CPIM-8.0 APICS Certified in Planning and Inventory Management (CPIM 8.0) Free Practice Exam Questions (2025 Updated)

The service part demand can be included in the gross requirements for the part. Gross requirements are the total demand for an item derived from all sources, such as customer orders, dependent demand, forecast, or safety stock. Service part demand is the demand for an item that is used to replace or repair a product after it has been sold to the customer. Service part demand is independent of the production of other items, and it can be forecasted based on historical data, warranty information, or customer contracts. Service part demand can be added to the gross requirements for the part, along with the dependent demand from the other part that uses it as a component.

Option A is not correct, because the low-level code of the part is not zero. Low-level code is the lowest level in the bill of material (BOM) at which an item appears as a component. An item that is not a component of any other item has a low-level code of zero. An item that is a component of another item has a low-level code equal to one plus the low-level code of the parent item. In this case, the part is a component of another part, so its low-level code is at least one.

Option B is not correct, because the material requirements for the part will not be understated. Material requirements are the net requirements for an item after deducting the available inventory and scheduled receipts from the gross requirements. If the service part demand is included in the gross requirements, the material requirements will reflect the true demand for the part. If the service part demand is not included, the material requirements will be understated, and the part may face stockouts or backorders.

Option D is not correct, because the part should have some safety stock. Safety stock is the extra inventory held to protect against uncertainties in demand, supply, or lead time. Safety stock can help reduce the risk of stockouts, improve customer service, and buffer against variability. The part should have some safety stock to account for the fluctuations in the service part demand, which may depend on factors such as product failure rate, customer behavior, or environmental conditions.

 Forecast error is the difference between the actual demand and the forecasted demand for a given period. Forecast error can be caused by various factors, such as changes in customer preferences, market conditions, competitor actions, or random variation. Forecast error can be measured using different methods, such as mean absolute deviation (MAD), mean absolute percentage error (MAPE), or tracking signal. Forecast error typically triggers forecast revision when it is continually increasing, which indicates that the forecast model is not capturing the underlying demand pattern or trend. A continually increasing forecast error can lead to poor customer service, excess or obsolete inventory, or lost sales opportunities. Therefore, it is important to monitor the forecast error and revise the forecast when necessary to improve the forecast accuracy and reliability. Forecast error does not trigger forecast revision when it is used in computing the tracking signal, associated with the introduction stage of the product life cycle, or caused by random variation. These are not valid reasons for revising the forecast, as they do not indicate a systematic or persistent deviation from the actual demand. References:

CPIM Part 1 Study Guide, Chapter 4: Demand Management, Section 4.2: Forecasting Techniques and Performance Measurement

CPIM Part 2 Study Guide, Chapter 3: Demand Management, Section 3.1: Demand Planning

A Critical Look at Measuring and Calculating Forecast Bias, Section: What Is Forecast Bias?

How Can Forecast Error be Calculated?, Section: Introduction

In an assemble-to-order (ATO) manufacturing environment, the MPS is used to plan subassemblies and components that have long lead times or high demand variability. These subassemblies and components are produced and stocked in anticipation of customer orders. The end items are only scheduled in the MPS when a customer order is received, and they are assembled from the available subassemblies and components. This reduces the lead time and inventory for the end items, while increasing the flexibility and responsiveness to customer needs. ATO is a hybrid strategy between make-to-stock (MTS) and make-to-order (MTO). References :=

CPIM Exam Content Manual, Module 4: Supply, Section 4.1: Master Production Schedule, p. 14

Manufacturing Planning and Control for Supply Chain Management, Chapter 8: Master Production Scheduling, Section 8.3: Master Production Scheduling in Different Environments, pp. 191-192

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. References: 1 Guide to Level Production Strategy - Welp Magazine 3 2 Planning Time Fence | SAP Help Portal 4

A low-cost provider strategy is a business strategy where a company aims to become the most cost-efficient player in its industry, often by producing goods or providing services at a lower cost than its competitors. The overall goal is to increase market share or achieve higher profitability. The low-cost leader in an industry often sets the price that other companies have to match or beat to stay competitive12.

A low-cost provider strategy works best when buyers are more price sensitive, meaning they are more likely to switch to cheaper alternatives if the price of a product or service increases. This condition creates a strong demand for low-priced products or services, and gives the low-cost leader a competitive advantage over rivals who have higher costs and prices. Buyers are more price sensitive when34:

•The product or service is standardized or undifferentiated, and there are few switching costs.

•The product or service represents a significant portion of the buyer’s budget or income.

•The product or service has low quality, performance, or image attributes that limit the buyer’s satisfaction or loyalty.

•The product or service is not crucial to the buyer’s well-being or enjoyment.

The other options are not correct because:

•A. Price competition among rivals is similar. This condition does not favor a low-cost provider strategy, because it implies that the industry is already highly competitive and there is little room for differentiation. A low-cost leader would have to lower its prices even further to gain an edge over rivals, which could erode its profitability and sustainability.

•C. There are many ways to achieve product differentiation. This condition does not favor a low-cost provider strategy, because it implies that the industry is diverse and dynamic, and there are many opportunities for innovation and value creation. A low-cost leader would have to invest more in research and development, marketing, and customer service to keep up with the changing customer preferences and expectations, which could increase its costs and reduce its efficiency.

•D. There are few industry newcomers. This condition does not favor a low-cost provider strategy, because it implies that the industry is mature and stable, and there are few threats from new entrants. A low-cost leader would have to rely on its existing customer base and market share, which could limit its growth potential and expose it to the risk of obsolescence.

References := 1 Low-cost leadership strategy: Explained with examples2 2 Low-Cost Producer: Definition, Strategies, Examples - Investopedia4 3 Low Cost Strategy - Definition, Factors & Example - MBA Skool5 4 Generating Advantage – Strategic Management - Open Educational Resources1

One advantage of adopting a supply network perspective is that it enhances understanding of competitive and cooperative forces. A supply network perspective is a holistic view of the supply chain that considers the interdependencies and interactions among the various entities involved in the flow of materials, information, and money. A supply network perspective helps to identify the sources of value creation and capture, the opportunities and threats in the market, and the potential synergies and conflicts among the supply chain partners. A supply network perspective also helps to design and implement effective strategies and tactics to achieve competitive advantage and customer satisfaction. The other statements are not advantages of adopting a supply network perspective. Protecting global markets, defining market relationships and partnerships, and encouraging rivals to collaborate are possible outcomes or objectives of adopting a supply network perspective, but they are not the benefits of the perspective itself. References: Supply Network Perspective | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM