QUESTION: 37

A plant uses a level production strategy due to the high costs of hiring and letting go of skilled employees. The constrained resource is due to be upgraded in the fourth month of the planning horizon, and that will reduce capacity for that month by 17%.

Which of the following actions would be appropriate in this situation to maintain current levels of customer service and gross margin?

Increase planned production for the next three periods.
Defer the upgrade to a period beyond the planning time fence.
Increase planned production from the fifth period on.
Defer the upgrade to the period in which the highest stock level is planned.

Answer(s): A

Explanation:

A level production strategy is a manufacturing strategy where a company produces a fixed number of products at a fixed rate. This strategy helps to avoid the high costs of hiring and firing skilled employees, and to maintain a stable workforce and inventory level. However, a level production strategy may face challenges when there is a capacity constraint due to an upgrade or maintenance of a resource. In this situation, the company may need to adjust its production plan to ensure that it can meet the customer demand and maintain the gross margin. One possible action is to increase the planned production for the next three periods before the upgrade, which will result in a higher inventory level. This inventory buffer can be used to compensate for the reduced production capacity during the upgrade period, and to avoid stockouts or backorders. This action will help to maintain the current levels of customer service and gross margin, as the company can still fulfill the customer orders on time and in full, and avoid the costs of lost sales or expedited deliveries. Option B is not correct, because deferring the upgrade to a period beyond the planning time fence may not be feasible or desirable, as the planning time fence is the period in which the production plan is considered firm and not subject to changes. The upgrade may be necessary or urgent, and postponing it may cause more problems or risks in the future. Option C is not correct, because increasing the planned production from the fifth period on may not help to maintain the current levels of customer service and gross margin, as the company may still face a shortage of inventory during the upgrade period. Increasing the production after the upgrade may also result in excess inventory or overproduction, which may increase the inventory carrying costs or waste. Option D is not correct, because deferring the upgrade to the period in which the highest stock level is planned may not be optimal, as the highest stock level may not be sufficient to cover the demand during the upgrade period. Moreover, deferring the upgrade may also have the same drawbacks as option B.

Reference:

1 Guide to Level Production Strategy - Welp Magazine 3 2 Planning Time Fence | SAP Help Portal 4

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QUESTION: 38

An example of an assignable cause of variation in process performance is:

power fluctuation during machine operation.
machine vibration during operation.
incorrect setup of a machine by the operator.
changes in temperature in the machine shop.

Answer(s): C

Explanation:

An assignable cause of variation is a source of variation that is intermittent, not predictable, and identifiable. It is also called a special cause of variation. An assignable cause of variation affects the process performance in an unexpected and non-random way, and it can be eliminated or controlled by finding and correcting the specific cause. An example of an assignable cause of variation in process performance is incorrect setup of a machine by the operator. This means that the operator did not follow the standard procedure or specification for setting up the machine, which may result in defective or nonconforming products or materials. This cause of variation can be identified and corrected by checking the setup instructions, training the operator, or implementing a setup verification system.

Reference:

1 Assignable Cause - isixsigma.com 4 2 Process Capability Analysis - an overview | ScienceDirect Topics 5 3 CPIM Exam Reference - Association for Supply Chain Management 1

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QUESTION: 39

The horizon for forecasts that are input to the sales and operations planning (S&OP) process should be long enough that:

cumulative forecast deviation approaches zero.
planned product launches can be incorporated.
required resources can be properly planned.
supply constraints can be resolved.

Answer(s): C

Explanation:

The horizon for forecasts that are input to the S&OP process should be long enough that required resources can be properly planned. This means that the forecasts should cover the time period needed to acquire, allocate, and adjust the resources such as materials, labor, equipment, and facilities that are necessary to produce and deliver the products or services that meet the customer demand. The resource planning horizon depends on the lead time, capacity, and flexibility of the resources, as well as the demand variability and uncertainty. A longer horizon allows for more accurate and proactive resource planning, which can improve the efficiency, effectiveness, and profitability of the S&OP process.

Reference:

1 Sales and Operations Planning (S&OP) 101| Smartsheet 3 2 CPIM Exam Reference - Association for Supply Chain Management 1

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QUESTION: 40

Given the information below, reducing which measure by 10% would contribute most to shortening the cash-to-cash cycle time?

Accounts receivable
Inventory value
Accounts payable
Cost of capital

Answer(s): B

Explanation:

Reducing the inventory value by 10% would contribute most to shortening the cash-to-cash cycle time. The cash-to-cash cycle time is calculated as the days of inventory outstanding plus days of sales outstanding minus days of payables outstanding. By reducing the inventory value, the company can decrease the days of inventory outstanding, leading to a shorter cash-to-cash cycle time. This aligns with CPIM's focus on efficient inventory management to optimize the supply chain.

Reference:

The concepts are covered in detail in Module 4: Inventory Management

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