APICS Updated CPIM-Part-2 Exam Questions and Answers by zohan

Collaborative planning, forecasting, and replenishment (CPFR) is a set of actions taken by supply chain partners to plan and communicate tasks to meet customer demand while reducing cost. It includes business planning, sales forecasting, and replenishment of raw materials and finished goods1. CPFR typically would be most effective for a regional headquarters for a large home improvement retailer, because this type of organization can benefit from the following advantages of CPFR:

• CPFR can strengthen the supply chain partner relationships between the regional headquarters and its suppliers, distributors, and stores, by enhancing trust, transparency, and coordination2.
• CPFR can provide analysis of sales and order forecast which improves the forecast accuracy, by using customer inputs and data from partners in the value chain, as well as advanced analytical tools and techniques3.
• CPFR can manage the demand chain and proactively eliminate problems before they appear, by identifying and resolving potential issues or conflicts in the planning, forecasting, and replenishment processes4.
• CPFR can allow collaboration on future requirements and plans, by involving all the relevant stakeholders in the decision-making process and aligning their goals and expectations5.
• CPFR can combine planning, forecasting and logistic activities, by integrating the best practices in sales and marketing (e.g. such as category management) to supply chain planning and execution processes2.

The other options are not as suitable for CPFR as a regional headquarters for a large home improvement retailer. A distributor with a few major customers and many smaller customers may not have enough incentives or resources to implement CPFR with all its customers, especially the smaller ones who may have low volumes or high variability in demand. A manufacturer that sells directly to a large number of firms may face challenges in coordinating and communicating with all its customers, as well as managing the complexity and diversity of their demand patterns. A company that has a large number of geographically dispersed suppliers may encounter difficulties in establishing trust and transparency with its suppliers, as well as ensuring the quality and reliability of their products or services.

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 safetystocks, 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.