Free CPIM-Part-2 Practice Test Questions and Answers (2026) | Cert Empire Practice Questions

When deciding what to report externally regarding sustainability performance, a company should

disclose its past results and future strategies. This will help the company to demonstrate its progress,

achievements, challenges, and commitments in relation to its environmental, social, and governance

(ESG) goals. Disclosing past results and future strategies will also enhance the company’s

transparency, accountability, and credibility with its stakeholders, such as investors, customers,

employees, regulators, and the public.

Disclosing results of poor performance or acceptable performance alone is not sufficient, as it does

not provide a complete picture of the company’s sustainability performance. Moreover, disclosing

only poor performance may damage the company’s reputation and trust, while disclosing only

acceptable performance may raise doubts about the company’s honesty and reliability. Disclosing

why current regulations are too costly is irrelevant and inappropriate, as it does not reflect the

company’s sustainability performance or efforts. It may also imply that the company is not willing or

able to comply with the regulations or improve its sustainability practices.

Reference : A Comprehensive Guide on How to Write a Sustainability Report; Designing Your

Company’s Sustainability Report; What to Include in a Sustainability Report.

Failure Mode and Effects Analysis (FMEA) is a systematic, proactive method for identifying and

evaluating the potential causes and impacts of failures in a process, product, or service1. It aims to

anticipate and prevent failures by assessing the relative effect and risk of different failure modes1.

The use of FMEA would be most appropriate prior to a new product introduction (NPI). During the

NPI phase, FMEA can be used to identify potential failure modes in the design of the product and

assess their potential effects on the product’s performance and reliability. This allows for proactive

measures to be taken to mitigate or eliminate these risks before the product is launched. FMEA is

particularly useful in the early stages of design, as it helps in making informed decisions that can

improve the quality and safety of the product1.

In contrast, using FMEA after a one-time quality incident investigation (A) or during evaluation of a

new market opportunity © may not be as effective, as these situations do not involve the design or

development of a product or process. While FMEA can be used during the define phase of a Six

Sigma project (B), its most impactful application is during the design phase of a new product, where

it can significantly influence the final outcome.

Ergonomic workstation design should incorporate the reduction of repetitive motion, as this can help

prevent musculoskeletal disorders, fatigue, and errors. Repetitive motion can cause strain on the

muscles, tendons, and nerves, leading to pain, inflammation, and loss of function. Ergonomic

workstation design can reduce repetitive motion by optimizing the layout of the workstation, tools,

and materials, using automation or mechanization where possible, and varying the tasks performed

by the worker. Reference: CPIM Part 2 Exam Content Manual, Domain 8: Manage Quality, Continuous

Improvement, and Technology, Section A: Quality Management, Subsection 3: Quality Tools and

Techniques, Page 37.

A life cycle assessment (LCA) would be used to determine environmental aspects and impacts.

Environmental aspects are the elements or characteristics of a product or service that can interact

with

the

environment,

such

as

emissions,

energy

use,

water

use,

waste

generation,

etc. Environmental impacts are the effects or consequences of the environmental aspects on the

environment, such as climate change, acidification, eutrophication, human health, biodiversity, etc1

A life cycle assessment (LCA) is a systematic analysis of the potential environmental impacts of

products or services during their entire life cycle. During an LCA, you evaluate the potential

environmental impacts throughout the entire life cycle of a product (production, distribution, use and

disposal) by considering all the relevant environmental aspects and their interactions with the

environment23

An LCA can help you:

Identify the most significant environmental aspects and impacts of your product or service

Compare the environmental performance of different products or services

Find opportunities to reduce the environmental impacts and improve the environmental

performance of your product or service

Communicate the environmental benefits of your product or service to your customers, stakeholders,

and regulators

Therefore, an LCA would be used to determine environmental aspects and impacts.

Reference: 1: Environmental Aspect Definition 2: Life-cycle assessment - Wikipedia 1 3: Life Cycle

Assessment (LCA) - Complete Beginner’s Guide - Ecochain 2

ABC classification is an inventory categorization technique that divides items into three classes based

on their usage value, which is the product of the number of units sold and the cost per unit. Class A

items have the highest usage value and account for a large proportion of the total inventory value,

but a small percentage of the number of items. Class B items have a moderate usage value and

account for a moderate proportion of the total inventory value and the number of items. Class C

items have the lowest usage value and account for a small proportion of the total inventory value,

but a large percentage of the number of items1.

An advantage of applying ABC classification to a firm’s replenishment items is that it allows planners

to focus on critical products. Replenishment items are items that are regularly ordered or produced

to maintain a certain level of inventory. By using ABC classification, planners can prioritize the

replenishment of class A items, which have the highest impact on the firm’s profitability and

customer satisfaction. Planners can also apply different inventory management techniques and

policies for each class of items, such as more frequent reviews, tighter controls, lower safety stocks,

and higher service levels for class A items, and less frequent reviews, simpler controls, higher safety

stocks, and lower service levels for class C items234. This way, ABC classification can help planners

optimize the replenishment process and reduce costs, waste, and stockouts.

The other options are not advantages of applying ABC classification to a firm’s replenishment items,

because they are either irrelevant or incorrect. ABC classification does not distinguish independent

demand from dependent demand, which are two types of demand that depend on whether the item

is sold to customers or used as a component in another item5. ABC classification does not provide

better order quantities than the economic order quantity (EOQ), which is a formula that calculates

the optimal order quantity that minimizes the total inventory costs6. ABC classification does not

allow the firm to utilize time-phased order point (TPOP), which is a method that determines when to

place an order based on the projected inventory position and the lead time7.

A benefit of the ISO 9000 series of specifications is that purchasers may accept ISO 9001

certifications, minimizing additional surveys. ISO 9001 is the standard within the ISO 9000 family that

specifies the requirements for a quality management system (QMS) that an organization must fulfill

to demonstrate its ability to consistently provide products and services that meet customer and

regulatory requirements1. ISO 9001 certification is a third-party verification that an organization has

implemented and maintained a QMS that conforms to the ISO 9001 standard2. By obtaining ISO 9001

certification, an organization can provide objective evidence of its quality performance to its

customers, suppliers, regulators, and other stakeholders3. This can reduce the need for additional

audits or surveys by the purchasers, as they can rely on the ISO 9001 certification as a proof of

quality assurance4. This can save time, money, and resources for both the purchasers and the

suppliers, as well as improve their trust and confidence in each other5.

Reference: 1: ISO 9000 Vs. 9001 3 2: ISO 9000 Standard: Benefits, How to Achieve 4 3: The Ultimate

Guide to ISO 9000 5 4: ISO 9000 Certification Guide 1 5: ISO - Selection and use of the ISO 9000 family

of standards 6

According to the web search results, the production plan is a long-term plan that establishes the

quantity and timing of the end products to be produced by the company1. The production plan is

based on the

forecasted demand,

the

available

capacity,

and the

company’s strategic

objectives2. The production plan is also used to authorize and guide the master schedule, which is a

more detailed and short-term plan that specifies the quantity and timing of each end product to be

produced in each time period3. The master schedule is derived from the production plan, and it must

not exceed the production plan’s limits. Therefore, the major contribution of the production plan is

to provide authorization for the master schedule.

The other options are not correct, because they are either irrelevant or inaccurate. The production

plan does not establish demand by end item, but rather responds to the forecasted demand by end

item. The production plan does not identify key resources to support the master schedule, but rather

determines the overall resource requirements to meet the production targets. The production plan

does not establish the weekly build schedule, but rather provides the basis for the weekly build

schedule, which is a more detailed breakdown of the master schedule that specifies how many units

of each end product will be built in each week.

Reference:

Production Planning - Definition, Objectives, Types, Importance

Production Planning in Manufacturing: Best Practices for Production Plans

Master Production Schedule (MPS) - Definition & Examples | Marketing Tutor

[Master Production Schedule (MPS) - Meaning & Process | Tallyfy]

[Production Planning - an overview | ScienceDirect Topics]

[Production Planning: Definition, Levels, Objectives and Factors]

[What Is a Weekly Build Schedule? | Bizfluent]

Process improvement is a method of analyzing and enhancing the production methods and

techniques to increase productivity and performance. Process improvement aims to reduce costs,

waste, defects, and errors, as well as to improve quality, efficiency, and customer satisfaction. When

considering process improvement, the first approach that should be considered is making better use

of existing resources. This means that the production system should optimize the utilization and

allocation of the available resources, such as materials, labor, machines, and space. This can be

achieved by implementing various techniques, such as lean manufacturing, six sigma, kaizen, or 5S.

Making better use of existing resources can help to improve the process without requiring additional

investment or expenditure.

The other options are not the first approaches that should be considered as part of process

improvement. Hiring more skilled people to perform the job is not the first approach, as it may

increase the labor cost and require more training and supervision. Hiring more skilled people may

not necessarily improve the process if the existing methods and techniques are inefficient or

ineffective. Buying better and faster equipment is not the first approach, as it may involve a large

capital outlay and a long payback period. Buying better and faster equipment may not necessarily

improve the process if the existing resources are underutilized or misallocated. Applying stricter

quality control is not the first approach, as it may increase the inspection and testing cost and time.

Applying stricter quality control may not necessarily improve the process if the existing methods and

techniques are prone to errors or defects. Reference: CPIM Exam Content Manual Version 7.0,

Domain 8: Manage Quality, Continuous Improvement, and Technology, Section 8.2: Continuous

Improvement Concepts, p. 46; Process Improvement; Process Improvement Definition.

The output of the equipment on Day 6 can be calculated by multiplying the demonstrated capacity,

the utilization, and the efficiency. The demonstrated capacity is given as $1,200 per day. The

utilization is the ratio of the actual time that the equipment is used to the available time that it could

be used. Since the utilization is reduced by 25% on Day 6, it means that the equipment is used for

75% of the available time. Therefore, the utilization is 0.75. The efficiency is the ratio of the actual

output to the standard output. It is given as 110%, which means that the equipment produces 10%

more than the standard output. Therefore, the efficiency is 1.1. The output on Day 6 can be found by

multiplying these three factors:

Output = Demonstrated capacity x Utilization x Efficiency Output = $1,200 x 0.75 x 1.1 Output = $990

Therefore, the output on Day 6 is $990. Reference: CPIM Part 2 Exam Content Manual, Version 7.0,

Domain 6: Plan, Manage, and Execute Detailed Schedules, Section A: Detailed Capacity Planning and

Scheduling, Subsection 2: Capacity Management Concepts and Calculations, p. 37-38.

The cumulative available-to-promise (ATP) method is based on an assumption that available

inventory in a period can be committed to demand in that period and any future period in the

planning horizon. The planning horizon is the time span for which plans are made and

executed1. The cumulative ATP is a running total of the ATP figure in the master schedule, which

shows the planned production or purchase of a product over a series of time periods2. The

cumulative ATP method allows the company to account for future shortages and build up inventory

for large or seasonal orders3.

The other options are not correct. The demand time fence (DTF) is a point in the near future, usually

equal to the cumulative lead time, beyond which changes to the master schedule are not allowed4.

The cumulative ATP method does not depend on the DTF, as it considers all future periods in the

planning horizon, regardless of whether they are inside or outside the DTF. Future periods with a

planned receipt are periods where there is an expected supply of inventory from production or

purchase orders2. The cumulative ATP method does not only commit inventory to these periods, but

also to any other periods where there is demand.

Reference : Available-to-Promise (ATP) - Tutorial; Planning Horizon Definition; Demand Time Fence

(DTF) Definition; Cumulative Available-to-Promise | Cargoz.

When a certified supplier’s delivery performance declines, a company should respond initially by

communicating with the supplier to investigate the source of the problem. A certified supplier is a

supplier that has met certain quality, delivery, and service standards and has been approved by the

company to supply goods or services without inspection or testing. A certified supplier is expected to

maintain a high level of performance and reliability, as well as to report any issues or deviations that

may affect the delivery process. However, sometimes a certified supplier may experience a decline in

delivery performance, which can cause delays, disruptions, or dissatisfaction for the company and its

customers.

The best way to deal with a decline in delivery performance from a certified supplier is to

communicate with the supplier and find out the root cause of the problem. Communication is

essential for maintaining a good relationship with the supplier and for resolving any issues or

conflicts that may arise. Communication can help the company and the supplier to understand each

other’s expectations, needs, and challenges, as well as to identify and implement corrective actions

or preventive measures. Communication can also help to restore trust and confidence between the

parties and to prevent further deterioration of performance.

Tightening performance criteria for the supplier is not an appropriate initial response when a

certified supplier’s delivery performance declines. Tightening performance criteria means imposing

stricter standards or requirements on the supplier, such as reducing lead times, increasing penalties,

or demanding more frequent reports. Tightening performance criteria may seem like a way of

holding the supplier accountable and motivating them to improve their performance, but it can also

have negative consequences. Tightening performance criteria can create more pressure and stress

for the supplier, which can affect their quality, productivity, or morale. It can also damage the

relationship with the supplier, as it may signal a lack of trust, respect, or cooperation from the

company.

Establishing a temporary buffer of finished goods inventory at the supplier is not an effective initial

response when a certified supplier’s delivery performance declines. Establishing a temporary buffer

of finished goods inventory means storing extra units of products at the supplier’s location to

compensate for any delays or shortages in delivery. Establishing a temporary buffer of finished goods

inventory may seem like a way of ensuring availability and continuity of supply, but it can also have

drawbacks. Establishing a temporary buffer of finished goods inventory can increase inventory costs,

such as holding costs, transportation costs, or obsolescence costs. It can also reduce inventory

visibility and control, as it may be difficult to track or manage the inventory at the supplier’s location.

Moreover, establishing a temporary buffer of finished goods inventory does not address the root

cause of the decline in delivery performance, but rather masks or postpones it.

Increasing the standard lead time of the component to allow for supplier delays is not a suitable

initial response when a certified supplier’s delivery performance declines. Increasing the standard

lead time of the component means extending the time between placing an order and receiving it

from the supplier. Increasing the standard lead time of the component may seem like a way of

adjusting to the decline in delivery performance and avoiding late deliveries, but it can also have

disadvantages. Increasing the standard lead time of the component can reduce customer satisfaction

and loyalty, as it may result in longer waiting times or missed deadlines for the customers. It can also

reduce operational efficiency and flexibility, as it may limit the ability to respond to changes in

demand or supply. Furthermore, increasing the standard lead time of the component does not solve

the problem of the decline in delivery performance, but rather accepts or tolerates it.

Reference := Supplier Performance Metrics and Scorecard - IADC.org, Delivery Performance

Explained (Measures, KPIs, and How to Improve), How to manage supplier performance -

gatekeeperhq.com

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.

Reference: 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 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 reflect

the 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.

Reference: 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].

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. Reference: 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.

A reduction in purchased lot sizes will reduce inventory levels. Purchased lot sizes are the quantities

of inventory that a stage of the supply chain either produces or purchases at a given time1. Inventory

levels are the amount of stock available throughout the distribution network2. By reducing the

purchased lot sizes, a company can lower the amount of inventory it holds, which can reduce the

inventory costs, such as holding costs, shortage costs, and order costs3.

Holding costs are the costs associated with storing and maintaining inventory, such as rent, utilities,

insurance, taxes, depreciation, and obsolescence4. Shortage costs are the costs incurred when

demand exceeds supply, such as lost sales, customer dissatisfaction, and backorder costs4. Order

costs are the costs involved in placing and receiving orders, such as transportation, inspection, setup,

and administrative costs4.

Reducing the purchased lot sizes can lower the holding costs by decreasing the average inventory in

the supply chain due to either production or purchases in lot sizes that are larger than those

demanded by the customer1. This is also known as cycle inventory1. Reducing the purchased lot

sizes can also lower the shortage costs by increasing the frequency of orders and decreasing the lead

time between orders5. This can help avoid stockouts and meet customer demand more consistently.

Reducing the purchased lot sizes can also lower the order costs by optimizing the order quantity

based on the trade-off between holding costs and order costs. This is also known as economic order

quantity (EOQ).

Therefore, a reduction in purchased lot sizes will reduce inventory levels and inventory costs.

Reference: 1: Chapter 11 Flashcards by Amy Horton 3 2: Optimal Inventory Levels: Calculate &

Manage Your Stock Levels 2 3: Inventory Levels Explained: The Highs & Lows Of Optimal Stock 1 4:

Economic Order Quantity Model in Inventory Management 4 5: Dual sourcing: Advantages and

disadvantages : Economic Order Quantity: What Does It Mean and Who Is It For5

Product price is most effective in influencing demand in the introduction phase of the product life

cycle. The product life cycle is a concept that describes the stages that a product goes through from

its development to its decline. The introduction phase is the first stage, when the product is launched

into the market and consumers are made aware of its existence and benefits. In this phase, product

price can have a significant impact on the demand for the product, depending on the following

factors:

The degree of product innovation: If the product is highly innovative and offers a unique value

proposition to customers, it may have a high price elasticity of demand, meaning that customers are

willing to pay a high price for it regardless of the availability of substitutes or competitors1. This is

often the case for products that create a new market or category, such as the iPhone or the

Kindle2. On the other hand, if the product is not very innovative and offers a similar value

proposition to existing products, it may have a low price elasticity of demand, meaning that

customers are sensitive to price changes and will switch to cheaper alternatives or competitors if the

price is too high1. This is often the case for products that enter an existing market or category, such

as generic drugs or copycat products3.

The degree of market competition: If the product faces little or no competition in the market, it may

have more pricing power and flexibility, meaning that it can charge a high price and still generate

high demand4. This is often the case for products that have a strong brand image, a loyal customer

base, or a patent protection5. On the other hand, if the product faces high competition in the

market, it may have less pricing power and flexibility, meaning that it has to charge a low price or

offer discounts and promotions to attract and retain customers4. This is often the case for products

that have a weak brand image, a low customer loyalty, or a short product life cycle.

Therefore, product price can be an effective tool to influence demand in the introduction phase of

the product life cycle, depending on how innovative and competitive the product is. A high price can

signal quality, exclusivity, and differentiation, while a low price can signal affordability, accessibility,

and penetration.

Reference: Price Elasticity of Demand - Definition & Formula - Corporate Finance Institute; Product

Life Cycle Explained: Stage and Examples - Investopedia; Generic Drugs - Overview - Mayo

Clinic; Pricing Strategies For The Product Life Cycle (Made Simple) - Tyonote; Brand Image - Definition

& Examples - Marketing Tutor; [Customer Loyalty - Definition & Examples - Marketing Tutor].

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.

Reference: 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).

Input/output control (I/O) is a type of tool that is used for monitoring a capacity plan. A capacity plan

is a statement of the resources needed to meet the production plan over a medium-term horizon. A

capacity plan can be stated in different units of measure depending on the type of manufacturing

environment, such as hours, units, tons, or dollars. Input/output control (I/O) is a method of

measuring and comparing the actual input and output of a work center or a production line against

the planned input and output. Input is the amount of work that is released to the work center or the

production line, and output is the amount of work that is completed by the work center or the

production line. Input/output control (I/O) helps to monitor the performance and efficiency of the

work center or the production line, and to identify any deviations or problems that may affect the

capacity plan. Input/output control (I/O) also helps to adjust the input or output levels as necessary

to maintain the balance between demand and supply, and to achieve the desired throughput.

Reference: CPIM Exam Content Manual Version 7.0, Domain 6: Plan, Manage, and Execute Detailed

Schedules, Section 6.3: Monitor Detailed Schedules, Subsection 6.3.2: Describe how to monitor

input/output control (I/O) (page 60).

The production plan is a statement of the resources needed to meet the aggregate demand plan over

a medium-term horizon. The production plan is the output of the supply planning step in the sales

and operations planning (S&OP) process. The production plan relates to a firm’s financial planning

because it is used to identify future cash needs. Cash needs are the amount of money that a firm

requires to operate and grow its business. Cash needs can be influenced by various factors, such as

sales revenue, cost of goods sold, operating expenses, capital expenditures, inventory levels,

accounts receivable, accounts payable, and taxes. The production plan can help to estimate the cash

inflows and outflows associated with these factors, and to determine the optimal balance between

them. The production plan can also help to identify the potential sources and uses of cash, such as

borrowing, investing, or paying dividends. By identifying future cash needs, the production plan can

help to improve the firm’s liquidity, profitability, and solvency.

Reference: 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 queue is the number of hours that a work order sits in front of a work center before it starts. It also

includes the move time required to physically move partially completed items from the previous

operation to the next work center1. A queue is used to provide a buffer between the time that a

component arrives at a machine or work center and when the operation actually starts2. A queue

can help to neutralize delays in previous operations and to reduce the waiting time and flow time of

the work orders3.

An order that moves into a work center on schedule following completion of a previous operation

will move into the queue in priority sequence. This means that the order will be placed in the queue

according to its priority level, which is determined by the priority control technique used for the

production system. A priority control technique is a method of determining the sequence and timing

of production orders in a manufacturing system4. Some examples of priority control techniques are

first-come, first-served (FCFS), shortest processing time (SPT), earliest due date (EDD), and critical

ratio (CR). Depending on the priority control technique, an order may move to the beginning, end, or

middle of the queue.

An order will not necessarily move to the end or the beginning of the queue, as these positions

depend on the priority level of the order and the other orders in the queue. An order will not move

into the queue when there is capacity available, as this implies that there is no queue at all. Capacity

is the amount of time or resources available for production at a work center5. Capacity can be

affected by factors such as machine availability, labor skills, setup time, and maintenance. Capacity

planning is a function of determining and adjusting the optimal level of resources needed to meet

the demand5.