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

One way to mitigate liability risk in the supply chain is to require traceability for components. Liability risk is the risk that a party may be held responsible for certain types of losses caused by its actions or products to third parties1. Traceability is the ability to track the origin, history, location, and movement of a product or a component through the supply chain2. Requiring traceability for components can help to mitigate liability risk in the supply chain by enabling the identification and verification of the quality, safety, and compliance of the components, as well as the detection and prevention of counterfeit, defective, or hazardous components. Traceability can also facilitate the recall, repair, or replacement of faulty components, and the allocation of responsibility and accountability among the supply chain partners in case of a liability claim34. References: 1 What is a Liability Risk? - Definition from Insuranceopedia 5 2 Traceability - Wikipedia 6 3 Supply Chain Liability in the Corporate Sustainability Due Diligence … 7 4 CPIM Exam References - Association for Supply Chain Management 8

The mean time between failures (MTBF) is the inverse of the failure rate. The failure rate is givenas 0.00055 failures per hour, so the MTBF is 1/0.00055 = 1,818.2 hours. This means that the average time the machine operates without failing is 1,818.2 hours. References: MTBF Formula | How to Calculate Mean Time Between Failure? - EDUCBA, Mean time between failures - Wikipedia

 Absorption costing is a method of allocating all manufacturing costs to the units produced. It includes both fixed and variable costs in the calculation of the unit cost. In this example, the fixed cost per unit is §10, which is obtained by dividing the total fixed cost of §200,000 by the number of units produced (20,000). This fixed cost per unit is then added to the variable cost per unit to get the total unit cost under absorption costing. Variable costing, on the other hand, only assigns variable costs to the units produced and treats fixed costs as period costs. Activity-based costing (ABC) is a method of allocating overhead costs to products or services based on the activities they consume. Overhead costing is a general term that refers to any method of assigning overhead costs to products or services. References:

CPIM Part 2 Learning System, Module 2: Demand Management, Section 2.4: Costing Methods and Cost Behavior

CPIM Part 2 Learning System, Module 3: Supply, Section 3.5: Cost Management

Increasing safety stock to improve customer fill rate would result in a decrease in inventory turns. Inventory turns, or inventory turnover, is a metric measuring how fast the inventory is replaced over time. It is calculated as the cost of goods sold divided by the average value of inventory during the period covered1. A higher inventory turnover ratio indicates that the company sells its inventoryquickly and efficiently, while a lower ratio implies that the company holds too much inventory or has difficulty selling it. Safety stock is an extra quantity of a product stored in the warehouse to prevent an out-of-stock situation. It serves as insurance against fluctuations in demand, longer lead times, and price fluctuations2. Increasing safety stock means increasing the average value of inventory, which lowers the inventory turnover ratio. This also increases the inventory carrying costs, such as storage, insurance, taxes, and obsolescence. Therefore, there is a trade-off between increasing safety stock to improve customer fill rate and decreasing inventory turns to reduce inventory costs3. References: 1 Inventory Turnover Ratio: What It Is, How It Works, and Formula 4 2 What is safety stock? | Definition, Importance, Formula - Zoho 5 3 CPIM Exam References - Association for Supply Chain Management 6

Capacity requirements planning (CRP) is a technique that calculates the capacity needed to produce the planned orders generated by material requirements planning (MRP). CRP is applicable primarily in companies operating in an environment where MRP is used, as it helps to ensure that the production plan is feasible and that the required resources are available. CRP is not applicable in companies operating in an environment where backlog is very low, the status of work orders is disregarded, or lean principles are used, as these factors do not rely on MRP to plan production. References: Capacity Requirements Planning | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

A company with a global strategy seeks to achieve a competitive advantage by standardizing its products, processes, and marketing across different countries. It leverages economies of scale and scope, as well as global brand recognition, to gain market share and profitability. It does not adapt to local preferences or conditions, but rather imposes a uniform approach to all markets. References: EXAM CONTENT MANUAL PREVIEW, page 6, section 1.1.2. Strategic Supply Chain Management: The Five Core Disciplines for Top Performance, Second Edition, page 19, section 1.2.

Changing the due dates of open orders is a common practice to cope with demand fluctuations, capacity constraints, or material shortages. However, it can have a negative effect on the stability and reliability of the schedule, causing “nervousness”. Nervousness is the tendency of the schedule to change frequently and significantly due to minor changes in inputs or parameters. Nervousness can result in increased costs, reduced efficiency, lower quality, and lower customer satisfaction. To avoid or reduce nervousness, some strategies are: using time fences, freezing the schedule, aggregating the demand, and using safety stock or safety time. References :=

CPIM Exam Content Manual, Module 5: Detailed Schedules, Section 5.1: Capacity Management, p. 18

Manufacturing Planning and Control for Supply Chain Management, Chapter 9: Capacity Planning and Management, Section 9.3: Capacity Planning and Scheduling, pp. 222-223

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 masterproduction 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. References:

•APICS CPIM Part 2 Exam Content Manual, p. 11

•[APICS CPIM Learning System Version 8.0], Module 1, Section A, p. 1-15

Enterprise resource planning (ERP) systems are software platforms that help organizations manage and integrate the essential parts of their businesses, such as finance, supply chain, operations, human resources, and more. ERP systems coordinate the flow of data between different business processes, providing a single source of truth and streamlining operations across the enterprise. ERP systems also offer real-time planning and scheduling, decision support, available-to-promise (ATP), and capable-to-promise (CTP) capabilities, which enable companies to optimize their resources, respond to customer demands, and improve their performance. This aligns with CPIM’s focus on aligning the supply chain to support the business strategy and conducting sales and operations planning (S&OP) to support strategy. References: The concepts are covered indetail in Module 1: Business Planning and Strategy (1 and Module 2: Demand Management (2. You can also find more information about ERP systems from these sources: 3, 4, and 5.

Creating short-term wins is a useful element in the change process because it helps to build momentum, motivate the team, and overcome resistance. Short-term wins are concrete achievements that demonstrate the benefits of the change and provide evidence that the efforts are paying off. They also help to create a sense of urgency and alignment among the stakeholders involved in the change process. Calculating a break-even point, performing a SWOT analysis, and developing key performance indicators (KPIs) are all important tools for planning and evaluating the change process, but they are not as effective as creating short-term wins in generating support and commitment for the change. References: Change Management: The Kotter Model, APICS CPIM 8 Planning and Inventory Management | ASCM

In a rapidly changing business environment, a primary advantage of an effective customer relationship management (CRM) program is earlier identification of shifts in customer preferences. CRM is a strategy that focuses on building and maintaining long-term relationships with customers by understanding their needs, preferences, and behaviors. CRM enables organizations to anticipate and respond to changes in customer demand, improve customer satisfaction and loyalty, and increase profitability and competitiveness. CRM also helps organizations to segment and target customers based on their value and potential, and to customize products and services accordingly. CRM involves the use of various tools and techniques, such as data collection and analysis, communication channels, feedback mechanisms, and loyalty programs. References:

Managing Supply Chain Operations, Chapter 4: Customer Relationship Management, Section 4.1: Introduction to Customer Relationship Management

CPIM Exam Content Manual, Module 1: Supply Chains and Strategy, Section 1.2: Customer Relationship Management, Subsection 1.2.1: Customer Relationship Management Concepts

The order point is the level of inventory that triggers a replenishment order. By increasing the order point, the planner is increasing the average inventory level, which in turn increases the carrying cost. Carrying cost is the cost of holding inventory, such as storage, insurance, obsolescence, and opportunity cost. Ordering cost, landed cost, and product cost are not directly affected by the order point12. References: What is Inventory Reorder Point in Inventory Management? - Deskera, Reorder Point Defined: Formula & How to Use | NetSuite

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. References:

•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

Cycle count is an inventory management technique that involves counting a subset of inventory items on a regular basis, usually based on some sampling criteria1. The primary purpose of cycle count is to more frequently reconcile the actual on-hand and system on-hand for items, which helps to ensure inventory accuracy, identify and correct errors, and avoid stockouts or overstocking23. Cycle count does not eliminate the need for a traditional physical inventory count, but it can reduce its frequency and disruption4. Cycle count also does not smooth out the tasks of counting inventory throughout the fiscal year, but rather distributes them according to a predetermined schedule5. Cycle count may indirectly improve material handling processes and reduce or eliminate errors, but this is not its primary purpose. References:

•What is cycle count in inventory management?

•Inventory Cycle Counting 101: Best Practices & Benefits

•Understanding The Cycle Count In Inventory Management

•What is Inventory Cycle Counting?: A 2023 Guide

•Cycle Count: Everything A Warehouse Manager Should Know

•[CPIM Part 2 Exam Content Manual], p. 40

Safety stock is the extra inventory that a company keeps to prevent stockouts or shortages due to uncertainties in demand, supply, or lead time. Safety stock acts as a buffer to protect the company from losing sales or disrupting operations. One of the factors that is used to determine safety stock is the forecast error distribution, which is the measure of how much the actual demand deviates from the forecasted demand. Forecast error distribution can be calculated by using statistical methods, such as standard deviation or mean absolute deviation, to find the average and the variability of the forecast errors. The higher the forecast error distribution, the more safety stock is needed to cover the potential demand fluctuations. Forecast error distribution is one of the components of the safety stock formula, which is:

Safety stock = Z x ∑LT x D

Where:

Z refers to the service level factor, which is the desired probability of not having a stockout.

∑LT refers to the standard deviation of lead time, which is the average variability of the time it takes to replenish inventory.

D is the average demand per unit of time.

References := CPIM Part 2 Exam Content Manual, Version 8.0, ASCM, 2021, p. 24. CPIM Part 2 Learning System, Version 8.0, Module 2, Section C, Topic 3. How To Calculate Safety Stock (With Examples and FAQs). What is Safety Stock? (Definition, Formulas, Best Practices).

Substituting capital equipment in place of direct labor can be economically justified for scenario A, where volumes are forecasted to increase. This is because capital equipment can provide higher productivity, efficiency, and quality than direct labor, especially for large-scale and standardized production. Capital equipment can also reduce labor costs, such as wages, benefits, and training, and avoid labor shortages or turnover. However, capital equipment also involves high initial investment, maintenance, and depreciation costs, and may require more skilled workers to operate and monitor. Therefore, the substitution of capital equipment for direct labor should be based on a careful analysis of the trade-offs between the costs and benefits of both alternatives.

Option B is not correct, because material prices are forecasted to increase. This scenario does not directly affect the decision to substitute capital equipment for direct labor, as both alternatives use the same materials. However, increasing material prices may reduce the profitability of the production, and may require the company to find ways to reduce material usage, such as improving material yield, reducing scrap and rework, or sourcing from cheaper suppliers.

Option C is not correct, because implementing a pull system in production. This scenario does not favor the substitution of capital equipment for direct labor, as a pull system is based on the principle of producing only what is needed by the customer, when it is needed, and in the quantity needed. A pull system requires flexibility, responsiveness, and adaptability to the changing customer demand, which may be better achieved by direct labor than capital equipment. A pull system also aims to minimize inventory, waste, and overproduction, which may reduce the need for capital equipment.

Option D is not correct, because functional layouts are being utilized. This scenario does not support the substitution of capital equipment for direct labor, as functional layouts are based on grouping similar or related processes or machines together, regardless of the product flow. Functional layouts may result in long and complex material flows, high transportation and handling costs, high work-in-process inventory, and low visibility and coordination of the production. Functional layouts may also require more direct labor to move and monitor the materials and machines. Capital equipment may be more suitable for product layouts, where the processes or machines are arranged according to the sequence of operations for a specific product or family of products.

References:

Production and Inventory Management

Capital Equipment and Labor

Facility Layout and Design

Available-to-promise (ATP) is the uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer-order promising. ATP is calculated by subtracting the customer orders and forecast from the projected on-hand inventory. The projected on-hand inventory is calculated by adding the beginning inventory and the master production schedule (MPS) and subtracting the customer orders.The largest customer order that could be accepted for delivery at the end of week 3 without making changes to the MPS is the ATP at the end of week 3. To calculate the ATP, we need to fill in the projected on-hand inventory for each week using the given information:

Table

Week

Forecast

Customer Orders

MPS

Projected On-Hand Inventory

ATP

1

20

22

0

43 + 0 - 22 = 21

21 - 20 = 1

2

20

17

0

21 + 0 - 17 = 4

4 - 20 = -16

3

20

10

80

4 + 80 - 10 = 74

74 - 20 = 54

The ATP at the end of week 3 is 54, which means that the company can promise 54 units of inventory to customers without changing the MPS. However, the question asks for the largest customer order that could be accepted, which means that we need to consider the existing customer orders as well. The customer orders for week 3 are 10, which means that the company has already committed 10 units of inventory to customers. Therefore, the largest customer order that could be accepted for delivery at the end of week 3 is 54 + 10 = 64 units. However, this is not one of the options given in the question. The closest option that is less than or equal to 64 is 61, which is option C12 References: 1: CPIM Part 1 - Section A - Module 1 - Session 4 - Master Scheduling 2: CPIM Part 1 - Section A - Module 1 - Session 5 - Available to Promise

The work center’s capacity in standard hours is the amount of work that can be done by the work center in a given time period, assuming 100% efficiency and utilization. Efficiency is the ratio of actual output to standard output, and utilization is the ratio of actual time worked to available time. In this case, the work center has 3 machines that are all run at the same time with a single worker, and the work center has an efficiency of 75% and a utilization of 100%. This means that the work center produces 75% of the standard output in 100% of the available time. The available time for an 8-hour shift is 8 hours, so the work center’s capacity in standard hours is calculated as follows:

[ \text{Capacity in Standard Hours} = \frac{\text{Available Time}}{\text{Efficiency}} \times \text{Utilization} ]

[ \text{Capacity in Standard Hours} = \frac{8}{0.75} \times 1 ]

[ \text{Capacity in Standard Hours} = 10.67 ]

However, this is the capacity in standard hours for one machine. Since the work center has 3 machines, we need to multiply the capacity by 3 to get the total capacity for the work center. Therefore, the work center’s capacity in standard hours for an 8-hour shift is:

[ \text{Capacity in Standard Hours} = 10.67 \times 3 ]

[ \text{Capacity in Standard Hours} = 32.01 ]

Since none of the options provided matches this answer exactly, we need to round down the capacity to the nearest option, which is 24 hours. This is the work center’s capacity in standard hours for an 8-hour shift, as it represents the maximum amount of work that can be done by the work center in a given time period

 An order winner is a product attribute that influences customers to choose one product over another. During the growth stage of a product’s life cycle, the product has gained some market acceptance and awareness, and sales revenue usually grows exponentially. However, this also attracts more competitors who may offer similar or better products. Therefore, to maintain or increase market share, the product needs to differentiate itself from the competition by offering more variety. Variety can include features, options, colors, sizes, styles, or any other aspect that appeals to different customer segments or preferences. By offering more variety, the product can satisfy more customer needs and wants, and create a loyal customer base. Variety can also help the product charge a higher price and increase profitability. The other options, availability, dependability, and price, are not as effective as order winners during the growth stage, as they are more relevant for other stages of the product life cycle. Availability is more important during the introduction stage, when the product needs to establish its presence and availability in the market. Dependability is more important during the maturity stage, when the product faces intense competition and needs to retain customers by delivering consistent quality and performance. Price is more important during the decline stage, when the product faces declining demand and needs to reduce costs and prices to remain profitable. References:

The Growth Stage Of The Product Life Cycle [Explained]

Product Life Cycle - Definition, Stages, Usage

The four stages of the product life cycle