CPIM Supply Planning and Management 2 — Questions and Answers
Question 1: Which planning horizon characteristic best distinguishes a master production schedule (MPS) from a long-range production plan?
- MPS covers years; long-range covers weeks
- MPS is stated in specific end items; long-range uses product families (Correct answer)
- MPS is updated annually; long-range is updated weekly
- MPS focuses on capacity; long-range focuses on materials
Correct answer: MPS is stated in specific end items; long-range uses product families
The MPS is expressed in specific end items over a shorter horizon, while long-range plans use product families or aggregate units.
Question 2: A company notices its planned orders are frequently being expedited due to demand spikes. Which MRP parameter adjustment would best reduce this problem?
- Increase the planning time fence
- Reduce the lot size
- Increase safety stock levels (Correct answer)
- Shorten the planning horizon
Correct answer: Increase safety stock levels
Increasing safety stock absorbs demand variability and reduces the need to expedite orders when unexpected spikes occur.
Question 3: In supply chain management, 'postponement' refers to:
- Delaying payment to suppliers to improve cash flow
- Deferring product differentiation to the latest possible point in the supply chain (Correct answer)
- Postponing production until firm orders are received
- Delaying new product launches to reduce risk
Correct answer: Deferring product differentiation to the latest possible point in the supply chain
Postponement delays customization or differentiation activities until demand is more certain, reducing finished goods inventory risk.
Question 4: What is the primary purpose of a 'rough-cut capacity plan' (RCCP)?
- To verify that the MPS is achievable given key resource constraints (Correct answer)
- To allocate capacity across all work centers in detail
- To determine machine maintenance schedules
- To calculate the cost of overtime production
Correct answer: To verify that the MPS is achievable given key resource constraints
RCCP checks that critical or bottleneck resources can support the MPS before detailed scheduling begins.
Question 5: Which of the following best describes 'available-to-promise' (ATP) functionality?
- The quantity on hand minus safety stock
- The uncommitted portion of inventory and planned production that can be promised to customers (Correct answer)
- Total planned production minus firm orders
- The difference between forecast and actual demand
Correct answer: The uncommitted portion of inventory and planned production that can be promised to customers
ATP identifies how much inventory or planned supply is uncommitted and can be allocated to new customer orders.
Question 6: A supplier offers a quantity discount: $10/unit for 1-499 units and $8/unit for 500+ units. Annual demand is 1,000 units. Holding cost is 20% of unit price per year. Which order quantity minimizes total annual cost?
- The EOQ calculated at $10/unit
- 500 units to capture the discount (Correct answer)
- 250 units based on average price
- 1,000 units to minimize ordering frequency
Correct answer: 500 units to capture the discount
When a quantity discount reduces unit cost enough to offset higher holding costs, ordering at the discount break point minimizes total cost.
Question 7: Which supply planning concept involves sharing real-time inventory and sales data between a retailer and supplier to jointly manage replenishment?
- Vendor-managed inventory (VMI)
- Collaborative planning, forecasting, and replenishment (CPFR) (Correct answer)
- Continuous replenishment planning (CRP)
- Cross-docking
Correct answer: Collaborative planning, forecasting, and replenishment (CPFR)
CPFR is a structured collaboration process where trading partners jointly develop forecasts and replenishment plans using shared data.
CPIM Supply Planning and Management 2
Which planning horizon characteristic best distinguishes a master production schedule (MPS) from a long-range production plan?