QUESTION: 17

A disadvantage of a capacity-lagging strategy may be:

lack of capacity to fully meet demand.
risk of excess capacity if demand does not reach forecast.
a high cost of inventories.
planned capital investments occur earlier than needed.

Answer(s): A

Explanation:

A capacity-lagging strategy is a conservative approach to capacity planning that involves adding capacity only when the firm is operating at full capacity because of an increase in demand. This strategy can help minimize costs and reduce the risk of excess capacity, but it can also lead to a disadvantage of not being able to fully meet customer demand if it rises quickly. This can result in lost customers, revenue, and market share, as well as lower customer satisfaction and loyalty.

Reference:

* Lag Capacity Strategy, Lag Demand Strategy - UniversalTeacher.com
* Capacity Planning Strategies: Types, Examples, Pros And Cons - Toggl
* 3 types of capacity planning strategies (with examples) - Xola

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QUESTION: 18

Which of the following statements is an assumption on which the economic order quantity (EOQ) model is based?

Customer demand is known but seasonal.
Items are purchased and/or produced continuously and not in batches.
Order preparation costs and inventory-carrying costs are constant and known.
Holding costs, as a percentage of the unit cost, are variable.

Answer(s): C

Explanation:

The economic order quantity (EOQ) model is a formula that calculates the optimal order quantity that minimizes the total inventory costs, such as ordering costs and holding costs. The EOQ model is based on several assumptions, one of which is that the order preparation costs and inventory- carrying costs are constant and known. This means that the costs of placing and receiving an order, and the costs of storing and maintaining the inventory, do not change with the order quantity or the inventory level, and that they can be estimated accurately.
The other options are not correct because:
* A. Customer demand is known but seasonal. This is not an assumption of the EOQ model, but rather a violation of it. The EOQ model assumes that the customer demand is constant and known, and that the orders are placed at regular intervals. However, if the customer demand is seasonal, it means that it varies over time and may not be predictable. This can affect the accuracy and applicability of the EOQ model, as the optimal order quantity may change with the demand pattern.
* B. Items are purchased and/or produced continuously and not in batches. This is not an assumption of the EOQ model, but rather a contradiction of it. The EOQ model assumes that the items are purchased and/or produced in batches, and that the inventory level decreases gradually until it reaches zero, at which point a new order is placed and received. However, if the items are purchased and/or produced continuously, it means that there is no need to place orders or maintain inventory, and the EOQ model becomes irrelevant.
* D. Holding costs, as a percentage of the unit cost, are variable. This is not an assumption of the EOQ model, but rather a complication of it. The EOQ model assumes that the holding costs, as a percentage of the unit cost, are constant and known. This means that the cost of storing and maintaining one unit of inventory does not depend on the unit cost of the item, and that it can be estimated accurately. However, if the holding costs, as a percentage of the unit cost, are variable, it means that the cost of storing and maintaining one unit of inventory changes with the unit cost of the item, and that it may not be easy to estimate. This can affect the accuracy and applicability of the EOQ model, as the optimal order quantity may depend on the unit cost of the item.

Reference:

1 Economic Order Quantity Model in Inventory Management - Investopedia.
2 Economic Order Quantity: What Does It Mean and Who Is It Important For? - Investopedia.

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QUESTION: 19

Information regarding a major new customer is received from sales. The company's most appropriate initial response would be to adjust the:

production volume.
master production schedule (MPS).
sales and operations plan.
forecast.

Answer(s): C

Explanation:

The sales and operations plan (S&OP) is the most appropriate level to adjust when a major new customer is received from sales. The S&OP is a cross-functional process that aligns the demand and supply plans with the business strategy and financial goals. It also provides the basis for the master production schedule (MPS), which is a more detailed and disaggregated plan for specific products or families. Adjusting the production volume or the forecast would not be sufficient to account for the impact of the new customer on the overall business objectives and resources.

Reference:

* APICS CPIM Part 2 Exam Content Manual, p. 11
* [APICS CPIM Learning System Version 8.0], Module 1, Section A, p. 1-15

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QUESTION: 20

Global outsourcing and shared suppliers serving an industry are drivers of which category of risk?

Supply disruptions
Forecast inaccuracy
Procurement problems
Loss of intellectual property

Answer(s): D

Explanation:

Global outsourcing and shared suppliers serving an industry are drivers of loss of intellectual property risk, which is the risk of losing proprietary information or technology to competitors or other parties. This risk can arise from inadequate protection of data, contracts, patents, or trade secrets, or from intentional or unintentional disclosure by suppliers or employees. Loss of intellectual property can result in reduced competitive advantage, lower market share, or legal disputes.

Reference:

CPIM Part 2 Exam Content Manual, Version 8.0, ASCM, 2021, p. 11. CPIM Part 2 Learning System, Version 8.0, Module 1, Section A, Topic 4.

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QUESTION: 17

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QUESTION: 18

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QUESTION: 19

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QUESTION: 20

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