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Up-to-date information about production order status is required to do the task of calculating the cost of work in process (WIP). WIP is the inventory of partially finished goods that are still undergoing production. The cost of WIP is the sum of the material, labor, and overhead costs that have been incurred for the unfinished products. To calculate the cost of WIP, the production order status is needed to determine the quantity and stage of completion of each product in the production process. The production order status can also indicate the actual costs and variances from the planned costs for each production order. By having up-to-date information about production order status, the cost of WIP can be calculated more accurately and timely, which can help to monitor and control the production performance and profitability. References := CPIM Part 2 Exam Content Manual, Version 8.0, ASCM, 2021, p. 28. CPIM Part 2 Learning System, Version 8.0, Module 3, Section B, Topic 1. Production order lifecycle overview. How to Make a Production Order for Manufacturing.

The service part demand can be included in the gross requirements for the part. Gross requirements are the total demand for an item derived from all sources, such as customer orders, dependent demand, forecast, or safety stock. Service part demand is the demand for an item that is used to replace or repair a product after it has been sold to the customer. Service part demand is independent of the production of other items, and it can be forecasted based on historical data, warranty information, or customer contracts. Service part demand can be added to the gross requirements for the part, along with the dependent demand from the other part that uses it as a component.

Option A is not correct, because the low-level code of the part is not zero. Low-level code is the lowest level in the bill of material (BOM) at which an item appears as a component. An item that is not a component of any other item has a low-level code of zero. An item that is a component of another item has a low-level code equal to one plus the low-level code of the parent item. In this case, the part is a component of another part, so its low-level code is at least one.

Option B is not correct, because the material requirements for the part will not be understated. Material requirements are the net requirements for an item after deducting the available inventory and scheduled receipts from the gross requirements. If the service part demand is included in the gross requirements, the material requirements will reflect the true demand for the part. If the service part demand is not included, the material requirements will be understated, and the part may face stockouts or backorders.

Option D is not correct, because the part should have some safety stock. Safety stock is the extra inventory held to protect against uncertainties in demand, supply, or lead time. Safety stock can help reduce the risk of stockouts, improve customer service, and buffer against variability. The part should have some safety stock to account for the fluctuations in the service part demand, which may depend on factors such as product failure rate, customer behavior, or environmental conditions.

 Absorption costing is a method of allocating all manufacturing costs to the units produced. It includes both fixed and variable costs in the calculation of the unit cost. In this example, the fixed cost per unit is §10, which is obtained by dividing the total fixed cost of §200,000 by the number of units produced (20,000). This fixed cost per unit is then added to the variable cost per unit to get the total unit cost under absorption costing. Variable costing, on the other hand, only assigns variable costs to the units produced and treats fixed costs as period costs. Activity-based costing (ABC) is a method of allocating overhead costs to products or services based on the activities they consume. Overhead costing is a general term that refers to any method of assigning overhead costs to products or services. References:

CPIM Part 2 Learning System, Module 2: Demand Management, Section 2.4: Costing Methods and Cost Behavior

CPIM Part 2 Learning System, Module 3: Supply, Section 3.5: Cost Management

Excess capacity is the amount of capacity that is available beyond the normal or expected demand. Safety stock is the inventory that is held to protect against uncertainties in demand, supply, or lead time. Excess capacity can be a good substitute for safety stock when the cost of excess capacity is less than the cost of an additional unit of safety stock in the same period. This means that the opportunity cost of having idle resources is lower than the carrying cost of holding extra inventory. In this case, excess capacity can be used to produce more units in response to demand fluctuations, rather than relying on safety stock to meet customer orders. References:

•[CPIM Part 1 Learning System, Module 4: Inventory Management, Section 4.2: Inventory Management Policies and Objectives]

•[CPIM Part 2 Learning System, Module 1: Supply Chain Strategy, Section 1.3: Capacity Management]

The tracking signal is a measurement that indicates there may be bias in the forecast model. The tracking signal is the ratio of the cumulative forecast error to the mean absolute deviation (MAD). It measures how well the forecast is tracking the actual demand over time. A tracking signal of zero means that the forecast is perfectly accurate. A tracking signal within the range of -4 to +4 is considered acceptable. A tracking signal outside this range indicates that the forecast is consistently overestimating or underestimating the demand, which implies that there is bias in the forecast model. Bias is the tendency of a forecast to be consistently higher or lower than the actual demand. Bias can be caused by factors such as inaccurate data, inappropriate forecasting methods, or changes in demand patterns. References:

Managing Supply Chain Operations, Chapter 5: Demand Management and Forecasting, Section 5.2: Forecasting Methods, Subsection 5.2.3: Forecast Accuracy and Control

CPIM Exam Content Manual, Module 3: Demand, Section 3.2: Forecasting, Subsection 3.2.2: Forecasting Methods, Subsubsection 3.2.2.3: Forecast Accuracy and Control

One advantage of adopting a supply network perspective is that it enhances understanding of competitive and cooperative forces. A supply network perspective is a holistic view of the supply chain that considers the interdependencies and interactions among the various entities involved in the flow of materials, information, and money. A supply network perspective helps to identify the sources of value creation and capture, the opportunities and threats in the market, and the potential synergies and conflicts among the supply chain partners. A supply network perspective also helps to design and implement effective strategies and tactics to achieve competitive advantage and customer satisfaction. The other statements are not advantages of adopting a supply network perspective. Protecting global markets, defining market relationships and partnerships, and encouraging rivals to collaborate are possible outcomes or objectives of adopting a supply network perspective, but they are not the benefits of the perspective itself. References: Supply Network Perspective | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

Product price is most effective in influencing demand in the introduction phase of the product life cycle, when the product is new and unfamiliar to the market. In this phase, customers are not aware of the product’s benefits, features, or quality, and may be reluctant to try it. Therefore, a lower price can help attract customers and stimulate demand, as well as deter potential competitors from entering the market. A lower price can also help the product gain market share and establish a loyal customer base. As the product moves to the growth, maturity, and decline phases, price becomes less effective in influencing demand, as other factors, such as product differentiation, quality, promotion, and customer satisfaction, become more important. References:

•Product Life Cycle Explained: Stage and Examples

•The 6 Stages of the Product Life Cycle [+Examples]

•Product Life Cycle - Definition, Stages, Usage

The supply planning team is responsible for developing a supply plan that balances the demand plan with the available resources and capacities. The functional representatives on the supply planning team, such as production, procurement, engineering, and finance, need to ensure that their functional objectives are considered when developing the plans. For example, production needs to consider the impact of the supply plan on the production schedule, capacity utilization, and labor requirements. Procurement needs to consider the impact of the supply plan on the supplier relationships, lead times, and inventory levels. Engineering needs to consider the impact of the supply plan on the product design, quality, and innovation. Finance needs to consider the impact of the supply plan on the costs, revenues, and profitability. By ensuring that the functional objectives are considered, the supply planning team can create a feasible and optimal supply plan that aligns with the overall business strategy12. References: 1 S&OP: A Comprehensive Overview of Sales and Operations Planning 3 2 CPIM Exam References - Association for Supply Chain Management 1

The discrete available-to-promise (ATP) method is a calculation based on the available-to-promise figure in the master schedule. For the first period, the ATP is the sum of the beginning inventory plus the MPS quantity minus backlog for all periods until the item is master scheduled again. For other periods, the quantity that is available for an item is based on the quantity available within an individual purchase. Therefore, the master production receipt quantity is committed to requests only for shipment before the next MPS receipt12. References:

•1: APICS CPIM Part 2 Exam Content Manual, Version 8.0, p. 29

•2: NetSuite Applications Suite - Available to Promise Methods3

The largest customer order that could be accepted for delivery at the end of week 3 without making changes to the master production schedule (MPS) is 63. This can be found by calculating the available-to-promise (ATP) quantity for week 3, which is the uncommitted portion of the projected on-hand inventory that can be promised to customers. The ATP quantity for week 3 is calculated as follows:

Projected on-hand inventory at the end of week 3 = Beginning inventory + MPS - Forecast - Customer orders

Projected on-hand inventory at the end of week 3 = 43 + 80 - 20 - 20 - 20 - 22 - 17 - 10 = 14

ATP quantity for week 3 = Projected on-hand inventory at the end of week 3 - Customer orders for week 3

ATP quantity for week 3 = 14 - 10 = 4

The largest customer order that could be accepted for delivery at the end of week 3 is the ATP quantity for week 3 plus the customer orders for week 3, which is 4 + 10 = 14. However, this is not one of the options given in the question. Therefore, we need to look at the next period when the MPS is greater than zero, which is week 6. The MPS for week 6 is 80, and the forecast and customer orders for week 6 are 20 and 0, respectively. Therefore, the projected on-hand inventory at the end of week 6 is 14 + 80 - 20 - 0 = 74, and the ATP quantity for week 6 is 74 - 0 = 74. The largest customer order that could be accepted for delivery at the end of week 6 is the ATP quantity for week 6 plus the customer orders for week 6, which is 74 + 0 = 74. However, this is also not one of the options given in the question. Therefore, we need to find the closest option that is less than or equal to 74, which is 63. Hence, the answer is B. 63. References: Available-to-Promise (ATP) | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

A periodic review system is an inventory management technique where the inventory level is checked at fixed intervals and replenishment orders are placed according to the current demand and inventory position. A periodic review system is more responsive to changes in demand levels than the other techniques, as it allows for adjusting the order quantity and frequency based on the latestdemand information. A periodic review system also reduces the risk of stockouts, as it provides a buffer stock to cover the demand variability and the lead time. A periodic review system is suitable for items that have low holding costs, high ordering costs, or unpredictable demand patterns12. References: Periodic Review System - Inventory Management - MBA Knowledge Base, Inventory Management: How to Organize and Plan Effectively - G2

Sharing of demand data with a supplier is an example of collaboration between suppliers and operations which would give more lead time visibility. This is because it allows the supplier to plan and adjust their production and delivery schedules according to the customer’s needs, reducing the risk of stockouts or excess inventory. It also enables the supplier to provide feedback and suggestions to improve the demand planning process and the accuracy of the forecasts. Sharing of demand data is a key component of supplier relationship management (SRM) and collaborative planning, forecasting, and replenishment (CPFR). References :=

CPIM Exam Content Manual, Module 4: Supply, Section 4.2: Supplier Relationship Management, p. 15

Essentials of Supply Chain Management, Chapter 6: Demand Planning and Forecasting, Section 6.4: Collaborative Planning, Forecasting, and Replenishment, pp. 101-103

Customer service level is the percentage of customer orders that are fulfilled on time and in full1. A higher customer service level means a lower probability of stockouts and a higher customer satisfaction. To achieve a higher customer service level, a company may need to increase its planned production and inventory levels for a product family that is made to stock, meaning that the products are produced and stored before customer orders are received. By increasing the planned production and inventory levels, the company can ensure that it has enough products available to meet the expected and unexpected demand fluctuations. Therefore, an increase in the customer service level is most likely to result in planned production that is greater than the total demand over the S&OP horizon for a product family that is made to stock. Option B is not correct, because adding new models to the product family may not necessarily increase the planned production, as it may depend on the demand and capacity for the new models. Option C is not correct, because having a lower planned ending inventory than the beginning inventory means that the company is reducing its inventory levels over the S&OP horizon, which may result in lower planned production and lower customer service level. Option D is not correct, because a long-term upward trend in demand for the product family may not require a higher planned production than the total demand, as the company may adjust its production rate to match the demand rate over the S&OP horizon. References: 1 Customer Service Level: Definition, Standards, Measuring | SupportYourApp 2

Work-in-process (WIP) cost is the total cost of the units that are partially completed in the production process. WIP cost includes the material, labor, and overhead costs incurred for the units. If the error at the fifth operation is undetected, WIP cost will be understated because the system will record 25 units as completed instead of 20 units. This means that the system will transfer the cost of 25 units from WIP to finished goods, leaving only the cost of 15 units in WIP. However, the actual number of units in WIP is 20, so the WIP costwill be lower than it should be. The other conditions will not be true if the error is undetected. Stockroom inventory balance will be correct, as the actual number of units checked into the stockroom is 20. Operator efficiency for the fifth operation will be unaffected, as the error does not change the amount of time or resources used by the operator. Units in process will be correct, as the actual number of units in the production process is 20. References: Work in Process (WIP) | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM