Ace APICS CPIM-Part-2 Certification with Actual Questions May 25, 2024 Updated

2024 The Most Effective CPIM-Part-2 with 153 Questions Answers

NEW QUESTION # 60
The cumulative available-to-promise (ATP) method is based on an assumption that available inventory in a period can becommitted to demand in that period and:

• A. future periods with a planned receipt.
• B. any future period in the planning horizon.
• C. any period before the demand time fence (DTF).
• D. future periods beyond the DTF.

Answer: B

NEW QUESTION # 61
An analysis was done on a group of parts that showed a missed delivery resulting in lost sales on other product lines manytimes greater than the value of the initial lost sale. As a result, the company launched an initiative to increase the fill rate onthese parts to 100%. Currently, they have raised the fill rate to 99%. As they continue the initiative, what effects are mostlikely expected?

• A. Operating costs will increase slower than service level,
• B. Operating costs and service level will both increase at the same rate.
• C. Operating costs will increase faster than service level.
• D. Neither operating costs nor service level will increase.

Answer: C

Explanation:
Explanation
Fill rate is the percentage of customer orders that are fulfilled without running out of inventory or placing backorders1. Fill rate is an important measure of customer service and inventory management efficiency. A high fill rate indicates that the company can meet customer demand in a timely and accurate manner, while a low fill rate suggests that the company is struggling to satisfy customer expectations.
Operating costs are the expenses associated with running a business, such as rent, utilities, wages, transportation, etc2. Operating costs are influenced by various factors, such as production volume, inventory level, technology, and quality. A high operating cost means that the company spends more money to produce and deliver its products or services, while a low operating cost means that the company spends less money to do so.
Service level is the measure of how well a company delivers its products or services to its customers, based on criteria such as availability, timeliness, quality, and satisfaction3. Service level is affected by various factors, such as demand variability, supply reliability, capacity utilization, and customer feedback. A high service level means that the company meets or exceeds customer expectations, while a low service level means that the company fails or falls short of customer expectations.
As the company continues its initiative to increase the fill rate on these parts to 100%, it is most likely that operating costs will increase faster than service level. This is because increasing the fill rate requires increasing the inventory level, which in turn increases the carrying costs, such as warehousing, insurance, taxes, and obsolescence4. Moreover, increasing the fill rate also requires reducing the variability and uncertainty in demand and supply, which may involve investing in more advanced technology, improving quality control, enhancing supplier relationships, or implementing demand management techniques5. These actions can also increase the operating costs of the company.
However, increasing the fill rate does not necessarily increase the service level at the same rate. This is because service level depends not only on fill rate, but also on other factors, such as delivery speed, order accuracy, product quality, and customer satisfaction6. Therefore, increasing the fill rate may not be enough to improve the service level significantly. In fact, there may be a point of diminishing returns, where increasing the fill rate beyond a certain level does not result in a proportional increase in service level. For example, increasing the fill rate from 95% to 99% may have a noticeable impact on service level, but increasing it from
99% to 100% may have a negligible impact on service level.

NEW QUESTION # 62
External sustainability reporting and verification is an opportunity for a company to communicate its:

• A. performance.
• B. profitability.
• C. confidence.
• D. growth.

Answer: A

Explanation:
Explanation
External sustainability reporting and verification is an opportunity for a company to communicate its performance in terms of environmental, social, and governance (ESG) aspects. ESG performance refers to how a company manages its impacts and risks on the natural environment, the society, and its own governance structure. By reporting and verifying its ESG performance, a company can demonstrate its commitment to sustainability, transparency, and accountability to its stakeholders, such as investors, customers, employees, regulators, and the public. External sustainability reporting and verification can also provide a company with various benefits, such as improved reputation, enhanced stakeholder trust, increased operational efficiency, reduced costs, and better decision making123.

NEW QUESTION # 63
A company can easily change its workforce, but inventory carrying costs are high. Which of the followingstrategies would bemost appropriate during times of highly fluctuating demand?

• A. Produce to backorders
• B. Produce to the sales forecast
• C. Produce to demand
• D. Produce at a constant level

Answer: A

Explanation:
Explanation
Producing to backorders means that the company only produces goods when there is a confirmed customer order. This strategy is most appropriate during times of highly fluctuating demand, as it allows the company to avoid holding excess inventory that may incur high carrying costs and become obsolete. Producing to backorders also enables the company to adjust its workforce according to the actual demand, which can be easily changed as the question states. This strategy can improve customer satisfaction, as the products are tailored to the specific needs and preferences of each customer. However, producing to backorders also has some drawbacks, such as longer lead times, higher production costs, and lower economies of scale.
The other strategies are less suitable for highly fluctuating demand. Producing at a constant level means that the company produces goods at a fixed rate regardless of the demand fluctuations. This strategy can result in either excess inventory or stockouts, depending on whether the demand is lower or higher than the production level. Producing to the sales forecast means that the company produces goods based on the projected demand for a certain period. This strategy can be effective if the forecast is accurate, but it can also lead to inventory imbalances if the forecast is inaccurate or if there are unexpected changes in demand. Producing to demand means that the company produces goods based on the current demand in the market. This strategy can be responsive and flexible, but it can also be challenging to implement, as it requires high visibility, coordination, and agility in the supply chain.
References : CPIM Part 2 Exam Content Manual, Domain 4: Plan and Manage Supply, Section B: Production Planning and Control, Subsection 1: Production Strategies and Techniques, Page 19.

NEW QUESTION # 64
A company with stable demand that uses exponential smoothing to forecast demand would typically use a:

• A. low beta value.
• B. high beta value.
• C. high alpha value.
• D. low alpha value.

Answer: D

Explanation:
Explanation
Exponential smoothing is a forecasting method that assigns weights to past observations, with more recent observations having higher weights. The alpha value is the smoothing constant that determines how much weight is given to the most recent observation. A low alpha value means that the forecast is based more on the historical average, while a high alpha value means that the forecast is more responsive to the latest changes in demand. A company with stable demand would typically use a low alpha value to smooth out random fluctuations and obtain a more accurate forecast. A beta value is another smoothing constant that is used for trend-adjusted exponential smoothing, which accounts for the presence of a linear trend in the data. A low beta value means that the trend component is based more on the historical average, while a high beta value means that the trend component is more responsive to the latest changes in demand. A company with stable demand would not need to use trend-adjusted exponential smoothing, since there is no significant trend in the data. References := CPIM Part 2 Exam Content Manual, Domain 3: Plan and Manage Demand, Section C:
Forecast Demand, Subsection 2: Select appropriate forecasting technique(s) (p. 16)

NEW QUESTION # 65
In a make-to-order (MTO) environment, inputs to sales and operations planning (S&0P) should include the:

• A. available-to-promise (ATP) data.
• B. finished goods inventory.
• C. work-in-process (WIP) inventory.
• D. projected backlog of customer orders.

Answer: D

Explanation:
Explanation
In a make-to-order (MTO) environment, the production process is triggered by customer orders, which means there is no finished goods inventory or work-in-process inventory to consider in the sales and operations planning (S&OP) process. The available-to-promise (ATP) data is not an input to the S&OP process, but rather an output that indicates the quantity and date of products that can be promised to customers based on the current supply plan. The projected backlog of customer orders, on the other hand, is an important input to the S&OP process, as it reflects the current and future demand for the products and services offered by the organization. The projected backlog can help the organization plan its capacity, resources, materials, and delivery schedules to meet customer expectations and optimize profitability. References: CPIM Part 2 Exam Content Manual, Domain 3: Plan and Manage Demand, Section 3.1: Demand Management Concepts and Tools, p. 27-28.

NEW QUESTION # 66
In a lean environment, one uses material requirements planning (MRP) processing primarily to:

• A. determine where to use supermarkets.
• B. create plans to share with suppliers.
• C. calculate average daily demand.
• D. determine the kanban circuit locations.

Answer: B

Explanation:
Explanation
In a lean environment, one uses material requirements planning (MRP) processing primarily to create plans to share with suppliers. MRP is a software-based system that calculates the quantity and timing of materials needed for production, based on the master production schedule, the bill of materials, and the inventory status.
MRP helps to coordinate the flow of materials from suppliers to the production process, reducing waste and inventory costs. MRP can also generate purchase orders, work orders, and other documents to communicate the plans with suppliers and internal departments. MRP does not calculate average daily demand, which is a measure of the average amount of a product or service that is sold or consumed per day. MRP does not determine the kanban circuit locations, which are the physical places where kanban cards or containers are exchanged between processes in a pull system. MRP does not determine where to use supermarkets, which are locations where a small amount of inventory is kept to buffer against fluctuations in demand or supply.
References: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1:
Supply Planning Concepts, p. 24; Lean MRP; Manufacturing resource planning.

NEW QUESTION # 67
To successfully empower individuals to drive change, an organization should:

• A. align performance appraisals with the business's vision.
• B. ensure everyone can clearly articulate the business's vision and strategy.
• C. establish and track broad change metrics on a quarterly basis.
• D. conduct thorough training programs for all levels of employees.

Answer: B

Explanation:
Explanation
To successfully empower individuals to drive change, an organization should ensure everyone can clearly articulate the business's vision and strategy. According to various sources, such as Forbes, Mercuri Urval, and LSA Global, one of the key factors for effective change leadership is to communicate a powerful and compelling change vision that inspires and motivates employees to support the change. A change vision is a statement that describes the desired future state of the organization after the change is implemented, and how it aligns with the overall business vision and strategy1. A clear and consistent change vision can help employees understand the purpose and benefits of the change, as well as their roles and responsibilities in the change process2. A change vision can also help create a sense of urgency, direction, and alignment among employees, as well as foster a culture of empowerment and participation3.
The other options are not sufficient or necessary to successfully empower individuals to drive change.
Conducting thorough training programs for all levels of employees is important, but not enough to empower them to drive change. Training can help employees acquire the skills and knowledge needed to perform their tasks in the new situation, but it does not necessarily influence their attitudes, beliefs, or behaviors toward the change1. Aligning performance appraisals with the business's vision is also helpful, but not essential to empower individuals to drive change. Performance appraisals can provide feedback, recognition, and incentives for employees who demonstrate the desired behaviors and outcomes related to the change, but they do not address the underlying motivations, emotions, or barriers that may affect employees' willingness or ability to change4. Establishing and tracking broad change metrics on a quarterly basis is also useful, but not critical to empower individuals to drive change. Change metrics can help measure the progress and impact of the change initiatives, but they do not necessarily engage or involve employees in the change process or give them a sense of ownership or autonomy over the change5.
References: CPIM Part 2 Exam Content Manual, Domain 8: Manage Quality, Continuous Improvement, and Technology, Section 8.2: Continuous Improvement Concepts and Tools, p. 61-62; 5 Ways To Empower And Engage Employees To Lead Change - Forbes; How to successfully drive change in your organisation - Mercuri Urval; Empower Employees to Effect Change - 4 Ways | LSA Global; Empowering Teams to Drive Change Sustainably; Change Management Metrics: How To Measure Your Change Management Project.

NEW QUESTION # 68
The most appropriate production output reporting method for repetitive manufacturing is:

• A. backflush.
• B. operation-by-operation.
• C. job tickets.
• D. count point.

Answer: A

Explanation:
Explanation
The most appropriate production output reporting method for repetitive manufacturing is backflush. Repetitive manufacturing is a production system where the same or similar products are produced in large quantities or in a continuous flow1. Backflush is a method of reporting output and consumption of materials at the end of the production process, rather than at each operation or stage2. Backflush can simplify and streamline the production output reporting process, as it eliminates the need for tracking and recording each individual transaction or movement of materials and components. Backflush can also reduce the paperwork, errors, and costs associated with production output reporting2.
The other options are not as appropriate as backflush for repetitive manufacturing. Operation-by-operation is a method of reporting output and consumption of materials at each operation or stage of the production process3. This method can provide more detailed and accurate information about the production performance and costs, but it can also be more complex and time-consuming, as itrequires tracking and recording each individual transaction or movement of materials and components. Count point is a method of reporting output and consumption of materials at selected points or milestones in the production process4. This method can provide a balance between detail and simplicity, but it can also introduce errors or discrepancies, as it requires estimating or extrapolating the output and consumption of materials between the count points. Job tickets are documents that record the time, materials, and costs associated with a specific job or order5. This method can provide more flexibility and customization, but it can also be more suitable for job shop or batch production systems, where different products are produced in small quantities or on demand.
References : Repetitive Manufacturing: Definition & Benefits; Backflush Costing: Definition & Example; Operation by Operation Reporting - ERP Software Blog; Count Point Reporting - ERP Software Blog; Job Ticket Definition.

NEW QUESTION # 69
Work Center 1 has an available capacity of 1,200 hours per month. Which of the following amounts represents thecumulative differencebetweenthe required capacity and the available capacity of Months 1 through 37

• A. 0
• B. 3,750
• C. 1
• D. 1,250

Answer: C

Explanation:
Explanation
To find the cumulative difference between the required capacity and the available capacity of Months 1 through 37, we need to sum up the differences for each month. The difference for each month is calculated by subtracting the available capacity from the required capacity. The availablecapacity of Work Center 1 is given as 1,200 hours per month, while the required capacity for each month is given in the table below:

The difference for each month is then:

The cumulative difference is the sum of all the differences:
-200 -100 +0 +100 +200 +300 +400 + ... +1,700 = 150

NEW QUESTION # 70
Potential reasons to make instead of buy a product may include:

• A. maintain quality, reduce cost, and keep confidential processes within the firm.
• B. eliminate risks associated with single sourcing, create intermittent flow, and reduce cost.
• C. less capital investment, large volume changes, and reduce cost.
• D. maintain core competencies, increase capital expense, and reduce cost.

Answer: A

Explanation:
Explanation
According to the CPIM Exam Content Manual, a make-or-buy decision is a strategic decision that involves choosing between manufacturing a product or service internally or purchasing it from an external supplier1. A make-or-buy decision is based on a cost-benefit analysis that considers various factors, such as quality, cost, capacity, lead time, technology, and competitive advantage2.
Some of the potential reasons to make instead of buy a product may include:
Maintain quality: Making a product internally may allow the firm to control and ensure the quality standards of the product, which may affect customer satisfaction and loyalty. Buyinga product from an external supplier may involve quality risks or uncertainties, especially if the supplier is located in a different country or has different quality systems3.
Reduce cost: Making a product internally may reduce the total cost of ownership of the product, which includes not only the purchase price, but also the costs of transportation, inventory, inspection, warranty, and maintenance. Buying a product from an external supplier may incur higher total costs due to these factors.
Keep confidential processes within the firm: Making a product internally may protect the firm's proprietary or confidential processes that give it a competitive edge in the market. Buying a product from an external supplier may expose the firm's processes to potential imitation or leakage.
Therefore, the correct answer is C. maintain quality, reduce cost, and keep confidential processes within the firm.
References:
CPIM Exam Content Manual
Make-or-Buy Decision Explained: How to Make Outsourcing Decisions
Make or Buy Decision - What Is It, Examples, Factors, Advantages
Make-or-Buy Decision - Overview, How It Works, Triggers
Make or Buy Decision - Definition & Examples | Marketing Tutor

NEW QUESTION # 71
In which of the following situations would the use of a failure mode effect analysis (FMEA) be most appropriate?

• A. After a one-time quality incident investigation
• B. During evaluation of a new market opportunity
• C. Prior to a new product introduction (NPI)
• D. During the define phase of asix-sigmaproject

Answer: C

Explanation:
Explanation
Failure Mode and Effects Analysis (FMEA) is a systematic, proactive method for identifying and evaluating the potential causes and impacts of failures in a process, product, or service1. It aims to anticipate and prevent failures by assessing the relative effect and risk of different failure modes1.
The use of FMEA would be most appropriate prior to a new product introduction (NPI). During the NPI phase, FMEA can be used to identify potential failure modes in the design of the product and assess their potential effects on the product's performance and reliability. This allows for proactive measures to be taken to mitigate or eliminate these risks before the product is launched. FMEA is particularly useful in the early stages of design, as it helps in making informed decisions that can improve the quality and safety of the product1.
In contrast, using FMEA after a one-time quality incident investigation (A) or during evaluation of a new market opportunity may not be as effective, as these situations do not involve the design or development of a product or process. While FMEA can be used during the define phase of a Six Sigma project (B), its most impactful application is during the design phase of a new product, where it can significantly influence the final outcome.

NEW QUESTION # 72
The demonstrated capacity of equipment in a process flow is $1,200 per day. Due to a malfunction in a feeder line, utilization of the equipment is reduced by 25% on Day 6. If the efficiency remains unchanged at 110%, what would the output be on Day 6?

• A. $300
• B. $330
• C. $900
• D. $990

Answer: D

Explanation:
Explanation
The output of the equipment on Day 6 can be calculated by multiplying the demonstrated capacity, the utilization, and the efficiency. The demonstrated capacity is given as $1,200 per day. The utilization is the ratio of the actual time that the equipment is used to the available time that it could be used. Since the utilization is reduced by 25% on Day 6, it means that the equipment is used for 75% of the available time.
Therefore, the utilization is 0.75. The efficiency is the ratio of the actual output to the standard output. It is given as 110%, which means that the equipment produces 10% more than the standard output. Therefore, the efficiency is 1.1. The output on Day 6 can be found by multiplying these three factors:
Output = Demonstrated capacity x Utilization x Efficiency Output = $1,200 x 0.75 x 1.1 Output = $990 Therefore, the output on Day 6 is $990. References: CPIM Part 2 Exam Content Manual, Version 7.0, Domain
6: Plan, Manage, and Execute Detailed Schedules, Section A: Detailed Capacity Planning and Scheduling, Subsection 2: Capacity Management Concepts and Calculations, p. 37-38.

NEW QUESTION # 73
Which of the following criteria is used to determine safety stock in a distribution center (DC)?

• A. Seasonal index value
• B. Economic order quantity (EOQ) N
• C. Alpha factor level
• D. Probability of stocking out

Answer: D

Explanation:
Explanation
Safety stock is a type of inventory that is held in excess of the expected demand to protect against uncertainties such as demand variability, lead time variability, or supply disruptions. Safety stock can help to reduce the risk of stockouts, which are situations where the inventory level falls below thedemand level and the customer orders cannot be fulfilled. Safety stock can be determined by using different methods, such as statistical models, service level policies, or empirical rules. One of the common criteria that is used to determine safety stock in a distribution center (DC) is the probability of stocking out, which is the likelihood that the inventory level will be insufficient to meet the demand during a replenishment cycle. The probability of stocking out can be calculated by using the normal distribution, assuming that the demand and lead time are normally distributed. The probability of stocking out can also be expressed as the complementary value of the service level, which is the percentage of customer orders that can be satisfied from the available inventory. A higher probability of stocking out implies a lower service level and a lower safety stock. A lower probability of stocking out implies a higher service level and a higher safety stock.
References: CPIM Exam Content Manual Version 7.0, Domain 7: Plan and Manage Distribution, Section 7.2:
Implement Distribution Plans, Subsection 7.2.2: Describe how to implement inventory management techniques in distribution (page 68).

NEW QUESTION # 74
A company has prioritized customers A, B, and C, filling orders in that sequence. What are the impacts to customer servicelevels for customers B and C?

• A. Customer C has higher service level
• B. 100% service levels for B and C
• C. Customer B and C have same service level
• D. Customer B has higher service level

Answer: D

Explanation:
Explanation
A company that has prioritized customers A, B, and C, filling orders in that sequence, will have an impact on the customer service levels for customers B and C. Customer service level is the percentage of orders that are fulfilled on time and in full. The higher the customer service level, the more satisfied the customer is with the company's performance. When a company prioritizes customers based on their importance, value, or profitability, it means that it allocates its resources and capacity to serve the most preferred customers first, and then the less preferred customers later. This can result in different customer service levels for different customer segments. In this case, customer A is the most preferred customer, followed by customer B and then customer C. Therefore, customer A will receive the highest customer service level, as the company will fill its orders first and ensure that they are delivered on time and in full. Customer B will receive the second highest customer service level, as the company will fill its orders after customer A's orders are fulfilled. Customer B may experience some delays or shortages if the company runs out of resources or capacity after serving customer A. Customer C will receive the lowest customer service level, as the company will fill its orders last, after customer A's and B's orders are completed. Customer C may face longer delays or higher shortages if the company has exhausted its resources or capacityafter serving customer A and B. Therefore, the impact of prioritizing customers A, B, and C is that customer B has a higher service level than customer C. References
:= How to Prioritize Customer Requests - Gladly, Support Ticket Prioritization - 6 Best Practices to follow,
[Customer Service Level: Definition & Calculation]

NEW QUESTION # 75
Return on investment (ROI) is decreased by which of the following activities?

• A. Reducing inventory levels
• B. Increasing prices
• C. Increasing cost of sales
• D. Increasing sales volume

Answer: C

Explanation:
Explanation
Return on investment (ROI) is a financial ratio that measures the profitability of an investment relative to its cost. ROI is calculated by dividing the net income (or profit) generated by the investment by the total cost of the investment. ROI is decreased by any activity that reduces the net income or increases the cost of the investment. Increasing cost of sales is an activity that decreases ROI because it reduces the net income generated by the sales revenue. Cost of sales (or cost of goods sold) is the direct cost of producing or purchasing the goods or services sold by an organization. Cost of sales includes materials, labor, and overhead costs. Increasing cost of sales means that the organization spends more money to produce or acquire the same amount of goods or services, which lowers its profit margin and ROI.
References: CPIM Exam Content Manual Version 7.0, Domain 8: Manage Quality, Continuous Improvement, and Technology, Section 8.1: Develop Quality and Continuous Improvement Plans, Subsection 8.1.2: Describe how to develop a business case for quality and continuous improvement initiatives (page 74).

NEW QUESTION # 76
The production plan relates to a firm's financial planning because it is used to:

• A. identify future cash needs.
• B. project payroll costs.
• C. determine variable costs.
• D. calculate standard product costs.

Answer: A

Explanation:
Explanation
The production plan is a statement of the resources needed to meet the aggregate demand plan over a medium-term horizon. The production plan is the output of the supply planning step in the sales and operations planning (S&OP) process. The production plan relates to a firm's financial planning because it is used to identify future cash needs. Cash needs are the amount of money that a firm requires to operate and grow its business. Cash needs can be influenced by various factors, such as sales revenue, cost of goods sold, operating expenses, capital expenditures, inventory levels, accounts receivable, accounts payable, and taxes. The production plan can help to estimate the cash inflows and outflows associated with these factors, and to determine the optimal balance between them. The production plan can also help to identify the potential sources and uses of cash, such as borrowing, investing, or paying dividends. By identifying future cash needs, the production plan can help to improve the firm's liquidity, profitability, and solvency.
References: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1:
Develop Supply Plans, Subsection 4.1.2: Describe how to develop a production plan (page 36).

NEW QUESTION # 77
When developing a quantitative model to support sales and operations planning (S&OP), which of the following statementsis most true?

• A. A minimal level of effort is required to develop a model.
• B. Aggregation will be necessary to develop an appropriate model.
• C. It is necessary to capture all of the detail in order to create a useful model.
• D. Clear objectives are not necessary to begin the modeling process.

Answer: B

Explanation:
Explanation
A quantitative model is a mathematical representation of a real-world situation that involves numbers, variables, equations, and logic. A quantitative model can be used to support sales and operations planning (S&OP), which is a process of aligning the demand and supply plans of an organization at an aggregate level.
To develop a quantitative model for S&OP, the following statements are most true:
It is not necessary to capture all of the detail in order to create a useful model. In fact, too much detail can make the model complex, unrealistic, and difficult to solve. A useful model should capture the essential features of the situation and simplify the irrelevant or insignificant aspects1.
Aggregation will be necessary to develop an appropriate model. Aggregation is the process of combining data or information into higher-level categories or groups. For example, products can be aggregated into product families, customers can be aggregated into market segments, and time periods can be aggregated into months or quarters. Aggregation can help reduce the size and complexity of the model, as well as improve its accuracy and reliability2.
Clear objectives are necessary to begin the modeling process. Objectives are the desired outcomes or goals that the model aims to achieve or optimize. For example, an objective of S&OP could be to maximize profit, minimize cost, or balance inventory. Clear objectives can help define the scope, structure, and criteria of the model3.
A significant level of effort is required to develop a model. Developing a model involves several steps, such as defining the problem, collecting and analyzing data, formulating and testing the model, implementing and validating the solution, and evaluating and improving the results. Each step requires careful planning, execution, and evaluation4.
References: CPIM Part 2 Exam Content Manual, Domain 3: Plan and Manage Demand, Section 3.1: Demand Management Concepts and Tools, p. 27-28; Quantitative Techniques Used in Sales & Operations Planning; Sales and Operations Planning (S&OP) 101| Smartsheet; Chapter 13 - Aggregate Planning - KSU; What is Sales and Operations Planning (S&OP) | Oracle; Aggregation and Disaggregation | SAP Help Portal.

NEW QUESTION # 78
An outlier has been identified in the demand data for an item. The most appropriate next step would be to:

• A. advance the forecast model in time, without smoothing.
• B. increase the length of the forecast time period.
• C. screen the outlier for manual review.
• D. set the forecast value to the outlier limit.

Answer: C

Explanation:
Explanation
An outlier is a data point that falls outside of the expected range of the data, i.e., it is an unusually large or small data point1. Outliers can have a significant adverse impact on the forecasts, as they can skew the data distribution and distort the statistical analysis2. Therefore, it is important to detect and remove outliers from the demand data before generating forecasts.
One of the techniques that can be used to detect outliers is to use the standard deviation of the data, or the equivalent z-score, to determine the outlier limit3. For example, one approach is to set the lower limit to three standard deviations below the mean, and the upper limit to three standard deviations above the mean. Any data point that falls outside this range is detected as an outlier.
However, detecting outliers is not enough. The most appropriate next step would be to screen the outlier for manual review. This means that the detected outlier should be examined by a humanexpert to determine whether it is a true outlier or not, and whether it should be corrected or not4. This is because not all outliers are erroneous or irrelevant. Some outliers may be valid observations that reflect real changes in demand, such as seasonal peaks, promotional effects, or market trends. In such cases, correcting or removing the outliers may lead to inaccurate or biased forecasts.
Therefore, screening the outlier for manual review can help verify the cause and validity of the outlier, and decide on the best course of action. Some of the possible actions are:
Correcting the outlier: replacing the outlier with a more typical value based on historical data or expert judgment. This can smooth out the data and reduce the noise.
Separating the demand streams: splitting the data into two or more series based on different factors that influence demand, such as product type, customer segment, or distribution channel. This can isolate the outliers and allow different forecasting methods to be applied to each series.
Adjusting the forecasting model: modifying the parameters or assumptions of the forecasting model to account for the outliers, such as using a different smoothing factor, trend component, or error term. This can improve the fit and accuracy of the model.
References: 1: Outlier Definition 1 2: How to Forecast Data Containing Outliers 2 3: How to Detect Outliers in Machine Learning - 4 Methods for Outlier Detection 1 4: How Outlier Detection and Correction Works 4 :
How to Understand What is an Outlier in Forecasting 3

NEW QUESTION # 79
Which of the following types of operational strategies typically would result in the lowest inventory cost?

• A. Chase
• B. Mixed-model
• C. Level
• D. Hybrid

Answer: A

Explanation:
Explanation
A chase operational strategy is one that adjusts production to match the demand pattern. This means that the inventory level is kept low, as the output is synchronized with the demand. This reduces the inventory cost, as there is less need for holding, ordering, and carrying inventory. A chase strategy also minimizes the risk of obsolescence, spoilage, or excess inventory.
A level operational strategy is one that maintains a constant output rate, production rate, or workforce level.
This means that the inventory level fluctuates, as the output may not match the demand. This increases the inventory cost, as there is more need for holding, ordering, and carrying inventory. A level strategy also increases the risk of stockouts, overstocking, or waste.
A mixed-model operational strategy is one that produces several products with the same resources. This means that the inventory level varies, as the output depends on the product mix and the demand. This may increase or decrease the inventory cost, depending on the product characteristics, demand variability, and resource utilization. A mixed-model strategy also requires more flexibility and coordination in production planning and scheduling.
A hybrid operational strategy is one that combines elements of chase and level strategies. This means that the inventory level is balanced, as the output is partly adjusted to the demand and partly kept constant. This may increase or decrease theinventory cost, depending on the degree of adjustment and constancy. A hybrid strategy also requires more trade-offs and compromises in production decision making.
References:
APICS Exam Handbook, page 12
CPIM Part 1 Study Guide, page 19
CPIM Part 2 Study Guide, page 17

NEW QUESTION # 80
Which of the following techniques would be most appropriate to use to develop a forecast?

• A. Exponentialsmoothing
• B. Time series decomposition
• C. Delphi method
• D. Moving average

Answer: A

Explanation:
Explanation
Exponential smoothing is a forecasting technique that uses a weighted average of past and present data to predict future values. It is suitable for time series data that have a stable or slowly changing trend and no significant seasonal variations. Exponential smoothing assigns more weight to the most recent data, giving it a higher influence on the forecast. This makes it more responsive to changes in demand patterns than other techniques, such as moving average or time series decomposition, which use fixed weights or historical data.
The Delphi method is a qualitative technique that involves a panel of experts who provide their opinions and feedback on a topic through multiple rounds of surveys. It is not based on historical data or mathematical formulas, but rather on human judgment and consensus. Therefore, it is not appropriate for developing a forecast. References: CPIM Part 2 Exam Content Manual, Version 7.0, Domain 3: Plan and Manage Demand, Section A: Demand Management, Subsection 2: Forecasting Techniques and Methods, p. 14-15.

NEW QUESTION # 81
If all other factors remain the same, when finished goods inventory investment is increased, service levels typically will:

• A. increase in direct (linear) proportion.
• B. increase at a decreasing rate.
• C. increase at an increasing rate.
• D. remain the same.

Answer: B

Explanation:
Explanation
Finished goods inventory is a type of inventory that consists of the final products that are ready for sale to the customers. Finished goods inventory investment is the value of the finished goods inventory held by the company. Service level is a measure of customer satisfaction that indicates the percentage of customer orders that can be fulfilled from the available inventory. Service level typically will increase when finished goods inventory investment is increased, because more inventory means more ability to meet the customer demand.
However, the relationship between service level and finished goods inventory investment is not linear, but rather asymptotic. This means that service level will increase at a decreasing rate as finished goods inventory investment increases. In other words, the marginal benefit of increasing finished goods inventory investment will diminish as the service level approaches 100%. This is because there is a limit to how much inventory can improve the service level, and beyond a certain point, the additional inventory will not have a significant impact on customer satisfaction.
References: CPIM Exam Content Manual Version 7.0, Domain 5: Plan and Manage Inventory, Section 5.1:
Develop Inventory Plans, Subsection 5.1.2: Describe how to develop an inventory policy (page 44).

NEW QUESTION # 82
In which of the following phases of the product life cycle is product price most effective in influencing demand?

• A. Decline
• B. Maturity
• C. Growth
• D. Introduction

Answer: D

Explanation:
Explanation
Product price is most effective in influencing demand in the introduction phase of the product life cycle. The product life cycle is a concept that describes the stages that a product goes through fromits development to its decline. The introduction phase is the first stage, when the product is launched into the market and consumers are made aware of its existence and benefits. In this phase, product price can have a significant impact on the demand for the product, depending on the following factors:
The degree of product innovation: If the product is highly innovative and offers a unique value proposition to customers, it may have a high price elasticity of demand, meaning that customers are willing to pay a high price for it regardless of the availability of substitutes or competitors1. This is often the case for products that create a new market or category, such as the iPhone or the Kindle2. On the other hand, if the product is not very innovative and offers a similar value proposition to existing products, it may have a low price elasticity of demand, meaning that customers are sensitive to price changes and will switch to cheaper alternatives or competitors if the price is too high1. This is often the case for products that enter an existing market or category, such as generic drugs or copycat products3.
The degree of market competition: If the product faces little or no competition in the market, it may have more pricing power and flexibility, meaning that it can charge a high price and still generate high demand4. This is often the case for products that have a strong brand image, a loyal customer base, or a patent protection5. On the other hand, if the product faces high competition in the market, it may have less pricing power and flexibility, meaning that it has to charge a low price or offer discounts and promotions to attract and retain customers4. This is often the case for products that have a weak brand image, a low customer loyalty, or a short product life cycle.
Therefore, product price can be an effective tool to influence demand in the introduction phase of the product life cycle, depending on how innovative and competitive the product is. A high price can signal quality, exclusivity, and differentiation, while a low price can signal affordability, accessibility, and penetration.
References: Price Elasticity of Demand - Definition & Formula - Corporate Finance Institute; Product Life Cycle Explained: Stage and Examples - Investopedia; Generic Drugs - Overview - Mayo Clinic; Pricing Strategies For The Product Life Cycle (Made Simple) - Tyonote; Brand Image - Definition & Examples - Marketing Tutor; [Customer Loyalty - Definition & Examples - Marketing Tutor].

NEW QUESTION # 83
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