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APICS
Exam CPIM-BSP
CPIM - Basics of Supply Chain Management

[ Total Questions: 155 ]

Topic 1, Business-wide Concepts

Question No : 1 - (Topic 1)

Which of the following manufacturing environments presents the greatest complexity in

promising completion dates for customer orders?

A. Flow
B. Repetitive
C. Continuous
D. Intermittent

Answer: D

Question No : 2 - (Topic 1)

The question below is based on the following cost information:

What is the carrying cost?

A. 14%
B. 16%
C. 20%
D. 25%

Answer: D

Question No : 3 - (Topic 1)

Gemba is a Japanese word meaning:

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A. shop floor.
B. shop order.
C. shop packet.
D. shop traveler.

Answer: A

Question No : 4 - (Topic 1)

Which practice focuses on root cause analysis?

A. Statistical process control

B. Five whys
C. Scatter diagram
D. Pareto chart

Answer: B

Question No : 5 - (Topic 1)

Which of the following situations is characteristic of a make-to-stock environment?

A. Work in process (WIP) represents the largest cost of inventory.

B. The impact of technology on the production process will be large.
C. The master schedule is stated at the finished product level.
D. Customer involvement is typically very high.

Answer: C

Question No : 6 - (Topic 1)

In an assemble-to-order production environment, the master production schedule contains:

A. standard items.
B. finished items.
C. raw materials.
D. subassemblies.

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Answer: D

Question No : 7 - (Topic 1)

The primary purpose of enterprise resources planning is to:

A. focus on the manufacturing function within an organization.

B. integrate an approach to business management.
C. use external knowledge to seek an internal advantage.
D. provide data protection along the supply chain.

Answer: B

Question No : 8 - (Topic 1)

A firm offers products configured from a large number of stocked options. Which of the
following production environments is the firm most likely to use?

A. Engineer-to-order
B. Make-to-order
C. Assemble-to-order
D. Make-to-stock

Answer: C

Question No : 9 - (Topic 1)

The overall objective of an integrated supply chain can best be described as the
achievement of:

A. decreased lead time.

B. increased supplier partnerships.
C. an efficient flow of materials and information.
D. an efficient flow of production.

Answer: C

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Question No : 10 - (Topic 1)

Which of the following statements characterizes an intermittent manufacturing

environment?

A. Work center load is predictable.

B. Routings for all products are the same.
C. Work centers are organized by function.
D. Kanban is the most appropriate scheduling method.

Answer: C

Question No : 11 - (Topic 1)

Which of the following tools is considered to be one of the seven quality tools?

A. Gantt chart
B. Input/output chart
C. Control chart
D. Capacity chart

Answer: C

Question No : 12 - (Topic 1)

The principal objective of total quality management in manufacturing is to:

A. implement statistical process control.

B. meet the expectations of the customer.
C. reduce the costs of failure.
D. eliminate inspections.

Answer: B

Question No : 13 - (Topic 1)

A company's cost of goods sold would be found on which of the following financial

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documents?

A. Balance sheet
B. Income statement
C. Cash flow statement
D. Performance statement

Answer: B

Question No : 14 - (Topic 1)

Which of the following items is considered an external failure cost?

A. Warranty cost
B. Incoming inspection
C. Prevention cost
D. Appraisal cost

Answer: A

Question No : 15 - (Topic 1)

Which of the following characteristics is most distinctive of lean manufacturing?

A. Teamwork
B. Continuous improvement
C. Qualitative measurements
D. Bottom-line results

Answer: B

Question No : 16 - (Topic 1)

Which of the following types of manufacturing processes would tend to have the lowest
work in process (WIP) inventory?

A. Project

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B. Intermittent
C. Batch
D. Flow

Answer: D

Question No : 17 - (Topic 1)

Which of the following techniques typically eliminates common errors?

A. Practical kaizen training

B. Kaizen
C. Poka-yoke
D. Kanban

Answer: C

Question No : 18 - (Topic 1)

After a quality improvement program has been successfully implemented, the greatest cost
of controlling quality typically is the cost of:

A. failure.
B. appraisal.
C. prevention.
D. inspection.

Answer: C

Question No : 19 - (Topic 1)

Having bolts and tools at the point of use on the automobile assembly line eliminates the
waste of :

A. waiting.
B. overproduction.
C. making defects.

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D. stocks.

Answer: A

Question No : 20 - (Topic 1)

Inventory turns is an appropriate performance measure for which of the following

functions?

A. Material control
B. Activity-based costing control
C. Total quality management
D. Flexible manufacturing

Answer: A

Question No : 21 - (Topic 1)

The theory of constraints is most effective when:

A. demand environments are unstable.

B. demand environments are stable.
C. the constraint cannot be managed easily.
D. the constraint cannot be identified easily.

Answer: B

Question No : 22 - (Topic 1)

Which of the following concepts could a firm implement to reduce defects?

A. Hansei
B. Jidoka
C. Muri
D. Heijunka

Answer: B

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Question No : 23 - (Topic 1)

The heijunka philosophy can best be described as:

A. level production.
B. make-to-stock production.
C. a chase production strategy.
D. produce to stock production.

Answer: A

Question No : 24 - (Topic 1)

Having the needed materials within easy reach of a subassembly process eliminates waste
of:

A. motion.
B. transportation.
C. making defects.
D. stocks.

Answer: A

Question No : 25 - (Topic 1)

Reducing set up time will affect item lead time and throughput in which of the following
ways?

A. Lead time will increase, throughput will decrease

B. Lead time will increase, throughput will increase
C. Lead time will decrease, throughput will increase
D. Lead time will decrease, throughput will decrease

Answer: C

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Question No : 26 - (Topic 1)

A production rate based on customer demand is called:

A. cycle time.
B. takt time.
C. lead time.
D. queue time.

Answer: B

Question No : 27 - (Topic 1)

An electronic board that provides visibility on the production floor is:

A. andon.
B. anova.
C. ANSI.
D. alpha factor.

Answer: A

Question No : 28 - (Topic 1)

Which of the following issues would be of greatest concern for a company choosing to
reduce its finished goods inventory?

A. Long production changeover time

B. Customer service expectations
C. Product quality requirements
D. Product shelf life constraints

Answer: B

Question No : 29 - (Topic 1)

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Which of the following manufacturing systems involves the creation of one unit or a small
number of units?

A. Flow manufacturing
B. Intermittent manufacturing
C. Project manufacturing
D. Continuous manufacturing

Answer: C

Question No : 30 - (Topic 1)

Manufacturing overhead includes which of the following types of costs?

A. Interest expense
B. Supervision
C. Direct labor
D. Direct material

Answer: B

Question No : 31 - (Topic 1)

Which of the following types of layouts is most efficient in a lean production environment?

A. Islands
B. Connected islands
C. Functional layout
D. Cells

Answer: D

Question No : 32 - (Topic 1)

In the income statement, the cost of goods sold is related to the:

A. sales dollars.

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B. total inventory dollars.
C. marketing expenses.
D. manufacturing expenses.

Answer: D

Question No : 33 - (Topic 1)

Which plant type describes a product at one stage that can be transformed into several
distinct products at the next stage (divergent points)?

A. A-Plant
B. I-Plant
C. T-Plant
D. V-Plant

Answer: D

Question No : 34 - (Topic 1)

Which of the following production environment strategies requires unique design or

significant customization?

A. Make-to-order
B. Assemble-to-order
C. Make-to-stock
D. Engineer-to-order

Answer: D

Question No : 35 - (Topic 1)

Which of the following manufacturing processes would be characterized by a narrow range

of standard products, low direct labor costs, and a high level of technical support for
manufacturing?

A. Jobbing

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B. Intermittent
C. Flow
D. Project

Answer: C

Question No : 36 - (Topic 1)

Which of the following factors is included in cost of goods sold?

A. Revenue
B. General and administrative expenses
C. Overhead
D. Standard cost

Answer: C

Question No : 37 - (Topic 1)

Which of the following is a graphical representation of a frequency distribution?

A. Cause-and-effect diagram
B. Pareto analysis
C. Scatter diagram
D. Histogram

Answer: D

Question No : 38 - (Topic 1)

The lean production concept works best in which of the following manufacturing
environments?

A. Make-to-order
B. Intermittent
C. Project
D. Flow

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Answer: D

Question No : 39 - (Topic 1)

Which of the following terms refers to the practice of stopping the production line when a
defect occurs?

A. Haiku
B. Arigato
C. Poka-yoke
D. Jidoka

Answer: D

Topic 2, Demand Management

Question No : 40 - (Topic 2)

An order winner is a competitive characteristic that:

A. is universal between customers and markets.

B. differentiates among potential customers.
C. a company must exhibit to be considered a potential supplier.
D. a company must exhibit to gain new sales.

Answer: D

Question No : 41 - (Topic 2)

Which of the following forecast inputs is considered to be intrinsic data?

A. Demographic
B. Econometric
C. Historical sales
D. Market survey

Answer: C

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Question No : 42 - (Topic 2)

Which of the following functional areas decides the product to be supplied and the
customers to be served?

A. Engineering
B. Finance
C. Manufacturing
D. Marketing

Answer: D

Question No : 43 - (Topic 2)

When demand is uncertain, what is the most appropriate action to take?

A. Recalculate safety stock

B. Increase order quantity
C. Change method of transportation
D. Increase number of warehouses for distribution

Answer: A

Question No : 44 - (Topic 2)

A product has a forecast of 200 units a month. The actual demand for the past 6 months
has been 195, 210, 205, 190, 220, and 225. Which of the following values reflects the
mean absolute deviation for this data?

A. 7.5
B. 12.5
C. 45
D. 75

Answer: B

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Question No : 45 - (Topic 2)

Which of the following factors most likely will impact the demand for a firm's products or
services?

A. Forecast accuracy
B. Order processing system
C. Competition
D. Planning horizon

Answer: C

Question No : 46 - (Topic 2)

Which of the following factors is most likely to affect the demand for a company's services
or products?

A. The sales and operations plan

B. Demand forecasting
C. Resource availability
D. Economic conditions

Answer: D

Question No : 47 - (Topic 2)

Which of the following forecasting techniques eliminates the need to keep months of
historical data?

A. Exponential smoothing
B. Seasonal index
C. Delphi
D. Trend

Answer: A

Question No : 48 - (Topic 2)

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Characteristics that cause customers to consider a company's products or services are
called:

A. order qualifiers.
B. order winners.
C. product configurations.
D. product specifications.

Answer: A

Question No : 49 - (Topic 2)

Which demand management activity includes processing a customer request and making
material available for production or shipping?

A. Forecasting
B. Order processing
C. Providing available-to-promise dates
D. Communicating with the marketplace

Answer: B

Question No : 50 - (Topic 2)

In Quality Function Deployment, "competitive evaluation" refers to:

A. analyzing current financial health.

B. considering global market potential.
C. ranking industry rivals' position.
D. comparing perceived product quality.

Answer: D

Question No : 51 - (Topic 2)

Service parts needs are most often determined by:

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A. bills of material explosion.
B. forecasts based on prior demand.
C. material requirements planning (MRP) logic calculations.
D. analysis of lead-time requirements.

Answer: B

Question No : 52 - (Topic 2)

Which of the following forecasting techniques reviews a company's sales history?

A. Qualitative
B. Delphi
C. Extrinsic
D. Intrinsic

Answer: D

Question No : 53 - (Topic 2)

Which of the following smoothing constants places the most weight on the old forecast?

A. 0.4
B. 0.3
C. 0.2
D. 0.1

Answer: D

Question No : 54 - (Topic 2)

Which of the following situations requires the largest amount of safety stock based on
demand variability and replenishment lead time?

A. Low variability, short replenishment lead time.

B. Low variability, long replenishment lead time.
C. High variability, short replenishment lead time.

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D. High variability, long replenishment lead time.

Answer: D

Question No : 55 - (Topic 2)

A distributor provides customer service by improving which of the following market driven
factors?

A. Availability
B. Design
C. Shelf life
D. Quality

Answer: A

Question No : 56 - (Topic 2)

The contribution made by an operation to the final usefulness of a product is known as:

A. the customer service level.

B. value-added.
C. the cost of quality.
D. an order winner.

Answer: B

Question No : 57 - (Topic 2)

An extreme change in demand in the supply position upstream generated by a small

change in demand downstream in the supply chain is called the:

A. efficiency variance.
B. bullwhip effect.
C. estimate of error.
D. stockout probability.

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Answer: B

Question No : 58 - (Topic 2)

The question below is based on the following information:

What is the mean absolute deviation of demand for the data?

A. 1
B. 3
C. 5
D. 101

Answer: B

Question No : 59 - (Topic 2)

A 5-year decline in demand for diapers most closely represents which of the following types
of forecast patterns?

A. Irregular
B. Cyclic
C. Trend
D. Seasonal

Answer: C

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Question No : 60 - (Topic 2)

Which of the following statements is true regarding the concept of independent demand?

A. These items are usually raw materials.

B. The requirements for these items are usually forecasted.
C. The demand for these items must be calculated.
D. The demand for these items is related to demand for other items.

Answer: B

Question No : 61 - (Topic 2)

A product has a forecast of 200 units a month. The actual demand for the past 6 months
has been 195, 210, 205, 190, 220, and 225. Calculate the tracking signal for this product's
forecast.

A. 6
B. 7.5
C. 45
D. 75

Answer: A

Question No : 62 - (Topic 2)

A manufacturer's market is highly dependent upon customers selecting standard options at

the time of placing an order. Which of the following manufacturing strategies is best suited
to compete in this market?

A. Engineer-to-order
B. Make-to-order
C. Assemble-to-order
D. Make-to-stock

Answer: C

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Question No : 63 - (Topic 2)

Which of the following describes a competitive characteristic that a firm must exhibit to be
considered as a supplier in a market?

A. Marketing research
B. Manufacturing automation
C. Order qualifier
D. Order winner

Answer: C

Question No : 64 - (Topic 2)

Which of the following items is a source of independent demand?

A. Customer orders for finished products

B. Subassembly requirements from material requirements planning
C. Raw material requirements from material requirements planning
D. Protective packaging for shipping customer orders

Answer: A

Question No : 65 - (Topic 2)

The question below is based on the following information:

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What is the forecast for period 34 if a simple three-period moving average is used?

A. 312
B. 313
C. 318
D. 325

Answer: C

Question No : 66 - (Topic 2)

The portion of a firm's inventory and planned production that is not already committed is
referred to as:

A. planned order receipts.

B. projected inventory balance.
C. master production schedule due date.
D. available-to-promise.

Answer: D

Question No : 67 - (Topic 2)

A primary purpose of Quality Function Deployment is to:

A. calculate performance limits.

B. determine marketing strategies.
C. direct product design.
D. set pass/fail criteria.

Answer: C

Question No : 68 - (Topic 2)

Which of the following calculations is a major component that is used with extrinsic
forecasting?

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A. Moving average
B. Exponential smoothing
C. A seasonal index
D. An economic indicator

Answer: D

Topic 3, Transformation of Demand into Supply

Question No : 69 - (Topic 3)

Part A is made from two Y’s and one X. An order is received for 50 A’s and there are 30 A’s
in stock. What is the net requirement for X?

A. 20
B. 40
C. 50
D. 100

Answer: A

Question No : 70 - (Topic 3)

Material requirements planning requires which of the following files to plan requirements?

A. Standard cost
B. Bill of materials
C. Routing
D. Work center

Answer: B

Question No : 71 - (Topic 3)

Which of the following terms refers to a sequence of end items to produce for specific
customers' orders in a make-to-order or assemble-to-order environment?

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A. Master schedule
B. Final assembly schedule
C. Dispatch list
D. Input/output control

Answer: B

Question No : 72 - (Topic 3)

Which of the following plans is a statement of long-range strategy and revenue, cost, and
profit objectives usually accompanied by budgets, a projected balance, and cash flow
statement?

A. Strategic
B. Business
C. Sales and operations
D. Budget

Answer: B

Question No : 73 - (Topic 3)

Material requirements planning provides recommendations for which of the following

processes?

A. Shop orders and capacity

B. Capacity and purchase orders
C. Purchase orders and shop orders
D. Routing and lead times

Answer: C

Question No : 74 - (Topic 3)

What is the output of sales and operations planning?

A. Production plan

26
B. Master production schedule
C. Sales plan
D. Production order

Answer: A

Question No : 75 - (Topic 3)

The question below is based on the following illustration of product parts:

Which of the following items are components?

A. Y and Z only
B. 1, 2, and 3 only
C. Y, Z, 1, 2, and 3 only
D. X, Y, Z, 1, 2, and 3

Answer: C

Question No : 76 - (Topic 3)

Which of the following documents is generated to show required components for a shop
order?

A. Master production schedule

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B. Bill of materials
C. Picking list
D. Advance shipping notice

Answer: C

Question No : 77 - (Topic 3)

Which of the following circumstances will cause a decrease in a work center's utilization?

A. Working overtime
B. Working below standard
C. Lack of materials
D. Rework operations

Answer: C

Question No : 78 - (Topic 3)

Which of the following information is the key output of rough-cut capacity planning?

A. Line balancing
B. Critical resource availability
C. Inventory objectives by product line
D. Capacity requirements plan

Answer: B

Question No : 79 - (Topic 3)

Which of the following four plant types for the theory of constraints processes one raw
material into one final product?

A. V-plant
B. A-plant
C. T-plant
D. I-plant

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Answer: D

Question No : 80 - (Topic 3)

When determining a make or buy decision, reasons to buy out would include:

A. accommodating large changes in volume.

B. maximizing resource utilization.
C. protecting confidential information.
D. maintaining workforce.

Answer: A

Question No : 81 - (Topic 3)

If the quantity ordered equals the quantity required in a time bucket, which of the following
lot-sizing rules has been used?

A. Lot-for-lot
B. Fixed order quantity
C. Order "N" periods supply
D. Economic order quantity (EOQ)

Answer: A

Question No : 82 - (Topic 3)

Which of the following capacity management techniques is used to support the production
plan?

A. Resource planning
B. Capacity requirements planning
C. Rough-cut capacity planning
D. Input/output control

Answer: A

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Question No : 83 - (Topic 3)

Which of the following plans generally includes an organization's explicit mission, goals,
and objectives, along with the specific actions needed to achieve those goals and
objectives?

A. Marketing
B. Business
C. Strategic
D. Financial

Answer: C

Question No : 84 - (Topic 3)

Earliest job due date is an example of:

A. dispatching.
B. infinite scheduling.
C. a chase strategy.
D. available-to-promise.

Answer: A

Question No : 85 - (Topic 3)

The primary advantage of process flexibility is the:

A. ease of implementing engineering changes.

B. responsiveness to volume or mix changes.
C. decrease in labor costs.
D. reduced need for skills.

Answer: B

Question No : 86 - (Topic 3)

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Production activity control receives authorization to release work orders from:

A. the material requirements plan.

B. the master production schedule.
C. production planning.
D. input/output control.

Answer: A

Question No : 87 - (Topic 3)

Effective inventory management should lead to which of the following?

A. Higher inventory turns

B. Higher product quality
C. Lower cost of capital
D. Elimination of inventory cycle counting

Answer: A

Question No : 88 - (Topic 3)

A work center has 2 machines that are operated 16 hours a day for 5 days a week.
Historically, the utilization has been 85% and the efficiency 105%. What is the rated
capacity for this work center? (Rounded)

A. 71
B. 99
C. 130
D. 143

Answer: D

Question No : 89 - (Topic 3)

Which of the following statements about strategic planning is true?

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A. It is focused on the master production schedule (MPS) and the material requirements
plan.
B. It helps integrate the plans of marketing and production.
C. It involves primarily personnel development and acquisition of long-lead-time materials.
D. It is top-level planning that is not tied to other planning activities.

Answer: B

Question No : 90 - (Topic 3)

Which of the following phrases best defines a production plan?

A. The plan for the production and purchase of the components used in making the items
in the master production schedule
B. The broad direction of the firm, the kind of business-product lines, and markets the firm
wants in the future
C. The quantities of each product group that must be produced in each period, desired
inventory levels, resources required in each period, and the availability of resources
needed
D. The flow of work through the factory through input/output analysis

Answer: C

Question No : 91 - (Topic 3)

Which of the following measures should a company focus on to reduce variation in the
product?

A. Mode
B. Mean
C. Median
D. Standard deviation

Answer: D

Question No : 92 - (Topic 3)

A manufacturer needs to monitor and balance the flow of work between work centers.

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Which of the following techniques would address this need?

A. Dispatching
B. Drum-buffer-rope
C. Critical ratio
D. Input/output control

Answer: D

Question No : 93 - (Topic 3)

Firm planned orders in a material requirements planning (MRP) system are used to:

A. protect against computer rescheduling.

B. reduce the use of forecasts.
C. increase accuracy in the MRP system.
D. validate capacity available.

Answer: A

Question No : 94 - (Topic 3)

Which of the following scheduling techniques reduces manufacturing lead times?

A. Backward
B. Finite
C. Forward
D. Overlapped

Answer: D

Question No : 95 - (Topic 3)

Which of the following terms refers to that which "pulls" production to the constraint for
processing?

A. Drum

33
B. Buffer
C. Rope
D. Kanban

Answer: C

Question No : 96 - (Topic 3)

At which of the following levels does sales and operations planning take place?

A. Component
B. Finished goods
C. Product family
D. Market

Answer: C

Question No : 97 - (Topic 3)

In which of the following environments is order-fill rate of primary importance to customer

delivery expectations?

A. Make-to-stock
B. Design-to-order
C. Assemble-to-order
D. Make-to-order

Answer: A

Question No : 98 - (Topic 3)

Which of the following systems typically involves design while manufacturing is occurring?

A. Flow
B. Intermittent
C. Project
D. Engineer

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Answer: C

Question No : 99 - (Topic 3)

Which of the following documents specifies how an item is to be manufactured?

A. Routing
B. Bill of labor
C. Dispatch list
D. Item master

Answer: A

Question No : 100 - (Topic 3)

Which of the following statements describes the difference between capacity requirements
planning and material requirements planning ?

A. Material requirements planning ignores capacity constraints.

B. Capacity requirements planning accounts for material.
C. Material requirements planning is confined by capacity constraints.
D. Capacity requirements planning only accounts for critical resources.

Answer: A

Question No : 101 - (Topic 3)

Which of the following variables best represents a strategic performance measure?

A. Revenue growth
B. Machine utilization
C. Work center capacity
D. Cycle time

Answer: A

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Question No : 102 - (Topic 3)

The primary purpose of sales and operations planning is to:

A. track and improve forecast accuracy within sales and marketing.

B. provide enough lead time for operations to acquire needed resources.
C. provide periodic updates on overall performance to top management.
D. link strategic and tactical plans across the organization.

Answer: D

Question No : 103 - (Topic 3)

Which of the following considerations should be included in product design?

A. Manufacturing strategy
B. Product pricing
C. Environmental sensitivity
D. Target markets

Answer: C

Question No : 104 - (Topic 3)

Which of the following techniques deals with analysis and planning of logistics and
manufacturing during various time periods?

A. Advanced planning and scheduling

B. Aggregate planning
C. Aggregate forecast
D. Distribution Requirements Planning

Answer: A

Question No : 105 - (Topic 3)

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Which of the following processes converts the master production schedule into resource
requirements that are then compared to the available resources?

A. Capacity requirements planning

B. Rough-cut capacity planning
C. Material requirements planning
D. Resource planning

Answer: B

Question No : 106 - (Topic 3)

Backward scheduling begins with which of the following dates?

A. Order receipt
B. Order due
C. Component availability
D. Supplier delivery

Answer: B

Question No : 107 - (Topic 3)

Which of the following is an input to capacity requirements planning (CRP)?

A. Bills of material (BOM)

B. Lot-sizing rules
C. Open shop orders
D. Standard cost

Answer: C

Question No : 108 - (Topic 3)

Which of the following plans is translated into synchronized functional plans through the
sales and operations planning process?

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A. Strategic
B. Marketing
C. Business
D. Financial

Answer: C

Question No : 109 - (Topic 3)

The ratio of actual output to standard output is defined as:

A. demonstrated capacity.
B. rated capacity.
C. utilization.
D. efficiency.

Answer: D

Question No : 110 - (Topic 3)

Which of the following processes commits orders against available capacity as well as
inventory?

A. Available-to-promise
B. Capable-to-promise
C. Engineered-to-order
D. Make-to-order

Answer: B

Question No : 111 - (Topic 3)

Which of the following factors can negatively influence indirect costs such as production
planning, purchasing, and inventory management?

A. Standardized parts
B. Low efficiency production equipment

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C. Poor product design
D. Time to market

Answer: C

Question No : 112 - (Topic 3)

Which of the following techniques is best for monitoring loads and capacities?

A. Exponential smoothing
B. Discrete lot sizing
C. Input/output control
D. Rough-cut capacity planning

Answer: C

Topic 4, Supply

Question No : 113 - (Topic 4)

What is the long-term effect of reducing the number of distribution centers between a
manufacturer and its customers?

A. Total stock quantity increases.

B. Transport costs from factory to distribution centers only decrease.
C. Transport costs from distribution centers to customers only decrease.
D. Transport costs from factory to distribution centers and from distribution centers to
customers decrease.

Answer: B

Question No : 114 - (Topic 4)

To provide the required level of customer service, to minimize the costs of transportation
and handling, and to interact with a factory to minimize scheduling problems are all
objectives of:

39
A. enterprise resources planning.
B. distribution inventory management.
C. sales and operations planning.
D. customer relations management.

Answer: B

Question No : 115 - (Topic 4)

Which of the following factors would reduce inventory carrying costs?

A. Ordering less inventory

B. Higher costs of working capital
C. Reducing ordering costs
D. Reducing transportation costs

Answer: A

Question No : 116 - (Topic 4)

Which of the following processes is concerned with the transfer or delivery of goods or
services?

A. Distribution channel
B. Supply chain
C. Transaction channel
D. Value chain

Answer: A

Question No : 117 - (Topic 4)

Which of the following typically would be the most economical mode of transportation for
crude oil to an oil refinery?

A. Water
B. Pipeline

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C. Truck
D. Rail

Answer: B

Question No : 118 - (Topic 4)

Which of the following statements best describes an example of advance ship notice?

A. An electronic data interchange communication indicating that an order has left the port
of loading
B. A person who handles international shipping documentation and transportation
requirements
C. A fee for material held at port longer than the standard unloading time
D. A listing of the items included in an overseas shipment

Answer: A

Question No : 119 - (Topic 4)

The complete supply chain dedicated to the flow of products for returns, repair and
remanufacturing is:

A. reverse auction.
B. reverse engineering.
C. reverse flow scheduling.
D. reverse logistics.

Answer: D

Question No : 120 - (Topic 4)

Which of the following considerations is an advantage of sourcing from multiple suppliers?

A. Competition
B. Opportunity for partnering
C. Better quality

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D. Shorter lead times

Answer: A

Question No : 121 - (Topic 4)

Which of the following inventory classifications would include semi-finished goods at an

outside supplier?

A. Maintenance, repair, and operating supplies

B. Finished goods
C. Raw materials
D. Work in process

Answer: D

Question No : 122 - (Topic 4)

What document or record is used to inform others of the receipt of purchased goods?

A. Advance shipping notice

B. Invoice
C. Receiving report
D. Packing slip

Answer: C

Question No : 123 - (Topic 4)

Which of the following actions most likely will serve to reduce economic lot size?

A. Decreasing the number of items

B. Decreasing the unit cost of items
C. Increasing the cost of ordering items
D. Increasing the cost of carrying inventory

Answer: D

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Question No : 124 - (Topic 4)

Which of the following statements describes a primary function of distribution inventory?

A. It protects against random changes in supply, demand, or lead time.

B. It helps to smooth production in periods of changing demand.
C. It is built to take advantage of quantity discounts.
D. It allows goods to be placed in close proximity to the customer.

Answer: D

Question No : 125 - (Topic 4)

Typically the highest cost for warehousing is the cost related to:

A. space.
B. labor.
C. equipment for materials handling.
D. the information system.

Answer: A

Question No : 126 - (Topic 4)

Which method of record audit is concerned with the total value of inventory?

A. Weight counts
B. Cycle counts
C. Physical inventory
D. Sampling records

Answer: C

Question No : 127 - (Topic 4)

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Vendor-managed inventory is most appropriate for which of the following types of
products?

A. Critical components with high value

B. Standard design products with low value
C. Long lead-time components with medium value
D. Complex design products with low value

Answer: B

Question No : 128 - (Topic 4)

Companies typically make final purchasing decisions based on which of the following
supplier characteristics?

A. Reverse logistics
B. Personal relationships
C. Delivery reliability
D. Market share

Answer: C

Question No : 129 - (Topic 4)

Which of the following functions of inventory exists to address unpredictable supply or

demand?

A. Fluctuation
B. Anticipation
C. Hedge
D. Transportation

Answer: A

Question No : 130 - (Topic 4)

What is the preferred mode of long-distance transportation for high-value, light-weight

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cargo?

A. Air
B. Truck
C. Rail
D. Ocean

Answer: A

Question No : 131 - (Topic 4)

Which of the following activities positions goods or services closer to the customer?

A. Distribution
B. Manufacturing
C. Materials handling
D. Transportation

Answer: A

Question No : 132 - (Topic 4)

Which of the following types of inventory is characterized by item quantity gradually being
depleted then replenished?

A. Decoupling
B. Cycle
C. Pipeline
D. Anticipation

Answer: B

Question No : 133 - (Topic 4)

An appropriate reason to carry safety stock is to protect against:

A. demand fluctuations before the order point is reached.

45
B. demand fluctuations after the order point is reached.
C. price fluctuations before the order point is reached.
D. price fluctuations after the order point is reached.

Answer: B

Question No : 134 - (Topic 4)

The final purchasing steps in order completion are:

A. receipt of goods and approval of invoice.

B. selecting suppliers and receipt of goods.
C. requesting quotations and approval of invoice.
D. selecting suppliers, follow-up, and delivery.

Answer: A

Question No : 135 - (Topic 4)

Which of the following functions of inventory is most likely to be included in a

manufacturer's finished goods?

A. Rework
B. Work in process
C. Anticipation
D. Maintenance, repair, and operations supplies (MRO)

Answer: C

Question No : 136 - (Topic 4)

Knowing average daily consumption and on hand inventory, a company can calculate:

A. storage cost.
B. days of supply.
C. annual usage rate.
D. annual cost of goods sold.

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Answer: B

Question No : 137 - (Topic 4)

Increasing sales through the Internet will result in an increased demand for reverse:

A. auctions.
B. engineering.
C. flow scheduling.
D. logistics.

Answer: D

Question No : 138 - (Topic 4)

Which of the following actions is an example of a company expanding its customer service
offering?

A. Adding a distribution center

B. Increasing work-in-process (WIP) inventory
C. Implementing statistical process control (SPC)
D. Decreasing manufacturing lot sizes

Answer: A

Question No : 139 - (Topic 4)

One purpose for holding inventory in distribution centers is to:

A. decouple the demand for goods with the supply of goods.

B. improve customer service by locating stock near the customer.
C. decrease damage to merchandise by shipping shorter distances.
D. absorb fluctuations in storage requirements that cannot be met at the factory.

Answer: B

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Question No : 140 - (Topic 4)

Which of the following terms represents a complete supply chain dedicated to the flow of
products and materials for the purpose of returns, repair, remanufacture, or recycling?

A. Responsible landfill
B. Remanufacturing resource planning
C. Reverse logistics
D. Global distribution

Answer: C

Question No : 141 - (Topic 4)

In the total cost concept, which of the following logistics costs should be considered when
selecting a transportation mode?

A. Import duty costs

B. Receiving inspection costs
C. Inventory purchasing costs
D. Inventory carrying costs

Answer: D

Question No : 142 - (Topic 4)

Which of the following processes is concerned with the change of ownership of goods and
services?

A. Distribution channel
B. Supply chain
C. Transaction channel
D. Value chain

Answer: C

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Question No : 143 - (Topic 4)

Which material handling equipment is the most flexible in a distribution center?

A. Industrial trucks
B. Conveyor
C. Crane
D. Hoist

Answer: A

Question No : 144 - (Topic 4)

The ABC approach to inventory management is used primarily to:

A. minimize transportation and material handling costs.

B. classify inventory according to the total amounts of inventory required.
C. optimize the amount of inventory for all classifications of inventory.
D. establish the degree of inventory control required.

Answer: D

Question No : 145 - (Topic 4)

Which of the following documents or records typically is required by accounting, receiving,

purchasing, and the supplier?

A. Bill of lading
B. Purchase requisition
C. Receiving report
D. Purchase order

Answer: D

Question No : 146 - (Topic 4)

Economic order quantity (EOQ) is best applied when the:

49
A. product is make-to-order.
B. product shelf life is short.
C. production process is continuous.
D. consumption rate is uniform.

Answer: D

Question No : 147 - (Topic 4)

Consolidating shipments and reducing the frequency of pickups help to reduce which of the
following types of costs?

A. Warehousing and inspection

B. Import duties and processing
C. Total transportation
D. Capital

Answer: C

Question No : 148 - (Topic 4)

As a company moves from domestic to global distribution, it becomes increasingly critical

to control which of the following distribution costs?

A. Warehousing
B. Material handling
C. Protective packaging
D. Transportation

Answer: D

Question No : 149 - (Topic 4)

The question below is based on the following information:

50
What is the average annual transit inventory in units?

A. 55
B. 110
C. 548
D. 658

Answer: C

Question No : 150 - (Topic 4)

Consignment stock is typically owned by:

A. a supplier until consumed.

B. the company who will consume the stock.
C. a joint trust set up for this purpose.
D. the carrier who transports the stock.

Answer: A

Question No : 151 - (Topic 4)

Which of the following factors is a primary consideration when contracting with a supplier?

A. Inventory levels
B. Order cost
C. Quantity discounts
D. Product quality

Answer: D

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Question No : 152 - (Topic 4)

Which of the following differences must be taken into consideration when dealing with a
global distribution system?

A. Culture
B. Cost
C. Carriers
D. Computer systems

Answer: A

Question No : 153 - (Topic 4)

Which of the following outcomes is a benefit of using a purchase requisition?

A. Purchase pricing being correct

B. Improved accuracy of information
C. Assurance that delivery dates are met
D. Terms and conditions being followed

Answer: B

Question No : 154 - (Topic 4)

Which of the following statements about a distribution requirements planning system is

true?

A. It is used only for service parts.

B. Priority is given to open orders.
C. Material requirements planning logic is used.
D. Gross requirements come from exploding the bill of material.

Answer: C

Question No : 155 - (Topic 4)

52
What is the order point when demand is 120 units per week, the lead time is 2 weeks, and
safety stock is 60 units?

A. 180
B. 240
C. 300
D. 360

Answer: C

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