APICS CPIM-8.0 - Certified in Planning and Inventory Management (CPIM 8.0)

The probability of stocking out is the likelihood that the demand for an item will exceed the available inventory during a given period. It is one of the criteria used to determine safety stock in a distribution center (DC), as safety stock is inventory that is carried to protect against forecast errors and fluctuations in demand or supply. The higher the probability of stocking out, the more safety stock is needed to avoid customer dissatisfaction and lost sales. The other criteria are not directly related to safety stock. Economic order quantity (EOQ) is the order quantity that minimizes the total inventory holding and ordering costs. Seasonal index value is a measure of how demand varies according to different seasons or periods. Alpha factor level is a parameter used in exponential smoothing to adjust the forecast based on the error between the actual and forecasted demand. References: Safety Stock: A Contingency Plan to Keep Supply Chains Flying High, APICS CPIM 8 Planning and Inventory Management | ASCM

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

A statistical safety stock calculation is based on the assumption that demand and lead time are normally distributed and independent. This method is suitable for end items with stable demand, as it can provide a reasonable estimate of the required safety stock to achieve a desired service level. Therefore, option C is correct. Option A is incorrect because components used in multiple end items may have dependent demand, which means that their demand is derived from the demand of the end items. Dependent demand may not follow a normal distribution and may require a different method of safety stock calculation. Option B is incorrect because new products at time of introduction may have uncertain or variable demand, which makes it difficult to apply a statistical safety stock calculation. Option D is incorrect because supply-constrained raw materials may have long and variable lead times, which also complicates the use of a statistical safety stock calculation. References: CPIM Part 2 Exam Content Manual, Version 8.0, Section E: Plan and Manage Inventory, Subsection E.2: Inventory Management Methods, p. 54.

Proximity to suppliers would be classified as a cost factor in preparing for a facility location decision. Cost factors are the expenses associated with operating a facility in a specific location, such as labor, materials, utilities, taxes, and transportation. Proximity to suppliers can affect the cost of inbound transportation, inventory holding, and quality control. Choosing a location that is close to suppliers can reduce these costs and improve the efficiency and reliability of the supply chain. References:

Managing Supply Chain Operations, Chapter 2: Global Supply Chain Strategy, Section 2.3: Facility Location

CPIM Exam Content Manual, Module 1: Supply Chains and Strategy, Section 1.4: Facility Location, Subsection 1.4.1: Facility Location Concepts