CPIM Supply Chain Management Practice Test

CPIM Basic Exam – Certified in Production and Inventory Management “Basics of Supply Chain Management” Exam:

 Study Guide

The CPIM Basics of Supply Chain Management Exam is the first of five exams created by the Association for Operations Management, also known as APICS, that are administered by Promissor and are required in order for an individual to receive a Certification in Production and Inventory Management.

This certification can be extremely useful as a resume-builder for individuals in the manufacturing and warehousing industries as it demonstrates to potential employers that the individual has an in-depth knowledge of how to manage the manufacturing process and the distribution of various products and services.

However, in order to receive the certification, the individual must pass all five CPIM exams.

This exam consists of 105 multiple-choice questions, 80 of which are scored and 25 that are not scored, related to basic business concepts, demand planning, the Just-in-Time (JIT) system, manufacturing resource management, transforming supply into demand, supply system management techniques including capacity management, and total quality management.


The exam-taker has three hours to complete the exam and there are no official breaks scheduled during that period.

The exam is scored based on a scale of 265 to 330 with 300 as the minimum score necessary to pass the exam.

To register for the exam, you must contact APICS to get a customer number and register online or by phone with APICS or Promissor to schedule a testing date.

The registration fee for the exam is $110 for APICS members and $145.00 for nonmembers.

CPIM Exams

Practice Questions

1. Inventory costs are likely to be higher in the initial phases of a manufacturing process because
  1. Product lead times are shorter initially, so more inventory is required
  2. Inspection costs accrue as materials or unfinished products are delivered
  3. “Chasing” costs add to inventory cost
  4. Setup costs are highest at the beginning of a manufacturing run
2. With respect to CPIM, which of the following defines and gives the chief aim of APICS?
  1. The Association for Production, Investment, and Control Society purports to provide certifications with the aim of increasing corporate profits by reducing inventory and supply chain costs
  2. APICS provides CPIM certification and refers to the Association of Operations Management
  3. APICS means American Production and Inventory Control Society and provides consulting services to the U.S. Labor Department
  4. APICS is the acronym for the Association of Production, Inventory, and Control Suppliers, with the aim of licensing suppliers who meet certification requirements
3. From the following answer choices, pick the definition that best describes the category of “fluctuation inventory.”
  1. Fluctuation inventory is the portion of finished goods inventory that is apportioned to customer demand
  2. Fluctuation inventory is the same as pipeline inventory
  3. Fluctuation inventory is the same as safety stock, or that part of finished goods used to fill spikes in demand for the finished product
  4. Fluctuation inventory refers to the ratio of difference between high and low production outputs of finished product
4. From the following answer choices, pick the definition that best describes the category of “finished goods inventory.”
  1. Finished goods inventory is the portion of fluctuation inventory that meets the anticipated customer demand for products
  2. Finished goods inventory is the portion of fluctuation inventory that remains unused in order to fill unexpected demand for products
  3. Finished goods inventory is safety stock used to increase market share
  4. Finished goods inventory is the store of finished goods and is a combination inventory of fluctuation inventory and anticipation inventory
5. The description that best describes the relationship between materials requirements and production planning (MRP and MPS) and raw materials inventory supply is:
  1. Overstatement in production capacity can lead to pipeline bottlenecks.
  2. Overly ambitious production scheduling can lead to raw materials and inventory bottlenecks. 
  3. Accurate MRP and production scheduling aid supplier efficiency.
  4. All of the above

Answer Key

1. D: The best answer is “d.” Setup costs are highest at the beginning of a manufacturing run. Once again, the other answers have some relevance to inventory costs, but with regard to inspection and “chasing” costs, those costs accrue at all phases of the manufacturing process. “Chasing” costs are those costs associated with locating and moving materials held in inventory, and they are always a factor. Inspection costs apply whenever supplier materials are delivered, regardless of whether a product is at the beginning or the end of a production run. Answer choice “a” is simply wrong and misleading, as product lead times tend to be longer, not shorter, in the initial phase of production.

2. B: The correct answer, in this case, is the short answer shown in option “b.”The reason the acronym APICS does not match with “Association of Operations Management” is that APICS sustained a name change. The original name of APICS was “American Production and Inventory Control Society”; however, its purpose is not to provide consulting services to the U.S. Labor Department. It does provide Certified in Production and Inventory Management (CPIM) certification. The basic goals for which APICS is organized are (1) to increase profitability through better inventory and supply chain management and (2) to ensure that managers have three related certifications, including CPIM.

3. C: The correct definition of the term “fluctuation inventory” is answer “c.”Fluctuation inventory is sometimes referred to as “safety stock.” It is used to compensate for unexpected surges in demand and to prevent customer stockouts. It is important to recognize that fluctuation inventory consists of finished product that can be immediately used. Pipeline inventory is product inventory in one of various stages of completion and cannot be used for stockouts or safety inventory for obvious reasons.

4. D: The correct answer is “d.” Finished goods inventory is the combined fluctuation inventory and anticipation inventory. Both fluctuation and anticipation inventories are finished goods, but each has a different purpose. Fluctuation inventory is the amount of finished product made above and beyond the amounts required by a specific customer batch or order. It is sometimes called “safety inventory” because it is used to prevent stockouts and the resultant potential loss of market share. Anticipation inventory is the portion of finished product allotted to meet expected customer demand.

5. D: Answer “d” is the best choice. The relationship between materials planning and inventory can make a great difference to business profitability. Productive capacity must be modulated to fit with inventory supply. An overly optimistic production schedule, in which actual productive capacity is not able to keep pace with scheduling plans, will cause inefficient pipeline inventory buildup. The goal of lean manufacturing is to have the right amount of raw materials or partially finished inventory entering the next production phase. Accurate and consistent materials planning helps suppliers to manufacture, ship, provide materials and components as they are needed. Inventory buildups in storage or in pipeline bottlenecks add considerably to manufacturing costs.

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