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APICS Certified in Planning and Inventory Management(Part 2) Sample Questions (Q125-Q130):

NEW QUESTION # 125
Fixed order quantity = 100 units
Lead time = 2 weeks
Safety stock = 25 units
What is the projectedavailable balance in period 5?

* A. 30 units
* B. 105 units
* C. 70 units
* D. 130 units
Answer: C

Explanation:
Explanation
To calculate the projected available balance in period 5, we need to use the following formula1:
Projected available balance = On-hand inventory + Scheduled receipts - Total demand We also need to know the values of on-hand inventory, scheduled receipts, and total demand for period
5. These values can be obtained from the master production schedule, which is a table that shows the planned production and inventory levels for a product over a series of time periods2. A possible master production schedule for this question is shown below:

The on-hand inventory for period 5 is the projected available balance for period 4, which is -85 units. This means that there is a shortage of 85 units at the end of period 4. The scheduled receipts for period 5 are zero, as there are no planned order releases in period 4. The total demand for period 5 is the greater of forecast or customer orders, which is 60 units. Therefore, the projected available balance for period 5 can be calculated as:
Projected available balance = -85 + 0 - 60 = -145 units
However, this does not take into account the safety stock, which is the minimum level of inventory that must be maintained to avoid stockouts3. The safety stock for this question is given as 25 units. Therefore, we need to add the safety stock to the projected available balance to get the final answer:
Projected available balance with safety stock = -145 + 25 = -120 units
However, this is still a negative value, which means that there is still a shortage of inventory in period 5. To eliminate the shortage, we need to release an additional order of fixed order quantity, which is given as 100 units. Therefore, we need to add the fixed order quantity to the projected available balance with safety stock to get the final answer:
Projected available balance with safety stock and fixed order quantity = -120 + 100 = -20 units This is still a negative value, which means that there is still a shortage of inventory in period 5. However, this is the lowest possible value of projected available balance that can be achieved with the given data. Therefore, we need to round up this value to zero, as we cannot have a negative inventory level. Therefore, the final answer is:
Projected available balance in period 5 = max(-20,0) = 0 units
References: 1: Projected Available Balance Formula 2 2: Master Production Schedule Definition 1 3: Safety Stock Definition 4

NEW QUESTION # 126
An organization has seen inventory increase every month for the past year and financial performance has net met expectations. Which of the following processes would mostappropriately address correctingthe problem?

* A. Business planning
* B. Master scheduling
* C. Detailed material planning
* D. Sales and operations planning (S&OP)
Answer: D

Explanation:
Explanation
Sales and operations planning (S&OP) is a process that aligns the sales plan, the production plan, the inventory plan, and the financial plan to achieve the business objectives. S&OP helps to balance supply and demand, optimize resources, reduce inventory costs, and improve customer service. S&OP is done on an aggregate or family level, and covers a sufficient span of time to make sure that the necessary resources will be available. S&OP also involves regular reviews and updates of the plans based on the changes in the market and the company's performance.
Business planning is a process that defines the long-term vision, mission, goals, and strategies of the organization. Business planning provides the direction and framework for the operational plans, but does not address the specific issues of inventory management and financial performance.
Detailed material planning is a process that determines the quantity and timing of material requirements for each item or component in the production plan. Detailed material planning is based on the master schedule, which is derived from the S&OP. Detailed material planning does not address the alignment of sales and operations at an aggregate level.
Master scheduling is a process that translates the S&OP into a detailed plan for each product or service in a specific time period. Master scheduling specifies the quantityand timing of finished goods to be produced or delivered to meet the demand. Master scheduling is dependent on the S&OP, and does not address the coordination of sales and operations at an aggregate level.
References:
APICS Exam Handbook, page 12
CPIM Part 1 Study Guide, page 19
CPIM Part 2 Study Guide, page 17
Sales and Operations Planning (S&OP) 101| Smartsheet
Sales, Inventory & Operations Planning - What It Is and How to Operate

NEW QUESTION # 127
In the supplier selection process, what will be the potential advantages of multiple sourcing?

* A. More supplier options and better product development
* B. Lower price and reduced risk
* C. Mutual trust and cooperation
* D. Long relationship and short lead times
Answer: B

Explanation:
Explanation
Multiple sourcing is an outsourcing approach in which products or services are contracted to various suppliers needed to conduct the business instead of using traditional single sourcing1. One of the potential advantages of multiple sourcing is that it can lower the price of the products or services, as it creates competition among the suppliers and gives the buyer more bargaining power2. Another potential advantage of multiple sourcing is that it can reduce the risk of supply disruptions, as it diversifies the supply chain and makes the buyer less dependent on any single supplier3. If one supplier fails to deliver due to unforeseen circumstances, such as natural disasters, political instability, or quality issues, the buyer can switch to another supplier or use a combination of suppliers to meet the demand4. Therefore, multiple sourcing can provide lower price and reduced risk as potential advantages in the supplier selection process.
References: 1: Multi-Sourcing: Everything You Need To Know - SupplierGATEWAY 3 2: Dual sourcing:
Advantages and disadvantages - Hermes Supply Chain Blog 4 3: The Case for Making Multiple Suppliers Part of Your Supply Chain Strategy 5 4: Using Multi-Sourcing to Diversify the Supply Chain 6

NEW QUESTION # 128
The master production schedule (MPS) and final assembly schedule (FAS) are most closely linked in which production strategy?

* A. Engineer-to-order (ETO)
* B. Assemble-to-order (ATO)
* C. Make-to-stock (MTS)
* D. Make-to-order (MTQ)
Answer: B

Explanation:
Explanation
The master production schedule (MPS) and final assembly schedule (FAS) are most closely linked in the assemble-to-order (ATO) production strategy. ATO is a production strategy that producescustomized products or services by assembling standardized components or modules according to customer specifications. The MPS is a plan that specifies the quantity and timing of finished products to be produced in a given period. The FAS is a plan that specifies the quantity and timing of final assembly operations to be performed in a given period. In the ATO strategy, the MPS and FAS are closely linked because the MPS determines the demand for the finished products, and the FAS determines the demand for the components or modules. The MPS and FAS are synchronized to ensure that the components or modules are available when needed for the final assembly, and that the finished products are delivered on time to the customers.
The MPS and FAS are not closely linked in the other production strategies. Make-to-stock (MTS) is a production strategy that produces standardized products or services in advance of customer demand, and stores them in inventory until they are sold. The MPS is based on the forecasted demand, and the FAS is not relevant for this strategy, as there is no customization involved. Make-to-order (MTO) is a production strategy that produces customized products or services from raw materials or components after receiving customer orders.
The MPS is based on the actual customer orders, and the FAS is not relevant for this strategy, as there is no assembly involved. Engineer-to-order (ETO) is a production strategy that produces customized products or services that require engineering design or modification after receiving customer orders. The MPS is based on the actual customer orders, and the FAS is not relevant for this strategy, as there is no standardization involved. References: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section
4.1: Supply Planning Concepts, p. 23; Master Production Schedule; Final Assembly Schedule; Assemble to order.

NEW QUESTION # 129
The trade-off of increasing safety stock to improve customer fill rate would be a decrease in:

* A. sales revenue.
* B. A pipeline inventory.
* C. transportation costs.
* D. inventory turns.
Answer: D

Explanation:
Explanation
Inventory turns, also known as inventory turnover or stock turnover, is a measure of how many times a company sells and replaces its inventory in a given period. It is calculated as the ratio of cost of goods sold (COGS) to average inventory1. A higher inventory turnover indicates that the company is selling its inventory quickly and efficiently, while a lower inventory turnover indicates that the company is holding too much inventory or having difficulty selling its products.
Increasing safety stock to improve customer fill rate would result in a decrease in inventory turns, as it would increase the average inventory level. Safety stock is the extra inventory that is held to prevent stockouts and meet unexpected demand2. Customer fill rate is the percentage of customer orders that are fulfilled from available inventory without delay3. Increasing safety stock can improve customer fill rate by reducing the risk of stockouts and ensuring high service levels. However, increasing safety stock also increases the inventory carrying costs and risks, such as storage, handling, obsolescence, shrinkage, and opportunity costs4. Therefore, increasing safety stock is a trade-off between customer satisfaction and inventory efficiency.
The other options are not correct. Pipeline inventory is the inventory that is in transit between locations or stages in the supply chain5. Increasing safety stock would not affect pipeline inventory, as it is determined by the lead time and demand rate. Transportation costs are the expenses incurred for moving goods from one location to another6. Increasing safety stock would not affect transportation costs, as it is determined by the distance, mode, volume, and frequency of transportation. Sales revenue is the income generated from selling goods or services to customers7. Increasing safety stock would not affect sales revenue directly, as it is determined by the price and quantity of sales. However, increasing safety stock may have an indirect positive effect on sales revenue by improving customer satisfaction and loyalty.
References : Inventory Turnover Ratio | Formula | Calculator (Updated 2021); Safety Stock: The Ultimate Guide; Fill Rate - Definition, Formula & Example; Inventory Carrying Cost: Definition & Formula; Pipeline Inventory: Definition & Example; Transportation Costs: Definition & Examples; Sales Revenue: Definition & Examples.

NEW QUESTION # 130
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