the resources, as well as the planning cycle for updating the production plan.

Answer : B

The break-even point is the level of sales or output where the total revenue equals the total cost, and the profit is zero. The break-even point can be calculated in units or in dollars. To calculate the break-even point in units, the following formula can be used:

Break-even point in units = Fixed cost / (Selling price per unit - Variable cost per unit)

In this case, the fixed cost is $120,000, the selling price per unit is $20, and the variable cost per unit is $5. Plugging these values into the formula, we get:

Break-even point in units = 120,000 / (20 - 5) = 120,000 / 15 = 8,000

Therefore, the break-even point in units for Product X is 8,000. This means that the company needs to sell 8,000 units of Product X to cover its fixed and variable costs and make no profit or loss.

Answer : C

The measurement that indicates there may be bias in the forecast model is the tracking signal. The tracking signal is a ratio of the cumulative forecast error to the mean absolute deviation (MAD). The cumulative forecast error is the sum of the differences between the forecasted and actual values over a period of time. The MAD is the average of the absolute values of the forecast errors. The tracking signal can help detect and measure the bias of a forecast model by comparing the magnitude and direction of the forecast errors. A positive tracking signal indicates that the forecast model is consistently over-forecasting, while a negative tracking signal indicates that the forecast model is consistently under-forecasting. A zero tracking signal indicates that there is no bias in the forecast model. A rule of thumb is that if the tracking signal exceeds a certain threshold, such as 4, then there is a significant bias in the forecast model that needs to be corrected.

The other measurements do not indicate bias in the forecast model, but rather other aspects of the forecast accuracy or variability. The MAD is a measure of the average error or deviation of the forecast model from the actual values. The MAD does not indicate bias, as it does not consider the direction or sign of the errors. A low MAD indicates a high accuracy of the forecast model, while a high MAD indicates a low accuracy of the forecast model.

The standard deviation is a measure of the dispersion or variation of the forecast errors around their mean. The standard deviation does not indicate bias, as it does not consider the direction or sign of the errors. A low standard deviation indicates a low variability or uncertainty of the forecast model, while a high standard deviation indicates a high variability or uncertainty of the forecast model.

The variance is a measure of the squared deviation or dispersion of the forecast errors around their mean. The variance does not indicate bias, as it does not consider the direction or sign of the errors. The variance is related to the standard deviation, as it is equal to the square of the standard deviation. A low variance indicates a low variability or uncertainty of the forecast model, while a high variance indicates a high variability or uncertainty of the forecast model.

Answer : A

Implosion in distribution requirements planning (DRP) is the process of calculating the gross requirements for a supplying location based on the net requirements of its customers or demand sources1.Implosion is the opposite of explosion, which is the process of calculating the net requirements for a demand source based on the gross requirements of its customers or demand sources2.Implosion and explosion are used to synchronize the supply and demand across different levels of the distribution network3.

An example of implosion in DRP is gathering information from several field locations and aggregating it at the manufacturing facility. This example shows how the manufacturing facility, which is the supplying location, can determine its gross requirements by adding up the net requirements of its field locations, which are its customers or demand sources. This way, the manufacturing facility can plan its production and inventory levels to meet the demand from the field locations.