Download Certified in Planning and Inventory Management-CPIM 8.0.CPIM-8.0.VCEplus.2025-02-25.43q.vcex

A capacity-lagging strategy is a conservative approach to capacity planning that involves adding capacity only when the firm is operating at full capacity because of an increase in demand1. This strategy can help minimize costs and reduce the risk of excess capacity, but it can also lead to a disadvantage of not being able to fully meet customer demand if it rises quickly2. This can result in lost customers, revenue, and market share, as well as lower customer satisfaction and loyalty3.Reference:* Lag Capacity Strategy, Lag Demand Strategy - UniversalTeacher.com* Capacity Planning Strategies: Types, Examples, Pros And Cons - Toggl* 3 types of capacity planning strategies (with examples) - Xola 

The economic order quantity (EOQ) model is a formula that calculates the optimal order quantity that minimizes the total inventory costs, such as ordering costs and holding costs. The EOQ model is based on several assumptions, one of which is that the order preparation costs and inventory-carrying costs are constant and known. This means that the costs of placing and receiving an order, and the costs of storing and maintaining the inventory, do not change with the order quantity or the inventory level, and that they can be estimated accurately12.The other options are not correct because:* A. Customer demand is known but seasonal. This is not an assumption of the EOQ model, but rather a violation of it. The EOQ model assumes that the customer demand is constant and known, and that the orders are placed at regular intervals. However, if the customer demand is seasonal, it means that it varies over time and may not be predictable. This can affect the accuracy and applicability of the EOQ model, as the optimal order quantity may change with the demand pattern12.* B. Items are purchased and/or produced continuously and not in batches. This is not an assumption of the EOQ model, but rather a contradiction of it. The EOQ model assumes that the items are purchased and/or produced in batches, and that the inventory level decreases gradually until it reaches zero, at which point a new order is placed and received. However, if the items are purchased and/or produced continuously, it means that there is no need to place orders or maintain inventory, and the EOQ model becomes irrelevant12.* D. Holding costs, as a percentage of the unit cost, are variable. This is not an assumption of the EOQ model, but rather a complication of it. The EOQ model assumes that the holding costs, as a percentage of the unit cost, are constant and known. This means that the cost of storing and maintaining one unit of inventory does not depend on the unit cost of the item, and that it can be estimated accurately. However, if the holding costs, as a percentage of the unit cost, are variable, it means that the cost of storing and maintaining one unit of inventory changes with the unit cost of the item, and that it may not be easy to estimate. This can affect the accuracy and applicability of the EOQ model, as the optimal order quantity may depend on the unit cost of the item12.

The sales and operations plan (S&OP) is the most appropriate level to adjust when a major new customer is received from sales. The S&OP is a cross-functional process that aligns the demand and supply plans with the business strategy and financial goals. It also provides the basis for the master production schedule (MPS), which is a more detailed and disaggregated plan for specific products or families. Adjusting the production volume or the forecast would not be sufficient to account for the impact of the new customer on the overall business objectives and resources.Reference:* APICS CPIM Part 2 Exam Content Manual, p. 11* [APICS CPIM Learning System Version 8.0], Module 1, Section A, p. 1-15

Global outsourcing and shared suppliers serving an industry are drivers of loss of intellectual property risk, which is the risk of losing proprietary information or technology to competitors or other parties. This risk can arise from inadequate protection of data, contracts, patents, or trade secrets, or from intentional or unintentional disclosure by suppliers or employees. Loss of intellectual property can result in reduced competitive advantage, lower market share, or legal disputes. Reference := CPIM Part 2 Exam Content Manual, Version 8.0, ASCM, 2021, p. 11. CPIM Part 2 Learning System, Version 8.0, Module 1, Section A, Topic 4.

Price negotiation is most appropriate when purchasing commodities. Commodities are products or materials that are standardized, widely available, and have low differentiation. Examples of commodities include metals, grains, oil, gas, etc. Price negotiation is a process of bargaining with the supplier to obtain the best possible price for the purchase. Price negotiation is suitable for commodities because they have high price volatility, meaning that their prices fluctuate frequently and unpredictably due to changes in supply and demand, market conditions, and other factors. Price negotiation can help the buyer to take advantage of the price fluctuations and secure a lower price or a better contract term with the supplier. Price negotiation can also help the buyer to reduce the total cost of ownership, which includes not only the purchase price but also the costs of transportation, storage, quality, and risk12.Reference: 1 How to negotiate price: negotiation tips for salespeople 3 2 CPIM Exam Reference - Association for Supply Chain Management 1

A push system is a production system that relies on forecasts and schedules to plan the production and distribution of goods and services. A pull system is a production system that responds to actual customer demand and signals to trigger the production and distribution of goods and services. A transition from a push system to a pull system requires a change in the mindset and the processes of the organization, as well as the adoption of new tools and techniques to enable a demand-driven production system12.One of the tools that is commonly used in a pull system is kanban, which is a visual signal that indicates the need for replenishment of materials or products. Kanban cards are attached to standardized containers that hold a fixed amount of inventory. When a container is empty, the kanban card is sent back to the upstream process as a signal to produce more. This way, the inventory level is controlled by the actual consumption of the downstream process, and the production is synchronized with the demand13.One of the actions that hinders the transition from a push system to a pull system is using work orders as a backup. Work orders are documents that authorize the production of a certain quantity of a product or a service, based on a forecast or a schedule. Work orders are typical of a push system, as they are not triggered by the actual customer demand, but by the planned production. Using work orders as a backup means that the organization is not fully committed to the pull system, and still relies on the push system to ensure the availability of inventory. This can create confusion, inconsistency, and inefficiency in the production system, as well as  increase the inventory holding costs and the risk of obsolescence1 .Therefore, using work orders as a backup is the correct answer, as it is an action that hinders the transition from a push system to a pull system. The other options are actions that support the transition, as they are aligned with the principles and practices of a pull system.

FIFO inventory accounting assumes that the first items purchased or produced are the first ones sold or used. Therefore, the cost of goods sold reflects the oldest costs of inventory. If a company uses a more expensive shipment of components instead of the lower-cost ones that were previously received, it will increase the cost of goods sold and reduce the gross profit margin. This is because the newer components have a higher unit cost than the older ones, and the cost of goods sold is calculated by multiplying the unit cost by the number of units sold or used.Reference:* CPIM Part 1 Exam Content Manual, page 17, section 3.2.1: ''Explain the impact of inventory valuation methods (for example, first in, first out [FIFO], last in, first out [LIFO], average cost, standard cost) on financial statements and taxes.''* CPIM Part 1 Study Guide, page 63, section 3.2.1: ''The FIFO method assumes that the first goods purchased or produced are the first goods sold. The cost of goods sold is based on the oldest costs, and the ending inventory is based on the most recent costs. The FIFO method results in a higher net income and a higher ending inventory value in a period of rising prices.''

Third-party logistics (3PL) services are external providers that handle various supply chain functions for a firm, such as transportation, warehousing, inventory management, and order fulfillment. By outsourcing these functions to a 3PL, a firm can reduce its investment in fixed assets, such as trucks, trailers, warehouses, and equipment. This can improve the firm's liquidity and return on assets ratios, as well as lower its depreciation and maintenance costs. However, using a 3PL does not necessarily affect the firm's retained earnings, accounts receivable, or intangible assets, which are influenced by other factors, such as profitability, sales, and goodwill.Reference:* Third-Party Logistics (3PL) Guide: Process, Resources, And Benefits* 3PLs, Explained: The Complete Guide to Third-Party Logistics* Understanding 3PL: The Role of Third-Party Logistics in 2024

Cross-training employees is the process of training employees for skills and job roles they weren't initially hired for. This allows them to switch between different tasks and roles when needed, which increases the flexibility and adaptability of the workforce. Cross-training also enhances the problem-solving, communication, and collaboration skills of the employees, but the primary benefit is improved flexibility12 Reference: 1: 9 Major Benefits of Cross-Training Employees Effectively 2: Employee cross-training: 8 benefits you can't afford to miss

Mixed-model scheduling is a technique that allows multiple products to be produced on the same assembly line without changeovers, and then sequences those products in a way that smoothes the demand for upstream components12. In this case, the company is using mixed-model scheduling to produce three different products (A, B, and C) on the same line, and then alternating them in a pattern that minimizes the variation in the workload and the inventory levels. The other options are not correct because:* Matrix scheduling is a technique that assigns tasks to workers based on their skills and availability3.* Synchronized scheduling is a technique that coordinates the production and delivery of materials and components to match the demand of the final assembly4.* Line balancing is a technique that distributes the workload evenly among the workers or machines on a production line5. Reference := 1 Create Mixed Model Flow in 5 Steps | Industrial Equipment News 2 Mixed Model Scheduling - Mountain Home Academy 3 Matrix Scheduling - an overview | ScienceDirect Topics 4 Synchronized Scheduling - an overview | ScienceDirect Topics 5 Line Balancing - an overview | ScienceDirect Topics

A level production strategy is a manufacturing strategy where a company produces a fixed number of products at a fixed rate1. This strategy helps to avoid the high costs of hiring and firing skilled employees, and to maintain a stable workforce and inventory level. However, a level production strategy may face challenges when there is a capacity constraint due to an upgrade or maintenance of a resource. In this situation, the company may need to adjust its production plan to ensure that it can meet the customer demand and maintain the gross margin. One possible action is to increase the planned production for the next three periods before the upgrade, which will result in a higher inventory level. This inventory buffer can be used to compensate for the reduced production capacity during the upgrade period, and to avoid stockouts or backorders. This action will help to maintain the current levels of customer service and gross margin, as the company can still fulfill the customer orders on time and in full, and avoid the costs of lost sales or expedited deliveries. Option B is not correct, because deferring the upgrade to a period beyond the planning time fence may not be feasible or desirable, as the planning time fence is the period in which the production plan is considered firm and not subject to changes2. The  upgrade may be necessary or urgent, and postponing it may cause more problems or risks in the future. Option C is not correct, because increasing the planned production from the fifth period on may not help to maintain the current levels of customer service and gross margin, as the company may still face a shortage of inventory during the upgrade period. Increasing the production after the upgrade may also result in excess inventory or overproduction, which may increase the inventory carrying costs or waste. Option D is not correct, because deferring the upgrade to the period in which the highest stock level is planned may not be optimal, as the highest stock level may not be sufficient to cover the demand during the upgrade period. Moreover, deferring the upgrade may also have the same drawbacks as option B.Reference: 1 Guide to Level Production Strategy - Welp Magazine 3 2 Planning Time Fence | SAP Help Portal 4