CPIM

CPIM practice questions, page 4 of 11, with answer review and explanations.

Question 16

A manufacturer has a forecasted annual demand of 1,000,000 units for a new product. They have to choose 1 of 4 new pieces of equipment to produce this product. Assume that revenue will be $10 per unit for all 4 options. Which machine will maximize their profit if the manufacturer anticipates market demand will be steady for 3 years and there is no residual value for any of the equipment choices?

  1. Machine A
  2. Machine B
  3. Machine C
  4. Machine D

Question 17

A reduction in purchased lot sizes will reduce which of the following items?

  1. Inventory levels
  2. Frequency of orders
  3. Reorder points (ROPs)
  4. Setup times

Question 18

A work center has 3 machines that are all run at the same time with a single worker. The work center has an efficiency of 75% and a utilization of 100%. What is the work center’s capacity in standard hours for an 8-hour shift?

  1. 6 hours
  2. 8 hours
  3. 18 hours
  4. 24 hours

Question 19

A company with stable demand that uses exponential smoothing to forecast demand would typically use a:

  1. low alpha value.
  2. low beta value.
  3. high beta value.
  4. high alpha value.

Question 20

The primary outcome of frequent replenishments in a distribution requirements planning (DRP) system is that:

  1. lead times to customers decrease.
  2. transportation costs decrease.
  3. the level of required safety stock is reduced.
  4. more efficient load consolidation occurs.