QUESTION: 25

Risk pooling would work best for items with:

low demand uncertainty and short lead times.
low demand uncertainty and long lead times.
high demand uncertainty and short lead times.
high demand uncertainty and long lead times.

Answer(s): D

Explanation:

Risk pooling is the concept of reducing the variability in demand for raw materials or finished goods by aggregating demand across multiple locations or products. By doing so, the demand fluctuations are more likely to cancel out each other, resulting in a lower safety stock and inventory cost. Risk pooling works best for items with high demand uncertainty and long lead times, because these items have the highest risk of stockouts and the highest inventory holding cost. If the demand uncertainty is low, there is less need for risk pooling, as the demand can be easily forecasted and met. If the lead time is short, the replenishment orders can be placed more frequently and adjusted to the actual demand, reducing the need for safety stock and risk pooling.

Reference:

1 Inventory risk pooling definition -- AccountingTools 3
2 Supply Chain Management: Risk pooling - UNB 4

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QUESTION: 26

During the sales and operations planning (S&OP) process, which of the following tasks is the primary responsibility of the functional representatives on the supply planning team?

Identifying reasons why the demand plan is not realistic
Communicating when an event will prevent meeting the supply plan
Ensuring that the functional objectives are considered when developing the plans
Understanding how to use the plan to improve functional performance

Answer(s): C

Explanation:

The supply planning team is responsible for developing a supply plan that balances the demand plan with the available resources and capacities. The functional representatives on the supply planning team, such as production, procurement, engineering, and finance, need to ensure that their functional objectives are considered when developing the plans. For example, production needs to consider the impact of the supply plan on the production schedule, capacity utilization, and labor requirements. Procurement needs to consider the impact of the supply plan on the supplier relationships, lead times, and inventory levels. Engineering needs to consider the impact of the supply plan on the product design, quality, and innovation. Finance needs to consider the impact of the supply plan on the costs, revenues, and profitability. By ensuring that the functional objectives are considered, the supply planning team can create a feasible and optimal supply plan that aligns with the overall business strategy.

Reference:

1 S&OP: A Comprehensive Overview of Sales and Operations Planning 3 2 CPIM Exam Reference - Association for Supply Chain Management 1

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QUESTION: 27

An example of a cradle-to-cradle sustainability model would be:

a laundry service collects dirty baby clothes from families; cleans the clothes in large, efficient batches; and then sorts and delivers the clothes back to each family.
a coffee shop collects paper waste in its restaurants, has a selected supplier collect the paper waste to be recycled, and then purchases paper products from that supplier.
a company uses wood that has been gathered from multiple sources to construct items, such as beds and toys for babies and young children.
a bank offers the lowest interest rates on loans to firms that are committed to using recycled materials and implementing zero-waste initiatives in their processes.

Answer(s): B

Explanation:

A cradle-to-cradle sustainability model is a design concept that aims to create products that can be reused or recycled indefinitely, without generating any waste or pollution. It mimics the natural cycles of nature, where everything is a nutrient for something else. A cradle-to-cradle model differs from a cradle-to-grave model, which follows a linear path of production, consumption, and disposal. Option B is an example of a cradle-to-cradle model, because the paper waste from the coffee shop is collected and recycled by a supplier, who then provides new paper products to the coffee shop. This creates a closed loop of material flow, where nothing is wasted and the paper is continuously reused. Option A is not a cradle-to-cradle model, because the laundry service does not reuse or recycle the baby clothes. It only cleans and delivers them, but does not prevent them from eventually ending up in the landfill.
Option C is not a cradle-to-cradle model, because the company does not ensure that the wood it uses is from sustainable sources, or that the products it makes can be easily disassembled and recycled. It also does not consider the environmental impacts of transporting the wood from different locations. Option D is not a cradle-to-cradle model, because the bank does not directly influence the design or production of the products that the firms use. It only provides financial incentives for them to adopt more sustainable practices, but does not guarantee that they will follow a cradle-to-cradle approach.

Reference:

* Cradle-to-Cradle for Sustainable Development: From Ecodesign to Circular Economy
* Cradle to Cradle Sustainability Guide

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QUESTION: 28

What priority control technique is most appropriate for a firm using a cellular production system?

Shortest processing time (SPT) rule
Distribution requirements planning (DRP)
Pull production activity control (PAC)
Push production activity control (PAC)

Answer(s): C

Explanation:

A cellular production system is a type of lean manufacturing system that reduces waste and improves efficiency by grouping machines and workers into cells that can produce a complete product or a product family. A pull production activity control (PAC) technique is most appropriate for a cellular production system because it allows the cells to produce only what is needed by the downstream processes or customers, thus minimizing inventory and overproduction. A pull PAC technique also enables quick response to changes in demand and feedback from quality control. A push PAC technique, on the other hand, is based on predetermined schedules and forecasts, which may not match the actual demand and may result in excess inventory and waste. The shortest processing time

(SPT) rule and the distribution requirements planning (DRP) are not specific to cellular production systems and do not take into account the customer demand or the cell capacity.

Reference:

* CPIM Part 2 Exam Content Manual, p. 49
* Cellular Manufacturing: A Comprehensive Guide
* Cellular manufacturing - Wikipedia

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