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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 ofservice 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

A pull system in distribution management is a method of inventory replenishment that is driven by the actual demand of the customers, rather than by forecasts or schedules. In a pull system, each warehouse makes its own replenishment decisions based on the inventory level and the customer orders. A pull system reduces the risk of overstocking or understocking inventory, as it responds to the real-time demand fluctuations. A pull system also improves the efficiency and flexibility of the distribution network, as it eliminates the need for centralized planning and coordination. A pull system is suitable for products that have high demand uncertainty, low holding costs, or short lead times12. References: Push vs. Pull Inventory Management Systems 2023 | Business.org, Push vs. pull: Inventory management for distribution businesses

According to quality function deployment (QFD), customer needs are gathered through surveys. QFD is a methodology for translating customer requirements into product or service specifications by listening to the voice of the customer (VOC). Surveys are one of the methods for collecting VOC data, which can include customer preferences, expectations, problems, and feedback. Surveys can be conducted through various channels, such as interviews, questionnaires, focus groups, or online platforms. Surveys help to identify and prioritize the customer needs and wants, and to measure the customer satisfaction and loyalty12. References: 1 What is Quality Function Deployment (QFD)? | ASQ 3 2 CPIM Exam References - Association for Supply Chain Management 1

Inventory turnover is a ratio that measures how many times a company sells and replaces its inventory in a given period. It is calculated by dividing the cost of goods sold (COGS) by the average inventory value. A higher inventory turnover indicates a more efficient use of inventory, while a lower turnover implies excess inventory or poor sales1.

Based on the values reported in the table, we can calculate the inventory turnover as follows:

Inventory Turnover = COGS / Average Inventory Value = $260,000 / $150,000 = 1.73

Therefore, the correct answer is C.

References := 1 Inventory Turnover - How to Calculate Inventory Turns2

Global outsourcing and shared suppliers serving an industry are drivers of loss of intellectual property risk, which is the risk of losing proprietary information or technology to competitors or other parties. This risk can arise from inadequate protection of data, contracts, patents, or trade secrets, or from intentional or unintentional disclosure by suppliers or employees. Loss of intellectual property can result in reduced competitive advantage, lower market share, or legal disputes. References := CPIM Part 2 Exam Content Manual, Version 8.0, ASCM, 2021, p. 11. CPIM Part 2 Learning System, Version 8.0, Module 1, Section A, Topic 4.

Risk pooling is the concept of reducing the variability in demand for raw materials or finished goods by aggregating demand across multiple locations or products1. By doing so, the demand fluctuations are more likely to cancel out each other, resulting in a lower safety stock and inventory cost. Risk pooling works best for items with high demand uncertainty and long lead times, because these items have the highest risk of stockouts and the highest inventory holding cost. If the demand uncertainty is low, there is less need for risk pooling, as the demand can be easily forecasted and met. If the lead time is short, the replenishment orders can be placed more frequently and adjusted to the actual demand, reducing the need for safety stock and risk pooling2. References: 1 Inventory risk pooling definition — AccountingTools 3 2 Supply Chain Management: Risk pooling - UNB 4

The mean time between failures (MTBF) is the inverse of the failure rate. The failure rate is givenas 0.00055 failures per hour, so the MTBF is 1/0.00055 = 1,818.2 hours. This means that the average time the machine operates without failing is 1,818.2 hours. References: MTBF Formula | How to Calculate Mean Time Between Failure? - EDUCBA, Mean time between failures - Wikipedia

A push system is a production system that relies on forecasts and schedules to plan the production and distribution of goods and services. A pull system is a production system that responds to actual customer demand and signals to trigger the production and distribution of goods and services. A transition from a push system to a pull system requires a change in the mindset and the processes of the organization, as well as the adoption of new tools and techniques to enable a demand-driven production system12.

One of the tools that is commonly used in a pull system is kanban, which is a visual signal that indicates the need for replenishment of materials or products. Kanban cards are attached to standardized containers that hold a fixed amount of inventory. When a container is empty, the kanban card is sent back to the upstream process as a signal to produce more. This way, the inventory level is controlled by the actual consumption of the downstream process, and the production is synchronized with the demand13.

One of the actions that hinders the transition from a push system to a pull system is using work orders as a backup. Work orders are documents that authorize the production of a certain quantity of a product or a service, based on a forecast or a schedule. Work orders are typical of a push system, as they are not triggered by the actual customer demand, but by the planned production. Using work orders as a backup means that the organization is not fully committed to the pull system, and still relies on the push system to ensure the availability of inventory. This can create confusion, inconsistency, and inefficiency in the production system, as well as increase the inventory holding costs and the risk of obsolescence1 .

Therefore, using work orders as a backup is the correct answer, as it is an action that hinders the transition from a push system to a pull system. The other options are actions that support the transition, as they are aligned with the principles and practices of a pull system.

Transportation cost and delivery time are two of the trade-offs that should be evaluated when determining where to place inventory in a multi-echelon supply chain network. A multi-echelon supply chain network consists of multiple levels of distribution, such as factories, warehouses, distribution centers, and retailers. Placing inventory closer to the customers can reduce the delivery time and improve the service level, but it can also increase the transportation cost and the inventory holding cost. Placing inventory farther from the customers can reduce the transportation cost and the inventory holding cost, but it can also increase the delivery time and the risk of stockouts. Therefore, the optimal inventory placement depends on balancing these trade-offs and finding the lowest total cost for the desired service level. The other trade-offs are not directly related to inventory placement in a multi-echelon supply chain network. Production cost and lot size quantity are more related to inventory replenishment policies and economies of scale. Purchase cost and shrinkage rates are more related to inventory sourcing and quality control. Customer price and order quantity are more related to demand management and pricing strategies. References: Network Design and Safety Stock Placement for a Multi-Echelon Supply Chain, APICS CPIM 8 Planning and Inventory Management | ASCM

The production plan relates to a firm’s financial planning because it is used to identify future cash needs. The production plan is a plan that specifies the quantity and timing of production for each product or product family. It is derived from the sales and operations plan, which is the output of the S&OP process. The production plan affects the firm’s financial planning because it determines the amount of cash that is needed to purchase materials, pay labor, and cover overhead costs. The production plan also affects the amount of cash that is generated from sales, as it influences the delivery time and customer service level. Therefore, the production plan helps to forecast the cash inflows and outflows, and to plan for the financing and investing activities of the firm. The other statements are not true about the production plan. The production plan does not calculate standard product costs, as standard product costs are predetermined costs that are based on the expected inputs and outputs of production. The production plan does not determine variable costs, as variable costs are costs that vary with the level of production. The production plan does not project payroll costs, as payroll costs are part of the labor budget, which is derived from the production budget. References: Production Plan | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

 Management should support investments in new process technologies that align with the strategic objectives of the organization and provide a sustainable competitive advantage in the market. New process technologies may involve changes in existing systems, procedures, and skills, but these changes should be justified by the potential benefits and risks of the investment. Therefore, option D is correct. Option A is incorrect because requiring minimal changes in existing systems, procedures, and skills is not a sufficient criterion for investing in new process technologies. Option B is incorrect because relying on the recommendations of technical experts and equipment suppliers may not reflect the best interests of the organization or its customers. Option C is incorrect because providing significant cost-reduction opportunities for the company’s current products may not be enough to justify the investment in new process technologies, especially if the products have a short life cycle or low demand. References: CPIM Part 2 Exam Content Manual, Version 8.0, Section H: Quality, Continuous Improvement, and Technology, Subsection H.3: Technology, p. 85.

Kanban is a pull system that uses visual signals to trigger the replenishment of materials or parts. It works best in environments where the demand is stable and predictable, and the production process is continuous and standardized. Kanban helps to reduce inventory, waste, and lead time by synchronizing the production and consumption rates. Kanban is not suitable for environments where the demand is volatile, the product life cycle is short, the production process is intermittent, or the product is highly customized. These factors would require frequent changes in the kanban system and reduce its effectiveness. References:

•CPIM Part 1 Study Guide, Chapter 4: Demand Management, Section 4.3: Pull Systems and Kanban

•CPIM Part 2 Study Guide, Chapter 1: Execution of Operations, Section 1.4: Lean Production and JIT

•What Is the Kanban System? - Investopedia

•Kanban - What Is it? | Lean Enterprise Institute

Increasing safety stock to improve customer fill rate would result in a decrease in inventory turns. Inventory turns, or inventory turnover, is a metric measuring how fast the inventory is replaced over time. It is calculated as the cost of goods sold divided by the average value of inventory during the period covered1. A higher inventory turnover ratio indicates that the company sells its inventoryquickly and efficiently, while a lower ratio implies that the company holds too much inventory or has difficulty selling it. Safety stock is an extra quantity of a product stored in the warehouse to prevent an out-of-stock situation. It serves as insurance against fluctuations in demand, longer lead times, and price fluctuations2. Increasing safety stock means increasing the average value of inventory, which lowers the inventory turnover ratio. This also increases the inventory carrying costs, such as storage, insurance, taxes, and obsolescence. Therefore, there is a trade-off between increasing safety stock to improve customer fill rate and decreasing inventory turns to reduce inventory costs3. References: 1 Inventory Turnover Ratio: What It Is, How It Works, and Formula 4 2 What is safety stock? | Definition, Importance, Formula - Zoho 5 3 CPIM Exam References - Association for Supply Chain Management 6

The order point is the level of inventory that triggers a replenishment order. By increasing the order point, the planner is increasing the average inventory level, which in turn increases the carrying cost. Carrying cost is the cost of holding inventory, such as storage, insurance, obsolescence, and opportunity cost. Ordering cost, landed cost, and product cost are not directly affected by the order point12. References: What is Inventory Reorder Point in Inventory Management? - Deskera, Reorder Point Defined: Formula & How to Use | NetSuite

The production plan is a high-level plan that defines the level of output to be produced for each product family or group in a given time period. It is based on the sales forecast, the aggregate production capacity, and the desired inventory levels. The production plan does not specify the quantities of each individual product to be produced, as this is done in the master production schedule. The production plan also does not include the sales forecast or the business plans for the company, as these are inputs to the production plan, not outputs12 References:

Introduction to Materials Management, 8th ed., 2017, Chapman, Stephen N., J. R. Tony Arnold, Ann K. Gatewood, and Lloyd M. Clive, ISBN: 978-0134156323, Chapter 11: Production Planning System

Manufacturing Planning and Control for Supply Chain Management, The CPIM Reference, 2nd ed., 2018, Jacobs, F. Robert, William L. Berry, D. Clay Whybark, and Thomas E. Vollmann, ISBN: 978-1260108385, Chapter 6: Production Planning Strategies