CPIM-Part-2 APICS Certified in Planning and Inventory Management(Part 2) Free Practice Exam Questions (2025 Updated)

 A focused differentiation strategy is a type of focus strategy that targets a narrow buyer segment and pursues a unique competitive advantage. A focus strategy is a business-level strategy that involves concentrating on a specific market niche or segment and tailoring the products or services to the needs and preferences of that niche1. A differentiation strategy is a business-level strategy that involves creating a product or service that is perceived as unique, distinctive, or superior by the customers, and charging a premium price for it2. A focused differentiation strategy combines these two approaches by offering a differentiated product or service to a narrow market segment that has unique demands or characteristics. This strategy allows the firm to create value for its customers and charge higher prices than its competitors, while avoiding direct competition with firms that target a broader market or offer lower-cost products or services3.

An example of a focused differentiation strategy is Lululemon, a Canadian company that sells high-end yoga and athletic apparel. Lululemon targets a niche market of health-conscious, affluent, and fashion-oriented women who are willing to pay premium prices for its products. Lululemon differentiates itself from other sportswear brands by offering high-quality, stylish, and innovative products that are designed to enhance the performance and comfort of its customers. Lululemonalso fosters a strong brand identity and community among its customers by providing yoga classes, fitness events, online platforms, and social media engagement4.

References:

Focus Strategy - Definition, Types and Examples | Marketing Tutor

Differentiation Strategy - Definition & Examples | Marketing Tutor

Focused Differentiation Strategy: Definition & Examples - Video & Lesson Transcript | Study.com

Lululemon’s Focused Differentiation Strategy - Business Strategy Hub

 An organization’s immediate industry and competitive environment includes the factors that directly affect its ability to compete and achieve its goals. These factors are often analyzed using Porter’s Five Forces model, which identifies five competitive forces that shape the industry: threat of new entrants, power of suppliers, power of buyers, threat of substitute products, and rivalry among existing competitors1. Among these forces, substitute products are the most relevant component of the immediate industry and competitive environment, as they represent the alternative solutions that customers can choose instead of the organization’s products. Substitute products can reduce the demand and profitability of the organization’s products, as well as increase the price sensitivity and bargaining power of customers1.

The other options are not components of the immediate industry and competitive environment, but rather components of the general or macro environment. The general or macro environment includes the broader factors that affect all organizations in a society or a market, such as political, economic, social, technological, environmental, and legal factors2. These factors are often analyzed using PESTEL analysis, which helps organizations identify the opportunities and threats arising from the external environment2. Among these factors, political factors include the government policies, regulations, and stability that affect the organization’s operations and decisions2. Interest rates are part of the economic factors that include the market conditions, growth, inflation, unemployment, and exchange rates that affect the organization’s performance and profitability2. Sociocultural forces are part of the social factors that include the demographics, values, beliefs, lifestyles, and preferences of the customers and society that affect the organization’s demand and customer satisfaction2.

References : Competitive Environment: Definition, Examples & Factors - StudySmarter US; Industry Analysis | Porter’s Five Forces | Competition.

The poka-yoke technique of process design is a method for preventing or detecting errors and defects in the manufacturing process. Poka-yoke means “mistake-proofing” in Japanese, and it aims to eliminate human errors by creating systems that either make it impossible for a mistake to occur or make the mistake immediately obvious once it has occurred1. One way to implement poka-yoke is to use part attributes, which are physical features of a part that ensure it can only be assembled or used in the correct way2. For example, a part attribute can define the correct orientation of a part, such as a notch, a hole, a shape, or a color, so that it can only fit into the matching component. This prevents the operator from inserting the part incorrectly or using the wrong part.

The other options do not illustrate the poka-yoke technique of process design. Reducing the number of types of fasteners is an example of standardization, which is a method for simplifying and streamlining the production process by minimizing variation and complexity3. Customized containers that hold mixed sets of parts are an example of kitting, which is a method for organizing and delivering parts or materials to the point of use or consumption in the production process4. An andon is a visual or audible signal that indicates the status of a machine or process, such as normal,abnormal, or emergency5. An andon can be used to alert operators or supervisors of problems or issues, but it does not prevent or detect errors by itself.

References: Lean Six Sigma Tools: What is Poka-Yoke? - Villanova University; What is Poka-Yoke? Mistake & Error Proofing | ASQ; What is Poka-Yoke? [Examples, Principles, Methods]; Standardization - an overview | ScienceDirect Topics; Kitting - an overview | ScienceDirect Topics.

The horizon for forecasts that are input to the sales and operations planning (S&OP) process should be long enough that required resources can be properly planned. The S&OP process is a cross-functional process that aligns the demand and supply plans of an organization. The S&OP process consists of several steps, such as data gathering, demand planning, supply planning, pre-S&OP meeting, executive S&OP meeting, and S&OP implementation. The output of the S&OP process is the production plan, which is a statement of the resources needed to meet the aggregate demand plan over a medium-term horizon. The production plan can be stated in different units of measure depending on the type of manufacturing environment, such as hours, units, tons, or dollars. The horizon for forecasts that are input to the S&OP process should be long enough that required resources can be properly planned, meaning that the organization can anticipate and allocate the necessary capacity, materials, labor, equipment, and facilities to meet the expected demand. The horizon for forecasts should also match the lead time for acquiring or changing the resources, as well as the planning cycle for updating the production plan.

References: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1: Develop Supply Plans, Subsection 4.1.2: Describe how to develop a production plan (page 36).

Producing to backorders means that the company only produces goods when there is a confirmed customer order. This strategy is most appropriate during times of highly fluctuating demand, as it allows the company to avoid holding excess inventory that may incur high carrying costs and become obsolete. Producing to backorders also enables the company to adjust its workforce according to the actual demand, which can be easily changed as the question states. This strategy can improve customer satisfaction, as the products are tailored to the specific needs and preferences of each customer. However, producing to backorders also has some drawbacks, such as longer lead times, higher production costs, and lower economies of scale.

The other strategies are less suitable for highly fluctuating demand. Producing at a constant level means that the company produces goods at a fixed rate regardless of the demand fluctuations. This strategy can result in either excess inventory or stockouts, depending on whether the demand is lower or higher than the production level. Producing to the sales forecast means that the company produces goods based on the projected demand for a certain period. This strategy can be effective if the forecast is accurate, but it can also lead to inventory imbalances if the forecast is inaccurate or if there are unexpected changes in demand. Producing to demand means that the company produces goods based on the current demand in the market. This strategy can be responsive and flexible, but it can also be challenging to implement, as it requires high visibility, coordination, and agility in the supply chain.

References : CPIM Part 2 Exam Content Manual, Domain 4: Plan and Manage Supply, Section B: Production Planning and Control, Subsection 1: Production Strategies and Techniques, Page 19.

Fill rate is the percentage of customer orders that are fulfilled without running out of inventory or placing backorders1. Fill rate is an important measure of customer service and inventory management efficiency. A high fill rate indicates that the company can meet customer demand in a timely and accurate manner, while a low fill rate suggests that the company is struggling to satisfy customer expectations.

Operating costs are the expenses associated with running a business, such as rent, utilities, wages, transportation, etc2. Operating costs are influenced by various factors, such as production volume, inventory level, technology, and quality. A high operating cost means that the company spends more money to produce and deliver its products or services, while a low operating cost means that the company spends less money to do so.

Service level is the measure of how well a company delivers its products or services to its customers, based on criteria such as availability, timeliness, quality, and satisfaction3. Service level is affected by various factors, such as demand variability, supply reliability, capacity utilization, and customer feedback. A high service level means that the company meets or exceeds customer expectations, while a low service level means that the company fails or falls short of customer expectations.

As the company continues its initiative to increase the fill rate on these parts to 100%, it is most likely that operating costs will increase faster than service level. This is because increasing the fill rate requires increasing the inventory level, which in turn increases the carrying costs, such as warehousing, insurance, taxes, and obsolescence4. Moreover, increasing the fill rate also requires reducing the variability and uncertainty in demand and supply, which may involve investing in more advanced technology, improving quality control, enhancing supplier relationships, or implementing demand management techniques5. These actions can also increase the operating costs of the company.

However, increasing the fill rate does not necessarily increase the service level at the same rate. This is because service level depends not only on fill rate, but also on other factors, such as delivery speed, order accuracy, product quality, and customer satisfaction6. Therefore, increasing the fill rate may not be enough to improve the service level significantly. In fact, there may be a point of diminishing returns, where increasing the fill rate beyond a certain level does not result in a proportional increase in service level. For example, increasing the fill rate from 95% to 99% may have a noticeable impact on service level, but increasing it from 99% to 100% may have a negligible impact on service level.

 Rivalry among competing sellers is the degree of competition between firms in the same industry. It can affect the profitability and market share of the firms, and influence their strategies and decisions. Rivalry tends to be stronger when the demand is slow, the products are similar, the switching costs are low, and the capacity is high. Rivalry can also lead to innovation, differentiation, and customer satisfaction.

Rivalry among competing sellers is generally weaker when buyer demand is growing rapidly. This is because a fast-growing market offers more opportunities for expansion and growth for all the firms, without having to compete aggressively for a limited number of customers. A fast-growing market also reduces the pressure to cut prices or increase advertising, as the demand exceeds the supply. A fast-growing market can also attract new entrants, which can increase the rivalry in the long run, but in the short run, it can create more diversity and segmentation in the market.

References: Competitive Rivalry: What Is It and Why Is It Important? | Indeed.com; Industry Rivalry & Competition | Porter’s Five Forces.

 Time-to-market (TTM) is the length of time it takes to develop a product from conception until it is released to the market and is available for sale1. Reducing TTM can provide a competitive advantage, as it can help a company to capture customer demand, respond to market changes, and increase profitability1.

One strategy to decrease TTM for a new product family is to increase collaboration between the buyer and the supplier of new components. Collaboration can involve sharing information, resources, risks, and rewards among supply chain partners to achieve mutual benefits2. By collaborating with the supplier of new components, the buyer can improve the quality, reliability, and innovation of the components, as well as reduce the costs, lead times, and uncertainties associated with them2. This can speed up the product development process and reduce the time and resources required to bring the new product family to the market.

The other options are not effective strategies to decrease TTM for a new product family. Decreasing the number of suppliers for components of the new product may reduce the complexity and variability of the supply chain, but it may also increase the dependency and vulnerability on a single or few suppliers, which may affect the availability and performance of the components3. Decreasing the purchasing lot size for the new product’s components may reduce the inventory carrying costs and risks, but it may also increase the ordering costs and frequency, which may affect the efficiency and responsiveness of the supply chain4. Increasing the safety stocks for the new product’s components may reduce the risk of stockouts and delays, but it may also increase the inventory carrying costs and risks, as well as tie up cash flow and working capital.

References : Time to market: Definition and strategies to speed up TTM; Time To Market (TTM) Defined & Why It’s Important | TCGen; Market Timing Tips Every Investor Should Know; Supply Chain Collaboration: Definition & Benefits; [Supplier Consolidation: Definition & Benefits]; [Economic Order Quantity (EOQ) Model: Definition & Formula]; [Safety Stock: The Ultimate Guide].

The sales and operations planning (S&OP) process is a cross-functional process that aligns the demand and supply plans of an organization. The S&OP process consists of several steps, such as data gathering, demand planning, supply planning, pre-S&OP meeting, executive S&OP meeting, and S&OP implementation. The output of the S&OP process is the production plan, which is a statement of the resources needed to meet the aggregate demand plan over a medium-term horizon. The production plan can be stated in different units of measure depending on the type of manufacturing environment. In a repetitive manufacturing environment, where the same or similar products are produced continuously or at regular intervals, the production plan can be stated in terms of the number of products planned for shipment. This unit of measure reflects the volume and mix of products that are expected to be sold and delivered to the customers. The number of products planned for shipment can also be used to calculate the capacity requirements, material requirements, and inventory levels for each product family.

References: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1: Develop Supply Plans, Subsection 4.1.2: Describe how to develop a production plan (page 36).

A company’s process technology and equipment should be characterized by product-independent processes and flexible automation if its competitive business strategy is based on offering customized products or features and a rapid response to market shifts. Product-independent processes are processes that can produce a variety of products or features without requiring major changes or adjustments in the production system. Flexible automation is a type of automation that can adapt to different product specifications or volumes by using programmable or reconfigurable machines, robots, or software. Product-independent processes and flexible automation can enable a company to offer customized products or features and a rapid response to market shifts by allowing it to:

Produce small batches or single units of products or features that meet specific customer needs or preferences.

Switch quickly and easily between different products or features without losing time or efficiency.

Incorporate new technologies, materials, or designs into the production system without disrupting the existing operations.

Respond to changes in demand or supply by adjusting the production capacity or output accordingly.

Continuous flow processes and a high degree of fixed automation are not suitable for a company’s process technology and equipment if its competitive business strategy is based on offering customized products or features and a rapid response to market shifts. Continuous flow processes are processes that produce products or features in a continuous and uninterrupted manner, without any breaks or buffers between the stages. Fixed automation is a type of automation that uses specialized machines or equipment that are designed to perform a specific task or operation. Continuous flow processes and fixed automation can enable a company to achieve high efficiency, productivity, and quality, but they also have some limitations, such as:

They are suitable for producing large volumes of standardized products or features that have stable and predictable demand.

They are difficult and costly to modify or change when there is a need to produce different products or features or to incorporate new technologies, materials, or designs.

They are inflexible and rigid when there are variations or fluctuations in demand or supply, as they cannot adjust the production capacity or output easily.

Product-independent processes with parallel production lines are not appropriate for a company’s process technology and equipment if its competitive business strategy is based on offering customized products or features and a rapid response to market shifts. Product-independent processes with parallel production lines are processes that use multiple identical machines or equipment that can produce the same product or feature simultaneously. Product-independent processes with parallel production lines can enable a company to increase its production capacity and output, but they also have some drawbacks, such as:

They are suitable for producing high volumes of standardized products or features that have high and constant demand.

They are inefficient and wasteful when there is a need to produce different products or features or to incorporate new technologies, materials, or designs, as they require duplication of resources and equipment.

They are redundant and unnecessary when there are variations or fluctuations in demand or supply, as they create excess inventory or idle capacity.

Product-dependent processes and automation based on product volume are not optimal for a company’s process technology and equipment if its competitive business strategy is based on offering customized products or features and a rapid response to market shifts. Product-dependent processes are processes that can produce only one type of product or feature, or that require significant changes or adjustments in the production system to produce different products or features. Automation based on product volume is a type of automation that uses different machines or equipment depending on the volume of production required for each product or feature. Product-dependent processes and automation based on product volume can enable a company to optimize its production costs and quality, but they also have some disadvantages, such as:

They are suitable for producing low volumes of specialized products or features that have low variability and uncertainty in demand.

They are complex and time-consuming when there is a need to produce different products or features or to incorporate new technologies, materials, or designs, as they require frequent changes or setups in the production system.

They are unresponsive and slow when there are variations or fluctuations in demand or supply, as they cannot adapt the production capacity or output quickly.

References := Process Technology - an overview | ScienceDirect Topics, Flexible Automation - an overview | ScienceDirect Topics, Continuous Flow Process - an overview | ScienceDirect Topics, Fixed Automation - an overview | ScienceDirect Topics, Parallel Production Line - an overview | ScienceDirect Topics, Product Dependent Process - an overview | ScienceDirect Topics

 In a lean environment, one uses material requirements planning (MRP) processing primarily to create plans to share with suppliers. MRP is a software-based system that calculates the quantity and timing of materials needed for production, based on the master production schedule, the bill of materials, and the inventory status. MRP helps to coordinate the flow of materials from suppliers to the production process, reducing waste and inventory costs. MRP can also generate purchase orders, work orders, and other documents to communicate the plans with suppliers and internal departments. MRP does not calculate average daily demand, which is a measure of the average amount of a product or service that is sold or consumed per day. MRP does not determine the kanban circuit locations, which are the physical places where kanban cards or containers are exchanged between processes in a pull system. MRP does not determine where to use supermarkets, which are locations where a small amount of inventory is kept to buffer against fluctuations in demand or supply. References: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1: Supply Planning Concepts, p. 24; Lean MRP; Manufacturing resource planning.

Finished goods inventory is a type of inventory that consists of the final products that are ready for sale to the customers. Finished goods inventory investment is the value of the finished goods inventory held by the company. Service level is a measure of customer satisfaction that indicates the percentage of customer orders that can be fulfilled from the available inventory. Service level typically will increase when finished goods inventory investment is increased, because more inventory means more ability to meet the customer demand. However, the relationship between service level and finished goods inventory investment is not linear, but rather asymptotic. This means that service level will increase at a decreasing rate as finished goods inventory investment increases. In other words, the marginal benefit of increasing finished goods inventory investment will diminish as the service level approaches 100%. This is because there is a limit to how much inventory can improve the service level, and beyond a certain point, the additional inventory will not have a significant impact on customer satisfaction.

References: CPIM Exam Content Manual Version 7.0, Domain 5: Plan and Manage Inventory, Section 5.1: Develop Inventory Plans, Subsection 5.1.2: Describe how to develop an inventory policy (page 44).

The most appropriate action by the master scheduler is to forward the request to senior management. According to the Time Fence Control (MRP and Supply Chain Planning Help) - Oracle, the demand time fence is a period within which the planning process does not consider forecast demand when calculating actual demand, and the planning time fence is a period within which the planning process does not alter the current material plan or master schedule. The master scheduler can make changes to the master schedule within the planning time fence, but only with approval from senior management. The request from marketing falls between the demand and the planning time fences, which means that it may affect the current material plan or master schedule, as well as the capacity and resource requirements of the production system. Therefore, the master scheduler should forward the request to senior management, who can evaluate the impact and feasibility of the request, and decide whether to approve or reject it.

The change in level of work-in-process (WIP) inventory is the most appropriate indicator to evaluate the effectiveness of the detailed capacity planning processes for a firm that produces a moderate variety of products to stock in a single plant. Detailed capacity planning is the process of determining the quantity and timing of resources, such as labor, equipment, and materials, needed to execute the master production schedule (MPS) at the work center level1. The MPS is a plan that specifies the quantity and timing of end items to be produced in a given time period2. The change in level of WIP inventory is a measure of the difference between the amount of WIP inventory at the beginning and at the end of a period3. WIP inventory consists of partially completed products or components that are waiting for further processing or assembly.

The change in level of WIP inventory can indicate how well the detailed capacity planning processes are aligned with the MPS and the actual demand. A positive change in WIP inventory means that more products or components are being produced than consumed, which implies that there is excess capacity or insufficient demand. A negative change in WIP inventory means that more products or components are being consumed than produced, which implies that there is insufficient capacity or excess demand. A zero or minimal change in WIP inventory means that the production and consumption rates are balanced, which implies that there is optimal capacity and demand. Therefore, by monitoring the change in level of WIP inventory, the firm can evaluate whether its detailed capacity planning processes are effective in meeting customer needs and expectations, as well as minimizing inventory costs and maximizing resource utilization.

The other options are not as appropriate indicators to evaluate the effectiveness of the detailed capacity planning processes for a firm that produces a moderate variety of products to stock in a single plant. Units of output per direct labor hour is a measure of labor productivity, which indicates how efficiently labor is used to produce output. However, labor productivity does not reflect the effectiveness of detailed capacity planning processes, because it does not account for other factors that affect production, such as equipment, materials, quality, or demand. Percentage of master schedule attained is a measure of schedule performance, which indicates how well the actual production matches the planned production. However, schedule performance does not reflect the effectiveness of detailed capacity planning processes, because it does not account for other factors that affect production, such as capacity constraints, resource availability, or customer satisfaction. Level of finished goods inventory is a measure of inventory management, which indicates how much inventory is available to meet customer orders. However, finished goods inventory does not reflectthe effectiveness of detailed capacity planning processes, because it does not account for other factors that affect production, such as product variety, lead time, or quality.

References: Detail Capacity Planning - Capacity Planning - Gaebler.com Resources …; Master Production Schedule (MPS) Definition | Operations & Supply Chain Dictionary; Work-in-Process Inventory: Definition & Example - Video & Lesson Transcript | Study.com; [Work-in-Process (WIP) Definition - Investopedia]; [Labor Productivity Definition - Investopedia]; [Labor Productivity: Definition & Statistics - Video & Lesson Transcript | Study.com]; [Schedule Performance Index (SPI) Definition - Investopedia]; [Schedule Performance Index (SPI) & Cost Performance Index (CPI) in Project Cost Management]; [Finished Goods Inventory: Definition & Formula - Video & Lesson Transcript | Study.com]; [Finished Goods Inventory: Definition & Example - Video & Lesson Transcript | Study.com].

A purchase order is issued to the supplier for each delivery requirement is an activity that represents waste in a system. Waste is any activity or process that does not add value to the customer or the product, but consumes resources, time, or money. Waste can reduce the efficiency, productivity, and quality of the system, as well as increase the costs, defects, or delays. Waste can be classified into seven types: overproduction, inventory, transportation, motion, waiting, overprocessing, and defects1.

Issuing a purchase order to the supplier for each delivery requirement is an example of overprocessing waste. Overprocessing waste is any activity or process that is unnecessary or excessive for meeting the customer needs or specifications. Overprocessing waste can result from poor communication, unclear requirements, redundant tasks, or outdated procedures. Issuing a purchase order to the supplier for each delivery requirement is an overprocessing waste because it involves more paperwork, approvals, and transactions than needed. It can also create confusion, errors, or delays in the delivery process. A better way to eliminate this waste is to use a pull system, such as kanban2, that signals the supplier to deliver only when there is a demand from the customer.

The other options are not activities that represent waste in a system. More kanbans with smaller quantities are added to the supply chain is an activity that reduces waste in a system. Kanban is a pull system that uses visual signals, such as cards or containers, to indicate when and how much to produce or deliver. Kanban can help reduce waste by synchronizing the production and delivery processes with the customer demand, minimizing inventory levels, improving quality and efficiency, and preventing overproduction or underproduction3. Adding more kanbans with smaller quantities can help reduce inventory waste by lowering the holding costs, transportation costs, or obsolescence costs of inventory. It can also help reduce overproduction waste by producing or delivering only what is needed by the customer.

A kanban is eliminated from the system is an activity that reduces waste in a system. Eliminating a kanban from the system means reducing the number of signals or containers used in the production or delivery process. Eliminating a kanban from the system can help reduce waste by increasing the throughput and velocity of the process, reducing cycle times and lead times, improving responsiveness and flexibility, and enhancing customer satisfaction4.

A production forecast is issued to the supplier is not an activity that represents waste in a system. A production forecast is an estimate of the future demand or sales of a product or service. A production forecast can help plan and manage the production and delivery processes by determining how much and when to produce or deliver. A production forecast can help reduce waste by optimizing the use of resources and capacity, minimizing inventory levels and costs, improving service levels and quality, and avoiding stockouts or shortages5. Issuing a production forecast to thesupplier can help align the production and delivery processes with the customer demand and expectations.

References := The 7 Wastes With Examples: How to Identify Them | Lean Manufacturing, What Is Overprocessing Waste? Definition And Examples, Kanban - Wikipedia, How To Reduce Inventory With Kanban | Lean Manufacturing, Production Forecasting - an overview | ScienceDirect Topics

 Staging in a manual system corresponds to dispatching in a computer system. Staging is the process of preparing and moving materials or components to the point of use or consumption in a production system1. Staging can be done manually by workers who physically move the items from storage areas to workstations, or automatically by conveyors, robots, or other devices2. Dispatching is the process of authorizing and releasing work orders or tasks to the production system3. Dispatching can be done manually by supervisors who assign work to workers, or automatically by computer systems that use algorithms or rules to prioritize and schedule work4. Both staging and dispatching are functions that facilitate the flow of materials and information in a production system and ensure that the right items are available at the right time and place.

References: CPIM Part 2 Exam Content Manual, Domain 6: Plan, Manage, and Execute Detailed Schedules, Section 6.1: Detailed Scheduling Concepts and Tools, p. 75-76; Staging (manufacturing) - Wikipedia; Staging - an overview | ScienceDirect Topics; Dispatching - an overview | ScienceDirect Topics; Dispatching: Meaning, Objectives, Importance and Procedure.

A process capability study is a method of evaluating how well a process can produce outputs that meet the specifications or requirements. A process capability study involves collecting data from a sample of the process output, calculating the process mean and standard deviation, and comparing them with the specification limits1. A process capability study can help identify the sources and causes of variation, measure the performance and quality of the process, and determine the potential for improvement2.

A process capability study would be necessary in a laboratory when frequent failures are occurring. Frequent failures indicate that the process is not capable of producing reliable and consistent results, and that there may be some problems or defects in the process. A process capability study can help diagnose the issues and suggest corrective actions to reduce or eliminate the failures. For example, a laboratory that performs blood tests may conduct a process capability study to find out why some of the test results are inaccurate or invalid, and what factors affect the accuracy and validity of the test results.

The other options are not situations that would require a process capability study, because they are either unrelated or irrelevant to the process performance or quality. A test results are consistently late (A) is a problem of timeliness, not capability. A new technician is hired © is a change of personnel, not process. Hours of operation are to be extended (D) is a change of schedule, not process.

References:

Process Capability Analysis Cp, Cpk, Pp, Ppk - A Guide - 1factory

What is Process Capability? Capability Estimates & Studies | ASQ

Hedge is a risk management strategy that assumes that losses in one part of the supply chain will be offset by gains in another. Hedge is a method of reducing the exposure to price fluctuations, currency fluctuations, or other uncertainties by taking a position in a related market or asset that moves in the opposite direction. Hedge helps to protect the profitability and cash flow of the supply chain by locking in the prices or rates at a certain level. For example, a company that imports raw materials from another country may hedge against the exchange rate risk by buying a forward contract or an option that guarantees a fixed rate for the currency conversion.

The other options are not risk management strategies that assume that losses in one part of the supply chain will be offset by gains in another. Flexible is a risk management strategy that allows the supply chain to adapt to changing conditions and customer preferences by using multiple sources, modes, or routes. Fluctuation is not a risk management strategy, but a term that describes the variation or volatility of a market or asset over time. Speculative is not a risk management strategy, but a term that describes an activity or investment that involves a high degree of uncertainty or risk, with the expectation of earning a high return. References: CPIM Exam Content Manual Version 7.0, Domain 7: Plan and Manage Distribution, Section 7.1: Distribution Planning Concepts, p. 40; Hedging; Hedging Definition.

 Safety capacity in lean environments is where take time is greater than cycle time. Take time is the average time between the start of production of one unit and the start of production of the next unit1. Cycle time is the average time it takes to complete one unit of a product or service2. Safety capacity is the amount of capacity that is reserved to deal with unexpected events or fluctuations in demand or supply3.

In lean environments, the goal is to minimize waste and maximize value by producing only what the customer wants, when the customer wants it, and in the exact amount4. This means that the production system should be synchronized with the customer demand, and the take time should match the cycle time. However, in reality, there may be variations or uncertainties in the demand or supply, such as changes in customer preferences, seasonal patterns, quality issues, equipment breakdowns, or supplier delays. These variations or uncertainties can cause disruptions or imbalances in the production system, leading to stockouts, overproduction, waiting, defects, or rework5.

To cope with these variations or uncertainties, lean environments may use safety capacity as a buffer or contingency plan. Safety capacity is where take time is greater than cycle time, meaning that the production system has some extra capacity to produce more than what the customer currently demands. This extra capacity can be used to absorb the variations or uncertainties and maintain a smooth and stable production flow6. However, safety capacity should not be confused with excess capacity, which is where take time is much greater than cycle time, meaning that the production system has a lot of idle or underutilized resources. Excess capacity is a waste that should be eliminated or reduced in lean environments7.

Therefore, safety capacity in lean environments is where take time is greater than cycle time.

References: 1: Take Time Definition 1 2: Cycle Time Definition 2 3: Safety Capacity Definition 3 4: Lean Manufacturing Definition 4 5: The Seven Wastes of Lean 5 6: Capacity Planning Tools 6 7: Excess Capacity