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

Excess capacity is the amount of capacity that is available beyond the normal or expected demand. Safety stock is the inventory that is held to protect against uncertainties in demand, supply, or lead time. Excess capacity can be a good substitute for safety stock when the cost of excess capacity is less than the cost of an additional unit of safety stock in the same period. This means that the opportunity cost of having idle resources is lower than the carrying cost of holding extra inventory. In this case, excess capacity can be used to produce more units in response to demand fluctuations, rather than relying on safety stock to meet customer orders. References:

•[CPIM Part 1 Learning System, Module 4: Inventory Management, Section 4.2: Inventory Management Policies and Objectives]

•[CPIM Part 2 Learning System, Module 1: Supply Chain Strategy, Section 1.3: Capacity Management]

The horizon for forecasts that are input to the S&OP process should be long enough that required resources can be properly planned. This means that the forecasts should cover the time period needed to acquire, allocate, and adjust the resources such as materials, labor, equipment, and facilities that are necessary to produce and deliver the products or services that meet the customer demand. The resource planning horizon depends on the lead time, capacity, and flexibility of the resources, as well as the demand variability and uncertainty. A longer horizon allows for more accurate and proactive resource planning, which can improve the efficiency, effectiveness, and profitability of the S&OP process12. References: 1 Sales and Operations Planning (S&OP) 101| Smartsheet 3 2 CPIM Exam References - Association for Supply Chain Management 1

Level production planning is a strategy that maintains a constant output rate, production rate, or workforce level over the planning horizon. It is suitable for products with stable demand or seasonal demand that can be smoothed by using inventory or backorders. Level production planning can help reduce labor costs, hiring and firing costs, and overtime costs. However, it may also result in high inventory costs or customer dissatisfaction due to long lead times or stockouts. To overcome these drawbacks, the company can investigate subcontracting to meet the extra demand during the peak season. Subcontracting is the process of outsourcing some or all of the production to another firm. It can help the company increase its capacity, flexibility, and responsiveness without investing in additional facilities or equipment. Subcontracting can also reduce the risk of obsolescence or spoilage of seasonal products.

Option B is not appropriate, because chase production planning is a strategy that adjusts the production rate to match the demand rate over the planning horizon. It is suitable for products with highly variable or uncertain demand that cannot be smoothed by using inventory or backorders. Chase production planning can help minimize inventory costs and avoid overproduction or underproduction. However, it may also result in high labor costs, hiring and firing costs, and overtime costs. Moreover, it may limit the company’s ability to capture the market share and satisfy the customer demand during the high demand season.

Option C is not appropriate, because hybrid production planning is a strategy that combines the features of level production planning and chase production planning. It is suitable for products with moderate variability or uncertainty in demand that can be partially smoothed by using inventory or backorders. Hybrid production planning can help balance the trade-offs between inventory costs and labor costs. However, it may also increase the complexity and difficulty of coordinating the production and demand plans. Moreover, it may not address the company’s financial constraints or capacity limitations.

Option D is not appropriate, because reducing the size of the customer base during the high demand season is a risky and counterproductive move. It may result in losing loyal customers, damaging the company’s reputation, and forfeiting potential profits. It may also create an opportunity for competitors to gain market share and customer loyalty.

A cellular production system is a type of lean manufacturing system that reduces waste and improves efficiency by grouping machines and workers into cells that can produce a complete product or a product family. A pull production activity control (PAC) technique is most appropriate for a cellular production system because it allows the cells to produce only what is needed by the downstream processes or customers, thus minimizing inventory and overproduction. A pull PAC technique also enables quick response to changes in demand and feedback from quality control. A push PAC technique, on the other hand, is based on predetermined schedules and forecasts, which may not match the actual demand and may result in excess inventory and waste. The shortest processing time (SPT) rule and the distribution requirements planning (DRP) are not specific to cellular production systems and do not take into account the customer demand or the cell capacity. References:

•CPIM Part 2 Exam Content Manual, p. 49

•Cellular Manufacturing: A Comprehensive Guide

•Cellular manufacturing - Wikipedia

Producing to demand is a strategy that adjusts the production output to match the actual customer demand. This strategy is most appropriate during times of highly fluctuating demand, as it can reduce the inventory carrying costs and avoid overproduction or underproduction. Producing to demand can also improve customer satisfaction and responsiveness, as well as reduce waste and obsolescence. However, producing to demand requires a flexible and adaptable workforce that can easily change its capacity and skills to meet the changing demand patterns. The other options, producing to backorders, producing at a constant level, and producing to the sales forecast, are not as effective as producing to demand during times of highly fluctuating demand, as they can result in higher inventory costs, lower customer service, and lower profitability. References:

Demand-Driven Manufacturing: What It Is and Why You Need It

Demand-Driven Manufacturing: How to Optimize Your Production Process

Demand-Driven Manufacturing: A Guide for Modern Manufacturers

A pull system in distribution management is a method of inventory replenishment that is driven by the actual demand of the customers, rather than by forecasts or schedules. In a pull system, each warehouse makes its own replenishment decisions based on the inventory level and the customer orders. A pull system reduces the risk of overstocking or understocking inventory, as it responds to the real-time demand fluctuations. A pull system also improves the efficiency and flexibility of the distribution network, as it eliminates the need for centralized planning and coordination. A pull system is suitable for products that have high demand uncertainty, low holding costs, or short lead times12. References: Push vs. Pull Inventory Management Systems 2023 | Business.org, Push vs. pull: Inventory management for distribution businesses