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NEW QUESTION # 63
An advantage of adopting a capacity-leading strategy is that:
- A. there is sufficient capacity to meet demand.
- B. all demand is satisfied, and profit is maximized.
- C. there is sufficient demand to consume capacity.
- D. overcapacity problems are minimized.
Answer: A
Explanation:
Explanation
A capacity-leading strategy is a proactive approach that adds or subtracts capacity in anticipation of future market demand. It is an aggressive strategy with the objective of improving the service level and decreasing lead time1. An advantage of adopting a capacity-leading strategy is that there issufficient capacity to meet demand, which means that the organization can satisfy customer needs and expectations, as well as capture new market opportunities. A capacity-leading strategy can also help the organization gain a competitive edge by being the first to offer new products or services, or by lowering prices due to economies of scale2.
The other options are not advantages of adopting a capacity-leading strategy. There is not necessarily sufficient demand to consume capacity, which means that the organization may face overcapacity problems, such as high inventory costs, low utilization rates, and reduced profitability3. All demand is not satisfied, and profit is not maximized, because there may be other factors that affect customer satisfaction and profitability, such as quality, price, or service4. Overcapacity problems are not minimized, but rather increased, by adopting a capacity-leading strategy, because the organization may have more capacity than needed if demand does not increase as expected3.
References: CPIM Part 2 Exam Content Manual, Domain 4: Plan and Manage Supply, Section 4.1: Supply Management Concepts and Tools, p. 33-34; Capacity Planning Strategies: Types, Examples, Pros And Cons - Toggl; Lead Capacity Strategy, Lead Demand Strategy - UniversalTeacher.com; Capacity Planning Strategies For End-to-End Supply Chain Profitability; Capacity Planning Strategies: Types, Examples, Pros And Cons - Toggl.
NEW QUESTION # 64
In a make-to-stock (MTS) environment, which of the following actions would improve thetrade-off between the cost ofinventory and the level of customer service?
- A. Eliminating raw material stockouts
- B. Decreasing the frozen time zone
- C. Improving estimates of customer demand
- D. Reducing manufacturing overtime
Answer: C
Explanation:
Explanation
In a make-to-stock (MTS) environment, improving estimates of customer demand would improve the trade-off between the cost of inventory and the level of customer service. MTS is a production strategy that manufactures products in anticipation of customer demand, based on forecasts. The main challenge of MTS is to balance the inventory costs and the customer service levels. Inventory costs include holding costs, ordering costs, and obsolescence costs. Customer service levels measure the ability to meet customer demand without delay or stockout. A trade-off exists between these two objectives, as higher inventory levels can increase customer service levels but also increase inventory costs, and vice versa.
Improving estimates of customer demand can help reduce the trade-off between inventory costs and customer service levels, as it can lead to more accurate production planning and inventory management. By forecasting demand more accurately, a company can avoid overproduction or underproduction, which can result in excess inventory or stockouts, respectively. By producing the right amount of products at the right time, a company can lower its inventory costs and increase its customer service levels.
Eliminating raw material stockouts would not improve the trade-off between inventory costs and customer service levels in a MTS environment, as it would not affect the finished goods inventory or the customer demand. Raw material stockouts are a supply issue that can disrupt the production process and cause delays or shortages in the finished goods. However, they do not directly impact the inventory costs or the customer service levels of the finished goods, which are determined by the demand forecasts and the production plans.
Decreasing the frozen time zone would not improve the trade-off between inventory costs and customer service levels in a MTS environment, as it would increase the variability and uncertainty in the production process. The frozen time zone is the period of time in which no changes can be made to the production schedule, as it is considered fixed and final. Decreasing the frozen time zone would allow more flexibility and responsiveness to changes in demand or supply, but it would also increase the risk of errors, disruptions, or inefficiencies in the production process. This could resultin higher production costs, lower quality, or longer lead times, which could negatively affect the inventory costs and the customer service levels.
Reducing manufacturing overtime would not improve the trade-off between inventory costs and customer service levels in a MTS environment, as it would reduce the production capacity and output. Manufacturing overtime is a way of increasing the production capacity and output by extending the working hours of the production resources, such as labor or equipment. Reducing manufacturing overtime would lower the production costs, but it would also lower the production output. This could result in insufficient inventory to meet customer demand, which could lower the customer service levels. References := Make-to-Stock (MTS) Definition, Make-to-Stock (MTS) vs Make-to-Order (MTO) | TradeGecko, Value Creation: Assessing the Cost-Service Trade-off
NEW QUESTION # 65
Which of the following represents landed costs?
- A. Duties levied on imports and exports
- B. Combining smaller shipments to take advantage of bulk efficiencies
- C. Purchasing and delivering a purchased product to its final destination
- D. Supplier absorbing freight charges
Answer: C
Explanation:
Explanation
Landed cost represents the total cost of a product on its journey from the factory floor to the buyer's door. It includes the price of goods, shipment costs, insurance fees, customs duties, and any other charges incurred along the way1. Therefore, purchasing and delivering a purchased product to its final destination is the best representation of landed cost among the given options.
Combining smaller shipments to take advantage of bulk efficiencies is not a representation of landed cost, but rather a strategy to reduce it. Bulk efficiencies are the benefits or savings that result from purchasing or shipping large quantities of goods at once, such as lower unit prices, transportation costs, or handling fees. Combining smaller shipments to take advantage of bulk efficiencies can help lower the landed cost by reducing some of the charges involved in the delivery process2.
Supplier absorbing freight charges is not a representation of landed cost, but rather a condition or term of sale.
Freight charges are the fees paid to transport goods from one place to another by land, sea, or air. Supplier absorbing freight charges means that the supplier pays for the freight charges and does not pass them on to the buyer. This can affect the landed cost depending on whether the sale is based on free on board (FOB) or cost, insurance, and freight (CIF) terms. FOB means that the buyer is responsible for the freight charges and other costs after the goods are loaded on board the carrier at the point of origin. CIF means that the supplier is responsible for the freight charges and other costs until the goods reach the point of destination3.
Duties levied on imports and exports are not a representation of landed cost, but rather a component or factor of it. Duties are taxes or fees imposed by a government on goods that are imported or exported across its borders. Duties can affect the landed cost by increasing the price of goods or adding extra charges to the delivery process. Duties can vary depending on the type, value, origin, or destination of the goods4.
References := Landed Cost: Meaning & Calculator | Freightos, Landed Cost | Definition, Calculation, Formula
& Price, What Is Landed Cost? Definition And Examples, What is Landed Cost? - Definition | Meaning | Example
NEW QUESTION # 66
The horizon for forecasts that are input to the sales and operations planning (S&O0P) process should be long enough that:
- A. cumulative forecast deviation approaches zero.
- B. planned product launches can be incorporated.
- C. supply constraints can be resolved.
- D. required resources can be properly planned.
Answer: D
Explanation:
Explanation
The horizon for forecasts that are input to the sales and operations planning (S&OP) process should be long enough that required resources can be properly planned. The S&OP process is a cross-functional process that aligns the demand and supply plans of an organization. The S&OP process consists of several steps, such as data gathering, demand planning, supply planning, pre-S&OP meeting, executive S&OP meeting, and S&OP implementation. The output of the S&OP process is the production plan, which is a statement of the resources needed to meet the aggregate demand plan over a medium-term horizon. The production plan can be stated in different units of measure depending on the type of manufacturing environment, such as hours, units, tons, or dollars. The horizon for forecasts that are input to the S&OP process should be long enough that required resources can be properly planned, meaning that the organization can anticipate and allocate the necessary capacity, materials, labor, equipment, and facilities to meet the expected demand. The horizon for forecasts should also match the lead time for acquiring or changing the resources, as well as the planning cycle for updating the production plan.
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 # 67
Marketing has requested a significant change in the mix for a product family. The requested change falls between thedemand and the planning time fences. The most appropriate action by the master scheduler is to:
- A. check the availability of required material.
- B. accept the request.
- C. forward the request to senior management.
- D. reject the request
Answer: C
Explanation:
Explanation
The most appropriate action by the master scheduler is to forward the request to senior management.
According to the Time Fence Control (MRP and Supply Chain Planning Help) - Oracle, the demand time fence is a period within which the planning process does not consider forecast demand when calculating actual demand, and the planning time fence is a period within which the planning process does not alter the current material plan or master schedule. The master scheduler can make changes to the master schedule within the planning time fence, but only with approval from senior management. The request from marketing falls between the demand and the planning time fences, which means that it may affect the current material plan or master schedule, as well as the capacity and resource requirements of the production system. Therefore, the master scheduler should forward the request to senior management, who can evaluate the impact and feasibility of the request, and decide whether to approve or reject it.
NEW QUESTION # 68
Which of the following actions will result in lower inventory levels?
- A. Increase customer service level.
- B. Level load the master production schedule (MPS).
- C. Reduce replenishment lead times.
- D. Decentralize inventory locations.
Answer: C
Explanation:
Explanation
Replenishment lead time is the time between placing an order and receiving the goods1. Reducing replenishment lead time will result in lower inventory levels, as it will allow the company to order less frequently and in smaller quantities, while still meeting customer demand. This will reduce the safety stock, cycle stock, and pipeline stock that the company needs to hold, and thus lower the inventory carrying costs and risks.
The other options will not result in lower inventory levels. Level loading the MPS means producing at a constant rate regardless of demand fluctuations2. This will result in higher inventory levels, as the company will need to build up inventory during periods of low demand and draw down inventory during periods of high demand. Increasing customer service level means improving the ability to meet customer expectations and requirements3. This will also result in higher inventory levels, as the company will need to hold more safety stock to avoid stockouts and ensure high fill rates. Decentralizing inventory locations means distributing inventory across multiple warehouses or facilities4. This will also result in higher inventory levels, as the company will need to maintain more safety stock at each location to account for demand variability and uncertainty.
References : What is Replenishment Lead Time?; Level Loading Definition; Customer Service Level; Centralized vs Decentralized Inventory Management.
NEW QUESTION # 69
Shop backlogs remain constant when:
- A. forecasts are updated on the basis of the longest lead time item.
- B. shop orders are released at a steady rate.
- C. capacity is assumed to be infinite.
- D. work input equals work output,
Answer: D
Explanation:
Explanation
Shop backlogs are the amount of work that has been ordered but not yet completed by a production facility1. Shop backlogs remain constant when the work input, which is the rate of incoming orders, equals the work output, which is the rate of finished products2. This means that the production facility is able to match the demand and supply of its products, and maintain a steady level of backlog. This can indicate that the production facility is operating efficiently and effectively, and has a stable market position.
The other options are not correct. Forecasts are updated on the basis of the longest lead time item means that the production facility uses the item that takes the longest time to produce as a reference for planning its future production3. This may help the production facility to avoid underestimating its capacity or overcommitting its resources, but it does not guarantee that the shop backlogs will remain constant, as it depends on the actual demand and supply of its products. Capacity is assumed to be infinite means that the production facility does not consider anylimitations or constraints on its ability to produce its products. This may help the production facility to simplify its production planning and scheduling, but it does not reflect the reality of its operations, and may lead to unrealistic expectations or poor performance. Shop orders are released at a steady rate means that the production facility releases a fixed number of orders to its shop floor at regular intervals. This may help the production facility to smooth out its production flow and reduce variability, but it does not ensure that the shop backlogs will remain constant, as it depends on the actual work input and output.
References : Backlog Definition, Implications, and Real-World Examples - Investopedia; Production Planning
- an overview | ScienceDirect Topics; [Production Planning: Definition & Types | Study.com]; [Production Planning: Definition & Types | Study.com]; What is a Sprint Backlog? Create With Examples [2023] * Asana.
NEW QUESTION # 70
To facilitate transportation efficiency and inventory management, companies frequently use:
- A. contract carriers.
- B. small lot sizes.
- C. automated storage/retrieval systems (AS/RS).
- D. standardized containers.
Answer: D
Explanation:
Explanation
Standardized containers are containers that have uniform dimensions and specifications, such as pallets, crates, boxes, etc. Standardized containers can facilitate transportation efficiency and inventory management by reducing the handling time, increasing the loading capacity, improving the space utilization, and simplifying the packaging and labeling processes. Standardized containers can also enable the use of automated storage/retrieval systems (AS/RS) and other technologies that require consistent dimensions and weights of the items. References: CPIM Part 2 Exam Content Manual, Domain 7: Plan and Manage Distribution, Section 7.1:
Distribution Network Design, p. 38.
NEW QUESTION # 71
Which of the following statements is true about the mean time between failures (MTBF) measure?
- A. Itis used for non-repairable products.
- B. Itis the same as operating life or service life.
- C. Itis a useful measure of reliability.
- D. An increase in MTBF is proportional to an increase in quality.
Answer: C
Explanation:
Explanation
Mean time between failures (MTBF) is the predicted elapsed time between inherent failures of a mechanical or electronic system during normal system operation1. MTBF can be calculated as the arithmetic mean (average) time between failures of a system1. MTBF is a useful measure of reliability, because it indicates how long a system is likely to work before failing. The higher the MTBF, the more reliable the system2. Reliability is the probability that a system will perform its intended function without failure for a specified period of time under specified conditions3.
The other statements about MTBF are false. MTBF is not used for non-repairable products, but for repairable systems. For non-repairable products, mean time to failure (MTTF) is used instead4. MTTF is the expected time to failure for a non-repairable system1. An increase in MTBF is not proportional to an increase in quality, because quality is not only determined by reliability, but also by other factors such as performance, functionality, durability, and customer satisfaction5. MTBF is not the same as operating life or service life, because operating life or service life is the total time that a system can operate before it reaches the end of its useful life, while MTBF is the average time between failures during the operating life6.
NEW QUESTION # 72
In a make-to-order (MTO) environment, inputs to sales and operations planning (S&0P) should include the:
- A. finished goods inventory.
- B. available-to-promise (ATP) data.
- 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 # 73
Operations strategy:
- A. is a top-down activity where operations improvements cumulatively build strategy.
- B. is a bottom-up reflection of what the whole group or business wants to do.
- C. involves translating market requirements into operations decisions.
- D. involves exploiting operations capabilities in the global market.
Answer: C
Explanation:
Explanation
Operations strategy is the process of aligning the operations function with the strategic goals of the organization. It involves translating market requirements into operations decisions that support the competitive priorities of the organization. Operations strategy is not a bottom-up reflection of what the whole group or business wants to do, but rather a top-down alignment of the operations function with the overall business strategy. Operations strategy is not a top-down activity where operations improvements cumulatively build strategy, but rather a deliberate and coherent plan that guides the design and management of the operations system. Operations strategy is not only about exploiting operations capabilities in the global market, but also about developing and sustaining those capabilities in response to the changing market needs.
References := What Is an Operations Strategy? Definition and Benefits, Operations Strategy: Definition And Impact On Projects - monday.com, Operations Strategy: Definition, Example & Strategies In 2022
NEW QUESTION # 74
Which of the following actions best supports a company's strategic focus on delivery speed to improve competitiveadvantage?
- A. Implementing rapid process improvements
- B. Developing flexible operations
- C. Maintaininghigh-capacityutilization
- D. Cross-training workers
Answer: B
Explanation:
Explanation
Developing flexible operations is the best action that supports a company's strategic focus on delivery speed to improve competitive advantage. Flexible operations are the ability to adapt to changes in customer demand, product mix, quality standards, and delivery schedules1. Flexible operations can help a company achieve faster delivery speed by enabling it to respond quickly and efficiently to fluctuations in the market, reduce lead times, optimize resource utilization, and avoid bottlenecks2. Flexible operations can also help a company gain a competitive edge by offering a wider variety of products or services, different volumes or quantities, and varying delivery dates to meet customer needs and expectations3.
Some examples of flexible operations are:
Volume flexibility: the ability to produce different quantities or volumes of output3 Delivery flexibility: the ability to change the timings or modes of delivery3 Product flexibility: the ability to produce different types or variants of products or services4 Process flexibility: the ability to use different methods or technologies to perform a process4 Resource flexibility: the ability to use different inputs or resources for a process4 Some strategies for developing flexible operations are:
Using modular design: designing products or services that consist of interchangeable components or modules that can be easily assembled or disassembled5 Implementing automation: using machines or software to perform tasks that would otherwise require human labor6 Adopting lean principles: eliminating waste and non-value-added activities from processes, such as overproduction, inventory, defects, waiting, transportation, motion, and overprocessing7 Applying agile methods: using iterative and incremental approaches to deliver products or services that meet changing customer requirements and feedback Cross-training workers: training workers to perform multiple tasks or roles within a process or organization References: 1: Operations Flexibility Definition 2 2: Why flexibility is critical when planning an operations - KPMG 4 3: Performance Objectives - What Are the 5 Business Objectives? - PeopleGoal 1 4: Competitive Priorities in Operations with Examples - StudiousGuy 5 5: Modular Design Definition 6: Automation Definition 7: Lean Principles Definition : Agile Methodology Definition : Cross-training Definition
NEW QUESTION # 75
Ergonomic workstation design should incorporate:
- A. bending so as to reduce monotony of work.
- B. visual systems.
- C. reduction of repetitive motion.
- D. an andon board.
Answer: C
Explanation:
Explanation
Ergonomic workstation design should incorporate the reduction of repetitive motion, as this can help prevent musculoskeletal disorders, fatigue, and errors. Repetitive motion can cause strain on the muscles, tendons, and nerves, leading to pain, inflammation, and loss of function. Ergonomic workstation design can reduce repetitive motion by optimizing the layout of the workstation, tools, and materials, using automation or mechanization where possible, and varying the tasks performed by the worker. References: CPIM Part 2 Exam Content Manual, Domain 8: Manage Quality, Continuous Improvement, and Technology, Section A: Quality Management, Subsection 3: Quality Tools and Techniques, Page 37.
NEW QUESTION # 76
Adopting a lean approach to manage supply chain throughput rather than a more traditional approach means that:
- A. more inventory may be required.
- B. mare capacity may be required.
- C. longer cycle times may occur,
- D. less training may be required.
Answer: B
Explanation:
Explanation
Adopting a lean approach to manage supply chain throughput rather than a more traditional approach means that more capacity may be required. Throughput is the rate at which a system produces or processes its output.
A lean approach is a philosophy that aims to eliminate waste and improve efficiency by focusing on customer value, continuous improvement, and pull systems. A traditional approach is a philosophy that relies on forecasting, push systems, and large batch sizes. A lean approach may require more capacity because it reduces inventory levels, buffers, and safety stocks, which may expose the system to more variability and uncertainty. More capacity may be needed to cope with fluctuations in demand or supply, and to maintain high service levels. A lean approach does not necessarily require less training, as it involves empowering employees, cross-training them, and involving them in problem-solving and improvement activities. A lean approach does not necessarily require more inventory, as it aims to minimize inventory and its associated costs. A lean approach does not necessarily result in longer cycle times, as it strives to reduce lead times, setup times, and waiting times. References: CPIM Exam Content Manual Version 7.0, Domain4: Plan and Manage Supply, Section 4.2: Supply Planning Methods, p. 26; Lean Manufacturing; Throughput.
NEW QUESTION # 77
An effective process to create meaningful change begins with:
- A. using consultants to provide in-depth analysis of current management opportunities.
- B. reviewing financial outcomes and metrics over the last 4 quarters year-over-year.
- C. refreshing corporate strategy to align with current marketplace realities for your industry.
- D. identifying and discussing a past crisis, a potential crisis, or major opportunities.
Answer: D
Explanation:
Explanation
An effective process to create meaningful change begins with identifying and discussing a past crisis, a potential crisis, or major opportunities. This step is important because it helps to create a sense of urgency and motivation for the change, as well as to clarify the vision and goals of the change1. A past crisis can be used as a learning opportunity to analyze what went wrong and how to prevent it from happening again. A potential crisis can be used as a warning signal to anticipate and prepare for the possible challenges and risks. A major opportunity can be used as a catalyst to seize the competitive advantage and create value for the organization and its stakeholders2.
The other options are not the best ways to start an effective process to create meaningful change. Reviewing financial outcomes and metrics over the last 4 quarters year-over-year may provide some insights into the performance and profitability of the organization, but it may not reveal the underlying causes or drivers of the change, or the future trends and scenarios that may affect the organization3. Refreshing corporate strategy to align with current marketplace realities for your industry may be a necessary step in the change process, but it may not be sufficient to generate buy-in and commitment from the people who are involved in or affected by the change4. Using consultants to provide in-depth analysis of current management opportunities may be a helpful way to obtain external perspectives and expertise, but it may not ensure that the change is aligned with the organization's culture, values, and capabilities5.
References : How To Create A Sense Of Urgency For Change; How To Use Crisis As A Catalyst For Change; Why Financial Metrics Alone Won't Drive Change; How To Align Your Strategy With Your Organization's Culture; How To Choose The Right Consultant For Your Change Project.
NEW QUESTION # 78
Which of the following techniques would a group use to prioritize problems?
- A. Cause-and-effect diagrams
- B. Critical path analysis
- C. Scatter charts
- D. Pareto analysis
Answer: D
Explanation:
Explanation
Pareto analysis is a technique that a group can use to prioritize problems. Pareto analysis is based on the Pareto principle, also known as the 80/20 rule, which states that 80% of the effects come from 20% of the causes1. Pareto analysis can help a group identify and focus on the most significant problems that account for the majority of the negative outcomes, and allocate their resources and efforts accordingly2.
The steps of Pareto analysis are3:
Step 1: Define the problem and its scope. Clarify what the problem is, why it is important, and what are the desired outcomes.
Step 2: Identify the causes of the problem. Brainstorm and list all the possible factors that contribute to the problem, such as people, processes, equipment, materials, environment, etc.
Step 3: Collect data on the causes. Gather quantitative or qualitative data on how often or how much each cause affects the problem, such as frequency, severity, cost, time, etc.
Step 4: Analyze the data using a Pareto chart. A Pareto chart is a type of bar chart that shows the frequency or impact of each cause in descending order, along with a cumulative line that shows the percentage of the total effect. A Pareto chart can help visualize which causes are more significant than others, and where the 80/20 split occurs.
Step 5: Prioritize the causes and take action. Based on the Pareto chart, select the most critical causes that need to be addressed first, and develop and implement solutions to eliminate or reduce them.
Monitor and evaluate the results and repeat the process if necessary.
Therefore, Pareto analysis is a technique that a group can use to prioritize problems by identifying and focusing on the most significant causes that account for the majority of the negative outcomes.
References: 1: The Pareto Principle - The 80/20 Rule Explained 1 2: How to Use Pareto Analysis to Improve Your Business 2 3: How to Perform a Pareto Analysis (Step-by-Step) 3
NEW QUESTION # 79
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. Clear objectives are not necessary to begin the modeling process.
- C. Aggregation will be necessary to develop an appropriate model.
- D. It is necessary to capture all of the detail in order to create a useful model.
Answer: C
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 # 80
A company sold 8,400 units last year. Average inventory investment was $42,000. Whatwas the inventory turns ratio,knowing that the unit cost is $207?
- A. 0
- B. 1
- C. 0.20
- D. 0.25
Answer: A
Explanation:
Explanation
The inventory turns ratio is a financial metric that measures how efficiently a company manages its inventory.
The inventory turns ratio is calculated by dividing the cost of goods sold (COGS) by the average inventory investment. The cost of goods sold is the direct cost of producing or purchasing the goods sold by the company. The average inventory investment is the average value of the inventory held by the company over a period of time. A higher inventory turns ratio indicates a higher inventory turnover and a lower inventory holding cost.
In this case, the company sold 8,400 units last year, and the unit cost is $207. Therefore, the cost of goods sold is:
COGS = Unit cost x Units sold = 207 x 8,400 = $1,738,800
The average inventory investment was $42,000. Therefore, the inventory turns ratio is:
Inventory turns ratio = COGS / Average inventory investment = 1,738,800 / 42,000 = 41.4 To express the inventory turns ratio as a whole number, we can round it to the nearest integer. Therefore, the inventory turns ratio is 5.
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 # 81
......
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