CPIM-8.0 APICS Certified in Planning and Inventory Management (CPIM 8.0) Free Practice Exam Questions (2026 Updated)

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. References:

•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.”

Inventory days of supply (IDS) is a measure of how long it takes for a company to sell its entire inventory. Reducing IDS means that the company is selling its inventory faster, which increases the inventory turnover ratio. Inventory turnover ratio is the number of times a company sells and replaces its inventory in a given period. A higher inventory turnover ratio indicates that the company is more efficient in managing its inventory and generating sales. Reducing IDS also means that the company is reducing the time between paying its suppliers and receiving payment from its customers, which reduces the cash-to-cash cycle time. Cash-to-cash cycle time is the number of days a company’s cash is tied up in its operations. A lower cash-to-cash cycle time indicates that the company is more efficient in converting its inventory into cash and improving its liquidity. Therefore, reducing distribution network inventory days of supply will have the impact of increasing turnovers and reducing cash-to-cash cycle time. References:

Gartner’s Top Actions for Supply Chain Inventory Reduction

Inventory Days Of Supply | Supply Chain KPI Library | Profit.co

Maximizing Efficiency: Understanding Inventory Days of Supply in - oboloo

To maximize profit, the manufacturer should choose the machine that has the lowest total cost per unit of demand. The total cost per unit of demand is calculated by adding the fixed cost per unit of demand and the variable cost per unit. The fixed cost per unit of demand is obtained by dividing the fixed cost by the annual demand. The variable cost per unit is given in the table. The total cost per unit of demand for each machine is:

Machine A: 1,000,000100,000​+6.00=6.10

Machine B: 1,000,000200,000​+5.50=5.70

Machine C: 1,000,000250,000​+5.00=5.25

Machine D: 1,000,0001,000,000​+4.50=5.50

The lowest total cost per unit of demand is for Machine C, which is $5.25. Therefore, Machine C will maximize the profit for the manufacturer.

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

An assignable cause of variation is a source of variation that is intermittent, not predictable, and identifiable. It is also called a special cause of variation. An assignable cause of variation affects the process performance in an unexpected and non-random way, and it can be eliminated or controlled by finding and correcting the specific cause1. An example of an assignable cause of variation in process performance is incorrect setup of a machine by the operator. This means that the operator did not follow the standard procedure or specification for setting up the machine, which may result in defective or nonconforming products or materials. This cause of variation can be identified and corrected by checking the setup instructions, training the operator, or implementing a setup verification system23. References: 1 Assignable Cause - isixsigma.com 4 2 Process Capability Analysis - an overview | ScienceDirect Topics 5 3 CPIM Exam References - Association for Supply Chain Management 1

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.

Product price is most effective in influencing demand in the introduction phase of the product life cycle, when the product is new and unfamiliar to the market. In this phase, customers are not aware of the product’s benefits, features, or quality, and may be reluctant to try it. Therefore, a lower price can help attract customers and stimulate demand, as well as deter potential competitors from entering the market. A lower price can also help the product gain market share and establish a loyal customer base. As the product moves to the growth, maturity, and decline phases, price becomes less effective in influencing demand, as other factors, such as product differentiation, quality, promotion, and customer satisfaction, become more important. References:

•Product Life Cycle Explained: Stage and Examples

•The 6 Stages of the Product Life Cycle [+Examples]

•Product Life Cycle - Definition, Stages, Usage

Appraisal costs are incurred from measuring and monitoring activities to ensure quality, such as inspections, testing, and audits. Conducting quality audits is a classic appraisal activity aimed at identifying defects before reaching the customer.

“Appraisal costs are associated with measuring, evaluating, or auditing products or services to assure conformance to quality standards and performance requirements.”

— APICS Dictionary; CPIM SMR Study Guide

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

Customer service performance is the degree to which a company meets or exceeds the expectations of its customers in terms of the quality, timeliness, and satisfaction of the service provided. The most relevant measure of customer service performance is the service perceived by the customer against the service expected by the customer, also known as the service quality gap. This measure captures the difference between what customers expect from a service and what they actually receive, and reflects the level of customer satisfaction or dissatisfaction. A positive service quality gap indicates that the service exceeded the expectations, while a negative service quality gap indicates that the service fell short of the expectations. The other options are not as relevant as the service quality gap because they do not account for the customer’s perspective or perception of the service. Service promised to the customer against service measured by the supplier is an internal measure of service performance, but it does not reflect how the customer perceives the service. Customer complaints received as a percentage of orders shipped is a measure of service failure, but it does not capture the positive feedback or the silent dissatisfied customers. Positive customer feedback as a percentage of customer feedback is a measure of service satisfaction, but it does not account for the customer’s expectations or the service quality dimensions. References:

CPIM Part 2 Exam Content Manual, p. 67

Customer Service Metrics: Top 10 to Measure

20 Customer Service KPIs You Need To Know

Postponement is a strategy whereby the final configuration of a product is delayed as much as possible, usually until a customer order is received. Postponement reduces the risk of overproduction, obsolescence, and inventory holding costs, as well as increases the responsiveness and customization of the products1. A firm that currently produces all items to stock is implementing the concept of postponement in all new product designs. This means that the firm will produce generic or family products that can be differentiated into specific end-products later. This will result in a decrease in the number of finished items stocked, as the firm will only stock the generic or family products and not the final products. The firm will also be able to offer more product variety and flexibility to the customers, as it can customize the products according to the customer orders. Therefore, the most likely outcome of implementing postponement in all new product designs is a decrease in the number of finished items stocked. References: 1 Postponement - Wikipedia 2