VERSION 6.

EXAM CONTENT
MANUAL
 APICS Certified in Production and
Inventory Management
Exam Content Manual

Version 6.0
Visit apics.org/ecmerrata for APICS CPIM Exam Content Manual errata.
Internet links cited in the bibliographic references can be found in a more usable format on the
APICS website at apics.org/cpim.

The references in this manual have been selected solely based on their educational value to the
APICS CPIM certification program and the content of the material. APICS does not endorse any
service or other materials that may be offered or recommended by the authors or publishers of
books and publications listed in this manual.

©2017 APICS

8430 West Bryn Mawr Avenue, Suite 1000

Chicago, IL 60631-3439 USA
Phone: 1-800-444-2742 or +1-773-867-1777
Fax: +1-773-639-3000

No portion of this document may be reproduced under any circumstances. CPIM is a registered
trademark of APICS.

Stock #09051-V60

09051-V60
Table of Contents
Letter to Candidates ................................................................................................................ 1
Introduction .............................................................................................................................. 3
About the APICS CPIM Examinations ...................................................................................... 3
Question Format ............................................................................................................................... 3
Taking the Test .................................................................................................................................. 4
Interpreting Test Scores ................................................................................................................... 4
APICS Certified Fellow in Production and Inventory Management (CFPIM) ......................... 4
Studying for the APICS CPIM Exam ......................................................................................... 4
APICS CPIM References .................................................................................................................... 5
Terminology ....................................................................................................................................... 5
Additional Resources for APICS CPIM Candidates ................................................................ 5
APICS CPIM Learning System ........................................................................................................... 5
APICS CPIM Instructor-Led Review Courses .................................................................................... 6
APICS Educational Programs............................................................................................................ 6
Exam Content vs. Courseware ................................................................................................ 6
APICS CPIM Certification Maintenance: Continuing Professional Development ................. 7
The Importance of Certification Maintenance ................................................................................ 7
APICS Code of Ethics ............................................................................................................... 8
Bibliography and References for CPIM Exams ....................................................................... 9
Key Terminology ..................................................................................................................... 11
APICS CPIM Part 1.................................................................................................................. 23
CPIM Part 1 Sample Questions ............................................................................................. 29
APICS CPIM Part 2.................................................................................................................. 32
CPIM Part 2 Sample Questions ............................................................................................. 47
Answers to Sample Questions .............................................................................................. 50

CPIM Exam Content Manual i


Letter to Candidates
Dear Candidate:
For more than four decades, the Certified in
Production and Inventory Management (CPIM)
program has been recognized as the
international standard for individual
assessment in the field of operations
managements as it relates to transformation
of products and services. Initiated by APICS in
1973, it continues to provide a standard for
individuals and organizations to evaluate their
knowledge of this ever-evolving field. APICS
has administered more than 1 million exams
in over 40 countries, and more than 105,000
professionals have earned the APICS CPIM
designation with 3,000 members at the Fellow
level.
The mission of the APICS CPIM program is to
be the premier professional certification for
supply chain and operations management.
The exams test the candidate’s knowledge
and understanding of the principles and
practices of operations and inventory
management. The APICS CPIM program is
designed to educate individuals in the various
concepts, methodologies, terminology, and
integration of topics within the supply chain
and operations management functions. Each
exam tests candidates’ in-depth knowledge of
these concepts. APICS has worked to ensure
that CPIM exams are consistently reliable and
the highest professional standards are used
to develop and administer the program.
Because organizations operate in a changing
and challenging international environment,
the APICS body of knowledge continues to
grow and include recognized concepts and
tools for improved organizational
competitiveness and effectiveness. The CPIM
Exam Content Manual (ECM) is regularly
updated to reflect changes in the body of
knowledge and assist candidates in their
understanding of the scope of material
covered.
The APICS CPIM program utilizes two exams in
a progression from basic - CPIM Part 1, to
advanced - CPIM Part 2. It is strongly
recommended that candidates complete CPIM
Part 1 before tackling the more advanced
topics in CPIM Part 2. If you follow this
sequence of the two exams, you will increase
your understanding and probability of success.
The following is a summary of each of the two
APICS CPIM exams:
APICS CPIM Part 1 (previously known as
Basics of Supply Chain Management)
As the entry-level learning program, CPIM Part
1 introduces the material presented in depth
in CPIM Part 2.
Part 1 introduces the definitions and concepts
for planning and controlling the flow of
products and services into, through and out of
an organization. Many of the key terms in Part
1 are expanded upon in Part 2. Part 1 explains
fundamental relationships among the various
activities that may occur in the supply chain
network from suppliers to customers. In
addition, Part 1 covers types of manufacturing
and service systems, forecasting, master
planning, material requirements planning,
capacity management, production activity
control, purchasing, inventory management,
and distribution. Four key management
philosophies are covered: enterprise
resources planning, lean, quality
management, and the theory of constraints.
APICS CPIM Part 2
CPIM Part 2, combines key concepts from the
field of operations management. It details four
areas of knowledge:
Master Planning of Resources (MPR)
Detailed Scheduling and Planning (DSP)
Execution and Control of Operations (ECO)
Strategic Management of Resources (SMR)
CPIM Exam Content Manual 1
In Master Planning of Resources, candidates The APICS CPIM program continues to evolve,
explore processes used to develop sales and incorporating relevant and current concepts
operations plans, identify and assess internal and techniques into the body of knowledge.
and external demand management Examples include, supply chain management,
requirements, forecasting, planning and lean, service industries, globalization, theory
replenishment in a distribution environment, of constraints, integrated business planning,
and gain an understanding of developing a sales and operations planning, outsourcing,
feasible master schedule. The section focuses critical chain, and sustainability. APICS CPIM
on a plan of supply; relating management of is an outstanding educational program. APICS
demand to manufacturing, distribution and relies on your comments and suggestions to
service environments; and developing and maintain and improve the program for future
validating the master schedule. candidates. We wish you success in your
pursuit of CPIM certification.
In Detailed Scheduling and Planning,
candidates focus on the various techniques
for inventory, procurement, and material and
capacity scheduling. This section includes
detailed descriptions of material requirements
William R. Leedale, CFPIM, CIRM, CSCP, CLTD
planning, capacity requirements planning,
Chair, CPIM Subcommittee
inventory management practices, and
procurement and supplier planning.
Candidates will also become familiar with
sustainable practices, supplier partnerships,
lean principles, and outsourcing strategies
and techniques.

In Execution and Control of Operations

candidates focus on four main areas:
execution of operational plans and schedules,
control of the work completed and the
analysis of results, the management of and
communication in the workplace, and the
importance of utilizing appropriate design
principles. The section explains techniques for
scheduling and controlling operations within
available capacity. It also deals with the
execution of quality initiatives, cost
management, problem solving, and
continuous improvement.

In Strategic Management of Resources,

candidates explore the relationship of existing
and emerging processes and technologies to
operations strategy and supply chain-related
functions for manufacturing and service
organizations. The section addresses three
main topics: understanding the business
environment, developing operations strategy,
and implementing operations strategy.

2 ©APICS

Introduction
This Exam Content Manual (ECM) provides
assistance for those preparing for the CPIM
certification examinations. The objective of
this manual is to outline the APICS CPIM body
of knowledge, which the APICS Certification
Committee has organized into two exams:
 CPIM Part 1 (previously known as
Basics of Supply Chain Management)
 CPIM Part 2
In this manual, each exam description begins
with a statement on the scope of the subject
matter, followed by a descriptive outline of the
content. References selected by the CPIM
exam committees can be found on pages 9-
10. Key terminology for each exam is provided
on pages 11-22. Each exam overview
concludes with sample questions typical of
those that appear on the examinations. The
correct answers for the sample questions,
with brief explanations of why they are correct,
appear at the end the manual.
The recommended procedure for mastering
the subject matter is to review the content
outline, which defines the material, and then
to study each topic, using the references
identified. At the end of each major section is
a list of the references that apply to the topics
in that section. The first number indicates the
sequence number for the reference in the
Bibliography section on pages 9-10, and the
numbers in parentheses indicate the
chapter(s) within that selected reference.
These outlines form the content and structure
for the certification examinations. Candidates
should understand the definitions of the key
terms in the content outline, as well as the
outlined techniques. Additionally, candidates
should know why and how to apply techniques
and which ones to select for different
situations.
Sufficient references are given for each
topical area to provide different approaches to
material covered in each exam and different
styles of presenting it. Reading the available
APICS Magazine will help you maintain an
awareness of changes in the state of this
discipline. Attending APICS conferences as
well as local Chapter professional
development meetings is also a way to keep
current on the CPIM body-of-knowledge.
Please visit our website, apics.org, for details
regarding APICS conferences and locating
your local chapter.
About the APICS CPIM
Examinations
Each of the two APICS CPIM exams consist of
150 questions, of which 20 are pre-test
questions that do not contribute to the total
score, but are necessary for research
purposes. There is a three and one-half hour
time limit for each APICS CPIM exam. For
more information regarding testing and
registration policies and procedures, please
download the APICS Exam Handbook from the
APICS website at apics.org/handbook, or call
APICS Customer Service at 1-800-444-2742
(United States and Canada) or +1-773-867-
1777.
Question Format
The questions on the CPIM examinations are
intended to test a candidate’s understanding
of the CPIM body of knowledge and frequently
require the candidate to select the best of four
choices, complete a calculation based on the
information given, or they may ask the
candidate to illustrate their understanding of a
concept, process, or procedure. These
questions may require the examinee to make
finer distinctions than the exercises or items
presented in a course. It is helpful to
understand the various formats of questions
on the examination. For sample questions and
an introduction to Technology Enhanced Items
found in the CPIM Part 1 exam, please see
pages 29–31. CPIM Part 2 sample questions
can be found on pages 47–49.
CPIM Exam Content Manual 3

Taking the Test
The key to success is a thorough
understanding of the subject matter as
outlined in this ECM. All questions are based
on the current CPIM body of knowledge as
defined in the exam content manual.
When you begin each exam, read all the
directions carefully. Be sure you understand
the directions before you begin to answer any
questions.
Read each question carefully. If a question
includes additional material, such as a table,
graph, or situation, be sure to study it before
answering the question and do not assume you
know what is being asked without reading the
question completely. Every effort has been
made to avoid misleading wording and to
provide sufficient information for each question.
Choose the best answer from the choices
given. Do not look for hidden tricks or
exceptions to the norm. For each question,
one and only one of the answer choices
represents the correct answer.
Once you begin the test, approach the questions
in order, but do not waste time on those that are
unfamiliar or seem difficult to you. Go on to the
other questions and return to the difficult ones
later if time allows. If you have some knowledge
about a particular question, you may be able to
eliminate one or more choices as incorrect. Your
score on the test will be based on the number of
questions you answer correctly, with no penalty
for incorrect answers; therefore, it is to your
advantage to guess rather than not answer a
question. Avoid changing an answer unless you
are absolutely certain that you marked the
wrong answer.
Interpreting Test Scores
Scoring is based on your correct responses.
There is no penalty for incorrect answers. The
omission of an answer will be counted the
same as an incorrect answer.
4 ©APICS
The CPIM exams scaled score range is 200 –
350.
200–299: Fail
300–350: Pass
320 and greater: Fellow level
For each examination, candidates receive a
score for the total exam. All candidates will
also receive diagnostic information by topic
areas on their performance.
APICS Certified Fellow in
Production and Inventory
Management (CFPIM)
The distinguishing characteristic of a Certified
Fellow in Production and Inventory Management
(CFPIM) is the willingness to share acquired
knowledge with others through presenting,
teaching, publishing, and participating in APICS
educational activities. This knowledge sharing
must take place above and beyond a candidate's
normal job duties and be directly related to the
APICS CPIM body of knowledge.
To obtain the APICS CFPIM designation, an
application form must be completed and
submitted to the APICS corporate office. Points
are awarded based on the following criteria:
APICS CPIM exams passed, presentations, high
scores on CPIM exams (320 or greater),
published works, classroom teaching, and
various volunteer or practitioner activities.
To apply for the CFPIM Certification, please visit
apics.org/cfpim.
Studying for the APICS CPIM
Exams
APICS offers several resources to help
individuals prepare for the APICS CPIM
examinations.

APICS CPIM References
Bibliography. The APICS CPIM Examination
Subcommittees have identified several
references for the APICS CPIM exams. These
are listed in the Bibliography section of this
manual on pages 9-10. All the references
contain excellent material that will assist in
test preparation. For additional information on
the APICS CPIM references, visit the APICS
website at apics.org/CPIM, or call APICS
Customer Service at 1-800-444-2742 (United
States and Canada) or +1-773-867-1777.
A candidate may discover that the material
covered in the chapters of one reference
duplicates material covered in another
reference. Both sources are included as
references to allow candidates discretion in
selecting test preparation materials that they
find most accessible and understandable.
In deciding if a single reference is sufficient,
candidates should assess their own level of
knowledge against both the descriptive
examination specifications and the detailed
topic list in the content outline. If there are
any areas of weakness, the candidate should
consult other references as part of the test
preparation process.
CPIM Content outlines. The content outlines
for CPIM Parts 1 and 2 provided in this ECM
should be considered a primary resource for
exam preparation. It provides an overview of
the major topics included in the exam, as well
as a list of the concepts relevant to that topic.
APICS Dictionary. The APICS Dictionary is an
essential reference to the exam content
manual and APICS exams. Within the
profession, terminology varies among
industries, companies, and the academic
community. The examination uses standard
terminology as defined in the APICS
Dictionary. Recognizing the terms and
understanding their definitions are essential.
Terminology
In studying for the APICS CPIM certification
exam, candidates may discover multiple terms
used to denote the same technique. APICS
and the certification exam committees have
worked to provide consistency with preferred
terminology. However, synonyms are often
used by authors in the various references
used to compile the body of knowledge.
Candidates are encouraged to be familiar with
all terms and concepts listed within the
outline and key terminology section, using the
APICS Dictionary as the primary guide for
definitions.
Additional Resources for
APICS CPIM Candidates
In addition to the cited references, it may be
helpful for you to pursue chapter-sponsored
courses, college courses, APICS workshops,
self-study courses, or courses offered by the
APICS network of authorized education
providers (AEPs) as a means of learning the
body of knowledge tested in the certification
program. A wide variety of courses and
materials are available. As with any
investment, you should research various
options before making your preparation
decisions.
APICS CPIM Learning
Systems
The APICS CPIM Learning Systems for Parts 1
and 2, are comprehensive professional
development and certification preparation
programs. The Learning Systems include a
copy of the Exam Content Manual and utilize
all the APICS CPIM references, including those
listed in the Bibliography section and the
APICS Dictionary. Additional outside
references are also used to supplement ECM
topics. These systems combine reading
material with interactive online tools, and are
available in self-directed and instructor led
formats.
The APICS CPIM Learning Systems do not
“teach the tests” and in many areas, review
the concepts rather than teach the concepts.
There will likely be some content in the APICS
CPIM Learning Systems not covered by the
exams; conversely, there will likely be some
CPIM Exam Content Manual 5
content in the exam not covered by the
Learning System. Thus, it is essential for
candidates to use the current exam content
manual in their studies.
APICS CPIM Instructor-Led
Review Courses
The instructor-led formats for CPIM Parts 1
and 2 combine the APICS CPIM Learning
Systems reading material and online
components with the leadership of a qualified
instructor; peer collaboration; company
networking; and a structured schedule to keep
participants on track. Learn more about APICS
recognized instructors at
apics.org/recognizedinstructors or find local
APICS partners that provide APICS CPIM
courses at apics.org/finder or call APICS
Customer Service at 1-800-444-2742 (United
States and Canada) or +1-773-867-1777 to
obtain contact information for your local
chapter. For courses outside North America,
visit apics.org/international to locate the
nearest partner.
APICS Educational Programs
In addition to the annual APICS International
Conference & Expo, APICS offers a variety of
educational programs. For details regarding
APICS learning opportunities and information
on course availability, visit apics.org or call
APICS Customer Service at 1-800-444-2742
(United States and Canada) or +1-773-867-
1777. For a complete list of APICS resources,
visit the APICS website at apics.org or call
APICS Customer Service at 1-800-444-2742
or +1-773-867-1777.
Exam Content vs. Courseware
Certification has a very different purpose than
education. It is to determine whether a
candidate meets a minimum set of
requirements in relation to a body of
knowledge. Certification examinations test an
individual’s knowledge and ability to apply
that knowledge to specific situations.
Certification exam questions frequently
require the candidate to select the best of the
6 ©APICS
four choices, complete a calculation based on
the information given, or they may ask the
candidate to illustrate their understanding of a
concept, process, or procedure. These
questions may require the candidate to make
finer distinctions than the exercises or items
presented in a review course.
APICS uses a rigorous process for creating its
Certification exams and courseware. Exam
and courseware study materials are
developed separately to maintain the integrity
of the exam process.
APICS exam committees define the contents
of the Exam Content Manual (ECM), which
determines the areas that will be tested in
APICS certification exams. The ECM defines
the body of knowledge that can be tested and
every exam question is linked to the ECM
content. The APICS exam committees also
select the references that will be used for
exam development and they create and
maintain exams.
A separate courseware committee and a third-
party vendor create the courseware using the
ECM and the recommended references.
Courseware developers and/or instructors
may believe that additional material needs to
be taught or included to ensure understanding
of the body of knowledge. They also may
decide that a concept or term is adequately
covered by the definitions in the APICS
Dictionary or content outlines and not cover it
in the course. These differences sometime
lead candidates to perceive a disconnect
between the courseware and the exam, when
in fact they are both covering the same body
of knowledge.
Question and answer sets for APICS exams
are written by exam committee members, who
are subject matter experts, and volunteers
who have earned APICS Certification
designations. The exam committees must
identify the specific entry in the ECM that is
being tested and one or more of the
references listed in the ECM that supports the
correct answer. All exam questions and
answers are reviewed and typically revised by
APICS exam committee members. Exam
committees, APICS Test Development staff,
and a third-party exam development
contractor, all review the potential test
questions for correctness of form, spelling,
and grammar.
A potential test question may be reviewed
multiple times before it actually appears on an
examination. Potential test questions initially
appear on exams in what is referred to as
“pretest” status, in order to collect statistics
on the questions.
Because each test form has a limited number
of questions, it samples representative areas
of the body of knowledge as defined by the
ECM. While each test form is different, all
areas tested are contained within the body of
knowledge as defined by the ECM.
The following graphic is representation of the
type of relationship between the Operations
Management Body of Knowledge (OMBOK),
courseware / Learning Systems, ECM’s and
different examinations.
APICS CPIM Certification
Maintenance: Continuing
Professional Development
The Importance of
Certification Maintenance
The growing number of individuals choosing to
pursue professional development through the
APICS CPIM program indicates a strong
awareness that continuing education and
skills development are essential to meeting
the information and technological challenges
in today’s rapidly evolving workplace and
global marketplace. Professional development
opens doors to individual career opportunities
and organizational success.
Although APICS CPIM recognition and
maintenance are voluntary programs, they
equally demonstrate one’s commitment to
achieving the highest level of professional
development and standards of excellence.
The APICS CPIM certification maintenance
program upholds both the objectives of the
APICS CPIM program and the APICS vision to
promote lifelong learning. This flexible
program recognizes that individuals are at
various levels in their careers, come from
many industries, have different educational
needs and career goals, and have varying
access to continuing education. Thus,
requirements for maintaining certification can
be met through multiple sources and a variety
of professional development activities. These
sources and activities are intended to help
prepare for the challenges ahead and
maintain a professional edge by:
 preserving the currency of hard-
earned certification credentials
 expanding your knowledge of the
latest industry practices
 exploring new technology solutions
 reinforcing skills
 improving job performance
 demonstrating commitment to
excellence
 increasing competitive advantage
CPIM Exam Content Manual 7
To ensure ongoing professional growth and  In your professional capacity, respect
lifelong learning, APICS CPIM designees must the fundamental rights and dignity of
complete the certification maintenance all individuals. You must demonstrate
program every five years. For complete details sensitivity to cultural, individual, and
on how to maintain your APICS CPIM role differences, including those due
designation, please visit to age, gender, race, ethnicity,
apics.org/maintenance. national origin, religion, sexual
orientation, disability, language, and
APICS Code of Ethics socio-economic status;
 In your professional capacity, not
engage in behavior that is harassing
When you start an examination, you will be or demeaning to others based on
asked to pledge to abide by the APICS Code of factors including, but not limited to,
Ethics. Once certified, you pledge to continue age, gender, race, ethnicity, national
your education to increase your contribution to origin, religion, sexual orientation,
the supply chain management profession. disability, language, or socio-economic
After achieving the APICS CPIM designation, status;
you pledge also to share your knowledge with
 Adhere to this Code of Conduct and its
others by participating in APICS research and
application to your professional work.
educational activities at local, district,
Lack of awareness or
national, and international levels.
misunderstanding of an ethical
standard is not itself a defense to a
APICS Code of Ethics is as follows:
charge of unethical conduct;
 Maintain exemplary standards of
 Contact the Ethics Committee when
professional conduct;
uncertain whether a particular
 Not misrepresent your qualifications, situation or course of action violates
experience, or education to APICS or the Code of Conduct; and
others you serve in a professional
 Not to become the subject of public
capacity;
disrepute, contempt, or scandal that
 Respect and not violate the United affects your image or goodwill.
States Copyright of all APICS
materials, including but not limited to Failure to abide by APICS Code of Ethics policy
courseware, magazine articles and may result in sanctions up to and including
other APICS publications, APICS decertification.
conference presentations, and CPIM,
CSCP, CLTD, and SCOR-P examination
resources. In this same spirit, you
must not violate the copyright of other
organizations and individuals in your
professional capacity;
 Not engage in or sanction any
exploitation of one’s membership,
company, or profession;
 Encourage and cooperate in the
interchange of knowledge and
techniques for the mutual benefit of
the profession;

8 ©APICS
Bibliography and References for CPIM Part 1 and Part 2
These references cover the material a successful CPIM candidate is required to know.

References Author(s) Part 1 Part 2

1 APICS Dictionary, 15th ed., 2016 APICS
X X

2 APICS CPIM Detailed Scheduling and Planning APICS Exam

X
Reprints, 2010 Committee
3 APICS CPIM Execution and Control of APICS Exam
X
Operations Reprints, 2015 Committee
4 APICS CPIM Master Planning of Resources APICS Exam
X
Reprints, 2010 Committee
5 Accounting Handbook, 6th ed. 2015 Shim, J. K.,
Siegal, J. G.,
X
Dauber, N.,
Qureshi, A. A.
6 Crafting and Executing Strategy: The Quest for Thompson, A. A.,
Competitive Advantage: Concepts and Peteraf, M. A.,
X
Readings, 20th ed., 2016 Gamble, J. E.,
Strickland III, A. J.
7 Designing and Managing the Supply Chain: Simchi-Levi, D.,
Concepts, Strategies and Case Studies, Kaminsky, P., X
3rd ed., 2008 Simchi-Levi, E.
8 Distribution Planning and Control: Managing in Ross, D. F.
the Era of Supply Chain Management, X
3rd ed. 2015
9 The G4 Sustainability Reporting Guidelines: Global Reporting
Reporting Principles and Standard Disclosures, Initiative X
2015
10 Introduction to Materials Management, Chapman, S. N.,
8th ed., 2017 Arnold, J.R. Tony,
X X
Gatewood, A. K.
Clive, L. M.
11 Juran’s Quality Handbook: The Complete Guide DeFeo, J. A.
to Performance Excellence, X
7th ed., 2017
12 Leading Change, 2012 Kotter, J. P. X
13 Lean Production Simplified: A Plain-Language Dennis, P.
Guide to the World’s Most Powerful Production X X
System, 3rd ed., 2015
14 The Lean Toolbox: A handbook for lean Bicheno, J.,
transformation, 5th ed., 2016 Holweg, M. X

CPIM Exam Content Manual 9

 References Author(s) Part 1 Part 2
15 Making Sustainability Work: Best Practices in Epstein, M. J.,
Managing and Measuring Corporate Social, Buhovac, A. R.
Environmental and Economic Impacts, X
2nd ed. 2014
16 Manufacturing Planning and Control for Supply Jacobs, F. R.,
Chain Management, APICS/CPIM Certification Berry, W. L.,
X
Edition, 2011 Whybark, D. C.,
Vollmann, T. E.
17 Operations Strategy, 4th ed., 2015 Slack, N.,
X
Lewis, M.
18 Project Management: A System Approach to Kerzner, H. R.
Planning, Scheduling, and Controlling, X
11th ed., 2013
19 United Nations Global Compact: Corporate UN Global
X
Sustainability in the World Economy, 2014 Compact Office
20 United Nations Global Compact Management Deloitte Touche
X
Model: Framework for Implementation, 2010 Tohmatsu

Note: At the end of each major section in the CPIM Part 1 and 2 Content Outlines is a list of the
references that apply to the topics within that section. The first number indicates the sequence
number for the references designated in each subject area within the content outline. For example, 7
(chapters 4–7, 10) means the reference, Designing and Managing Supply Chain 3rd edition, 2008.
Chapters 4, 5, 6, 7 and 10 contain content relevant to that subject matter.

Content outline. The content outline for each exam provides an overview of the major topics included
in that module. Each major topic is denoted by a Roman numeral and is followed by a list of the
references that are particularly relevant to that topic.

APICS Dictionary. The APICS Dictionary, 15th edition, is an essential publication that applies to the
exam content manual and exams. Within the profession, terminology varies among industries,
companies, and the academic community. Each examination uses standard terminology as defined
in the APICS Dictionary. Recognizing the terms and understanding their definitions are essential.

Reprints. The committee responsible for the exam content manual and examination selects articles
that are particularly applicable to the curricula and exam preparation. These articles then are
reprinted in exam-specific collections. The reprints are included in the references for the CPIM Part 2
exam.

The APICS Dictionary is available from the APICS Book store; please visit apics.org/shopapics. Other
references can be found at the APICS Amazon store at, astore.amazon.com/apics01-20.

10 ©APICS
Key Terminology
Candidates are encouraged to be familiar with all key terms listed below for the corresponding exams.
The APICS Dictionary is the primary guideline for all definitions of the key terms.

In studying for the APICS CPIM certification, candidates may discover multiple terms used to denote
the same technique. Examples of this include “sales and operations planning” versus “production
planning” and “master production schedule” versus “master schedule”. APICS has attempted to
provide consistency across all both exams with recognized and preferred terminology. However,
synonyms are often used by authors in the various references used to compile the body of knowledge.

CPIM Key Terminology

Part 1 Part 2 Part 1 Part 2
14 Points (Deming’s) X assemble-to-order X
A3 method X assembly line X
ABC classification X assignable cause X X
abnormal demand X attribute data X
absorption costing X availability X
acceptable quality level available capacity X
X
(AQL) available inventory X
acceptance sampling X available time X
action message X available-to-promise (ATP) X
activation X average cost per unit X
activity-based cost average inventory X
X
accounting average outgoing quality
activity based management X
X limit (AOQL)
(ABM) back scheduling X
actual costs X backflush X
actual demand X backflush costing X
adaptive smoothing X backhauling X
adjustable capacity X backlog X
advanced planning and backorder X
X X
scheduling (APS) backward integration X
advanced planning system backward scheduling X
X
(APS) balanced scorecard X
advance ship notice (ASN) X balance sheet X
aggregate forecast X balancing operations X
aggregate plan X bar code X
agility X baseline measures X
allocation X base series X
alpha factor X basic seven tools of quality
alternate operation X X
(B7)
alternate routing X batch X X
analysis of variance (ANOVA) X batch picking X
andon X X batch processing X
anticipated delay report X benchmarking X
anticipation inventories X benchmark measures X
appraisal costs X

CPIM Exam Content Manual 11

 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
bias X cellular manufacturing X X
bill of distribution X centralized inventory control X
bill of labor X central point scheduling X
bill of lading (uniform) X certificate of compliance X
bill of material (BOM) X certification audits X
bill of resources X certified supplier X X
block scheduling X changeover X
bonded warehouse X changeover costs X
bottleneck X X chase production method X X
bottleneck operation X chase strategy X
bottom-up replanning X check sheet X
break-bulk X closed-loop MRP X
break-even point X X collaborative planning,
bucketed system X forecasting, and X
bucketless system X replenishment (CPFR)
budgeted capacity X common carrier X
buffer X X common causes X
buffer management X X common parts bill of
X
buffer stock X material
bullwhip effect X X competitive advantage X
business plan X competitive analysis X
business process component X
X concurrent design X
reengineering (BPR)
business-to-business concurrent engineering X
X
commerce (B2B) conformance X
by-product X consignment X
calculated capacity X constraint X X
capable-to-promise (CTP) X X constraints management X
capacity available X X consuming the forecast X
capacity-constrained continuous improvement X
X
resource (CCR) continuous manufacturing X
capacity control X continuous process control X
capacity management X X continuous process
X
capacity planning X improvement (CPI)
capacity planning using continuous production X X
X
overall factors (CPOF) continuous replenishment X
capacity-related costs X contract carrier X
capacity requirements X contribution X
capacity requirements contribution margin X
X
planning (CRP) control chart X X
capacity strategy X control limit X X
capacity utilization X control points X
carrying cost X co-product X
cash conversion cycle X core competencies X
cash flow X core process X
cash-to-cash cycle time X corporate culture X
cause-and-effect diagram X X corrective action X
cell X correlation X

12 ©APICS
 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
cost center X Delphi method X
cost of goods sold X demand filter X
cost of poor quality X demand forecasting X
cost of quality X demand lead time X
cost variance X demand management X
cost-volume-profit analysis X demand planning X
count point X demand time fence (DTF) X
critical chain method X demonstrated capacity X X
critical characteristics X demurrage X
critical path method (CPM) X X dependent demand X
critical point backflush X design for manufacturability X
critical ratio X design for manufacture and
X
critical-to-quality assembly (DFMA)
X
characteristics (CTQs) design of experiments (DOE) X
cross-docking X design-to-order X
cumulative available-to- detention X
X
promise deviation X
cumulative lead time X direct costs X
current ratio X direct labor X
curve fitting X direct material X
customer relationship discounted cash flow X
X X
management (CRM) discrete available-to-
customer service X X
promise
customer service level X discrete manufacturing X
customer-supplier discrete order picking X
X
partnership disintermediation X
customs broker X dispatching X
cycle counting X distressed goods X
cycle stock X distribution X X
cycle time X distribution center X X
data governance X distribution channel X X
days of supply X distribution inventory X
decentralized inventory distribution network
X X
control structure
decision matrix X distribution of forecast
decision support system X
X errors
(DSS) distribution requirements
decomposition X X
planning (DRP)
decoupling X distribution warehouse X
decoupling inventory X divergent point X
dedicated capacity X dock-to-stock X
dedicated line X downtime X
de-expedite X drop ship X
define, measure, analyze, drum-buffer-rope (DBR) X X
improve, control (DMAIC) X drum schedule X
process duty X
delivery lead time X X early manufacturing
delivery schedule X X
involvement

CPIM Exam Content Manual 13

 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
early supplier involvement first-order smoothing X
X
(ESI) first pass yield X
earned hours X fishbone analysis X
echelon X fitness for use X
e-commerce X five focusing steps X
econometric model X five forces model of
X
economic order quantity competition
X
(EOQ) five Ss X X
economic value added X five whys X
effective date X fixed cost X
efficiency X X fixed-location storage X
electronic data interchange fixed order quantity X
X
(EDI) fixed overhead X
employee empowerment X X fixed-position manufacturing X
employee involvement (EI) X X flexibility X
engineer-to-order X flexible workforce X
enterprise resources floor stocks X
X X
planning (ERP) flowchart X X
environmentally responsible flow control X
X
business flow processing X
excess capacity X flow rate X
expedite X flow shop X
explode X fluctuation inventory X
exponential smoothing focused factory X
X
forecast focus forecasting X
external failure costs X forecast X
external setup time X X forecast consumption X
extrapolation X forecast error X
extrinsic forecasting method X forecast horizon X
fabricator X forecast interval X
failsafe work methods X forecast management X
failure mode effects
X form-fit-function X
analysis (FMEA)
forward flow scheduling X
feature X
forward integration X
feedback X
forward scheduling X X
feeder workstations X
four Ps X
field service X
freight consolidation X
fill rate X
freight forwarder X
final assembly schedule
X X frequency distribution X
(FAS)
functional layout X X
finished goods inventory X
functional product X
finishing lead time X
funnel experiment X
finite forward scheduling X X
Gantt chart X X
finite loading X X
gatekeeping X
finite scheduling X
gateway work center X
firm planned order (FPO) X
gemba X
first-article inspection X
gemba walk X
first in, first out (FIFO) X

14 ©APICS
 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
genchi genbutsu X internal customer X
general and administrative internal failure costs X
X
expenses (G&A) internal rate of return X
generally accepted internal setup time X X
X X
accounting principles (GAAP) interoperation time X
global measurements X interplant demand X X
Global Reporting Initiative in-transit inventory X
X
(GRI) intrinsic forecast method X
global trade identification inventory accounting X
X
number (GTIN) inventory accuracy X
go/no-go X inventory adjustment X
green manufacturing X inventory buffer X
green reverse logistics X inventory control X
gross margin X inventory investment X
gross requirement X inventory management X
group technology (GT) X inventory ordering system X
hansei X inventory policy X
hazmat X inventory turnover X X
hedge X inventory valuation X
hedge inventory X Ishikawa diagram X
heijunka X X ISO 14000 Series
histogram X X X
Standards
horizontal dependency X ISO 9000 X
horizontally integrated firm X ISO 26000 X
hoshin X X item master record X
hoshin planning X jidoka X X
house of quality (HOQ) X jishuken X
hurdle rate X job analysis X
hybrid production method X job costing X X
hypothesis testing X job enlargement X
idle capacity X X job enrichment X
idle time X job sequencing rules X
inactive inventory X job shop X X
inbound stockpoint X job shop scheduling X X
income statement X job status X
incoterms X joint replenishment X
indented bill of material X Juran trilogy X
independent demand X Just-in-Time (JIT) X
indirect costs X kaizen X X
infinite loading X X kaizen blitz X
information system kaizen event X
X
architecture kanban X X
input/output control (I/O) X X keiretsu X
insourcing X key performance indicator
intangible costs X X X
(KPI)
intellectual property X key success factors X
intermittent production X kit X
intermodal transport X knowledge-based system X

CPIM Exam Content Manual 15

 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
labor efficiency X lower control limit (LCL) X
labor productivity X lower specification limit
X
labor standard X (LSL)
lag capacity strategy X low-level code X
landed cost X X machine center X
last in, first out (LIFO) X machine hours X
lead capacity strategy X machine-limited capacity X
leading indicator X machine loading X
lead time X X maintenance, repair, and
X X
lead-time offset X operating (MRO) supplies
lean enterprise X make-or buy decision X
lean metric X make-to-order X
lean production X X make-to-stock X
lean six sigma X management by walking
X
learning curve X around (MBWA)
learning organization X managerial accounting X
least changeover cost X manufacturing calendar X
least-squares method X manufacturing environment X
least total cost X manufacturing execution
X
level loading X systems (MES)
level of service X manufacturing layout
X
level production method X strategies
level schedule X X manufacturing lead time X X
liabilities X manufacturing order X
life cycle assessment (LCA) X manufacturing order
X
reporting
lifecycle analysis X
manufacturing philosophy X
lifecycle costing X
manufacturing process X
limiting operation X
manufacturing resource
line X X
planning (MRP II)
line balancing X
manufacturing strategy X
line haul costs X
market driven X
Little's Law X
marketing strategy X
load X
mass customization X X
load leveling X X
master planning X
load profile X
master planning of
load projection X X
resources
local measures X master production schedule
logistics X X X
(MPS)
lot X master schedule X
lot control X X master schedule item X
lot cost X master scheduler X
lot-for-lot X material-dominated
lot size X X
scheduling (MDS)
lot-size inventory X material requirements
lot sizing X X
planning (MRP)
lot splitting X material safety data sheet
lot traceability X X
(MSDS)

16 ©APICS
 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
materials handling X on-time schedule
X
materials management X performance
mean X open order X X
mean absolute deviation operating expense X
X
(MAD) operation X
mean absolute percent error operational performance
X X
(MAPE) measurements
mean squared error (MSE) X operation costing X
mean time between failures operation due date X
X
(MTBF) operation duration X
mean time to repair operation overlapping X
X
(MTTR) operation/process yield X
measure phase X operations management X
median X operations plan X
milk run X operations scheduling X
min-max system X operations sequence X
mixed-flow scheduling X operations sequencing X
mixed-model production X X operation start date X
mixed-model scheduling X X operations strategy X
mix forecast X operation time X
mode X operator flexibility X
modular bill of material X opportunity cost X
modularization X option X
move card X option overplanning X
move time X X order entry X
moving average X ordering cost X
muda (waste) X X order picking X
multilevel bill of material X order point X
multilevel master schedule X order policy X
multisourcing X order priority X
mura X order promising X
muri X order qualifiers X
nesting X order release X
net present value X order winners X
net requirements X outbound stockpoint X
network planning X outlier X
nominal group technique X outsourcing X X
nonconformity X overall equipment
nonevident failure X X
effectiveness (OEE)
nongovernmental overhead X X
X
organization (NGO) overhead allocation X
non-value-added X overlapped schedule X X
normal distribution X overload X
obsolete inventory X overstated master
one-card kanban system X X
production schedule
one less at a time X owner's equity X
one-piece flow X pacemaker X X
on-hand balance X package to order X

CPIM Exam Content Manual 17

 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
pallet positions X priority control X X
panel consensus X priority planning X X
parent item X private carrier X
Pareto's law X X probability X
participative probability distribution X
X X
design/engineering probable scheduling X
participative management X problem-solving storyboard X
payback X process batch X
P:D ratio X process capability X
pegging X process capability index X
people involvement X process control X
perceived quality X process costing X
performance measure X process flexibility X X
performance measurement process flow X
X
system process flow analysis X
performance objectives X process flow diagram X
performance standard X process flow production X
periodic replenishment X process flow scheduling X
period order quantity X process focused X
perpetual inventory record X process manufacturing X
phantom bill of material X processor-dominated
physical inventory X X
scheduling
physical supply X process train X
picking list X procurement X
pickup and delivery costs X procurement lead time X
pipeline stock X product configuration
X
plan-do-check-action (PDCA) X X catalog
plan for every part (PFEP) X product cost X X
planned load X product differentiation X
planned order X product family X
planned order receipt X product focused X
planned order release X product group forecast X
planning bill of material X X production activity control
X X
planning horizon X X (PAC)
planning time fence X production capability X
point of sale (POS) X X production forecast X
point-of-use delivery X production level X
point-of-use inventory X production line X
poka-yoke (mistake-proof) X production plan X X
post-deduct inventory production planning X
X
transaction processing production rate X
postponement X X production schedule X
pre-deduct inventory production scheduling X
X
transaction processing productive capacity X X
prevention costs X productivity X X
preventive maintenance X X product layout X
primary work center X product life cycle X
priority X product line X

18 ©APICS
 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
product load profile X random variation X
product mix X X rate-based scheduling X
product-mix flexibility X rated capacity X X
product positioning X raw material X
product profiling X receiving X
product/service hierarchy X record accuracy X
profit margin X redundancy X
program evaluation and regression analysis X
X
review technique (PERT) released order X
project costing X remanufacturing X X
projected available balance X remedial maintenance X
project management X X reorder quantity X
project manufacturing X repair order X
project phase X repetitive manufacturing X X
project plan X replanning frequency X
protective capacity X replenishment lead time X
protective inventory X request for quote (RFQ) X
protective packaging X required capacity X
prototyping X requirements explosion X
pull signal X requisition X
pull system X X rescheduling X
purchase order X residual income X
purchase requisition X resiliency X
purchasing lead time X resource X
push system X X resource-constrained
X
pyramid forecasting X schedule
QS 9000 X resource leveling X
qualitative forecasting resource-limited scheduling X
X
techniques resource planning X X
quality X resource profile X
quality at the source X responsible procurement X
quality circle X return on investment (ROI) X
quality control X X reverse auction X
quality costs X X reverse logistics X
quality function deployment rework X
X X
(QFD) risk management X
quantitative forecasting risk pooling X
X
techniques robust design X
quantity discount X root cause analysis X X
queue X X rough-cut capacity planning
queue time X X
(RCCP)
quick asset ratio X routing X X
quick changeover X running sum of forecast
radio frequency X
X errors
identification (RFID) run time X X
random cause X safety capacity X
random-location storage X safety lead time X
random sample X safety stock X

CPIM Exam Content Manual 19

 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
sales and operations SMART X
X
planning (S&OP) smoothing constant X
sales plan X smoothing factor X
sales promotion X social responsibility X
sample X special cause X
sampling distribution X specification X
sawtooth diagram X specific identification X
scatter chart X X split lot X
scatterplot X spread X
scheduled downtime X standard X
scheduled load X standard costs X X
scheduled receipt X standard deviation X
scheduling X standard time X
scheduling rules X standardized work X
scrap X start date X
scrap factor X statistical process control
X X
seasonal index X (SPC)
seasonal inventory X statistical quality control
X
seasonality X (SQC)
second-order smoothing X stockkeeping unit (SKU) X
self-directed work team X stockout costs X
semifinished goods X stockout percentage X
sensei X store X
service X strategic drivers X
service function X strategic performance
X
service industry X measurements
service level agreement strategic plan X
X strategic planning X
(SLA)
service parts X strategic sourcing X
setup X subcontracting X
setup costs X substitution X
setup time X X summarized bill of material X
shelf life X sunk cost X
Shingo's seven wastes X X super bill of material X
shipping manifest X supermarket approach X
shitsuke X supplier X
shojinka X supplier certification X
shrinkage X supplier-input-process-
single-card kanban system X output-customer (SIPOC) X
single exponential diagram
X supplier lead time X
smoothing
single-level bill of material X supplier measurement X
single-minute exchange of supplier partnership X
X supplier relationship
die (SMED) X
single-source supplier X management (SRM)
six sigma X X supplier scheduling X
small group improvement supply chain X
X supply chain management X
activity

20 ©APICS
 CPIM Key Terminology
Part 1 Part 2 Part 1 Part 2
surge capacity X transfer batch X
sustainability X X transfer pricing X
SWOT analysis X transient state X
synchronized production X transit inventory X
tactical plan(s) X transit time X
tactical planning X transportation X X
Taguchi methodology X transportation inventory X
takt time X X trend X
target inventory level X trend forecasting models X
tariff X truckload carriers X
terminals X two-bin inventory system X
terminal-handling charges X two-card kanban system X X
terms and conditions X two-level master schedule X
theoretical capacity X U-lines X
theory of constraints (TOC) X X uniform plant loading X
theory of constraints unit cost X
X
accounting UN Global Compact
X
third-party logistics (3PL) X X Management Model
throughput X X United Nations Global
X
throughput time X Compact
time-based competition unitization X
X
(TBC) unit load X
time bucket X unit of measure X
time buffer X unplanned repair X
time fence X upper control limit (UCL) X
time-phased order point upper specification limit
X X X
(TPOP) (USL)
time series X upstream X
time series analysis X usage variance X
time standard X utilization X X
tolerance X X value added X X
total cost curve X value analysis X
total cost of ownership value chain X
X
(TCO) value chain analysis X
total costs X value perspective X
total factor productivity X value stream X X
total line-haul cost X value stream mapping X
total productive variable cost X X
X X
maintenance (TPM) variable costing X
total quality control (TQC) X variance X
total quality management VATI Analysis X
X X
(TQM) velocity X
traceability X X vendor-managed inventory
tracking capacity strategy X X
(VMI)
tracking signal X vertical dependency X
trading partner X vertical integration X
traffic X virtual cell X
transaction channel X virtual organization X

CPIM Exam Content Manual 21

 CPIM Key Terminology
Part 1 Part 2
visual control X
visual management X
visual review system X
voice of the customer
X X
(VOC)
wait time X
wall-to-wall inventory X
warehouse demand X
warehousing X
waste X X
wave picking X
waybill X
ways X
weighted moving average X
what-if analysis X
where-used list X
work cell X
work center X X
work in process (WIP) X X
work order X
workplace organization X
yield X X
zone X
zone picking X

22 ©APICS

APICS CPIM Part 1
(previously known as Basics of Supply Chain
Management)
Examination Committee
Marilyn M. Helms, (Chair) D.B.A., CFPIM, CIRM,
CSCP, CMQ/OE
Dalton State College
Louise Beauchamp, CFPIM
DBM Systems Inc.
Staffan Cederstrand, CPIM
EG Sverige AB
Lawrence Ettkin, Ph.D., CFPIM
University of Tennessee at
Chattanooga
Dave Lehman, CFPIM, CIRM, CSCP, CLTD
DCL Associates, Inc.
William S. Thurston, CPIM, CIRM, CSCP, PMP
Scope of the Subject Matter
The entry-level concepts in this Exam Content
Manual contain essential information to
prepare for the CPIM examinations.
The subject matter of CPIM Part 1 is an
introductory overview of CPIM Part 2, which
covers topics in greater depth.
The first section of the content outline covers
basic business-wide concepts, including an
understanding of the various supply chain
environments. Common management
concepts and techniques, including: supply
chain fundamentals, operating environments,
financial fundamentals, enterprise resources
planning, lean, quality fundamentals, and the
theory of constraints.
The second section of the outline covers
demand management, including a basic
understanding of how markets influence
demand, how customers in these markets
define value for goods and services and then
managing all demands to support the
marketplace.
The third section of the outline covers
transformation of demand into supply and
includes the design of products (goods and
services), processes, and information
systems. The fundamentals of planning,
priorities and capacity, execution, controls,
and performance measures are included.
The fourth section of the content outline is
devoted to basic supply issues covering
inventory costs, functions, and metrics. It
provides a fundamental overview of supplier
management, demand management, and
monitoring supplier performance. Physical
distribution systems encompass
transportation, warehousing, reverse logistics,
and distribution requirements planning.
The successful candidate will understand and
be able to discuss the major management
philosophies used in a supply chain. Emphasis
is on manufacturing, but the examination also
covers the distribution, service, and retail
industries. This understanding includes the
fundamental relationships in the design,
planning, execution, monitoring, and control
that occur. The candidate should also
understand:
 fundamental relationships among
supply chain activities
 basic enterprise resources planning
 Introductory measurement and
continuous improvement.
CPIM Part 1 Content Outline
The following table identifies the four main
topics of the exam. The relative importance of
these topics varies among industries, but the
figures show the percentage designated for
each section of the exam.
Diagnostic Main topic Percentage of
part exam
I Business-wide 25%
Concepts
II Demand 25%
Management
III Transformation 25%
of Demand
into Supply
IV Supply 25%
CPIM Part 1 Content 23
I. Business-wide Concepts
In this section, common management
concepts and techniques including: supply
chain fundamentals, operating environments,
financial fundamentals, enterprise resources
planning, lean, quality fundamentals, and
theory of constraints.
A. Supply Chain Fundamentals
The concept of a global network used to
deliver products and services from raw
materials to end consumers through a
structured flow of information, physical
distribution, and cash. It includes
managing conflicts that occur within the
supply chain. Businesses are also called
upon to demonstrate social responsibility
in operating their supply chains.
1. A supply chain is a network of retailers,
distributors, transporters, storage
facilities, and suppliers that participating
in the production, delivery, and sale of a
product or service to the consumer. It
also includes returning items from the
consumer back to the producer.
2. Supply chain conflicts and risks exist
among trading partners that need to be
identified, analyzed, and addressed.
Some examples include disruption of
supply, synchronizing supply with
demand, minimizing inventory
investment, maximizing customer
service, and managing total cost.
3. Internal organizational conflicts can
exist between finance, sales, production,
marketing, engineering, and planning
functions. Some examples include
excessive inventory versus inventory
stockouts; setup cost versus economies
of scale; and expediting versus not
expediting.
4. The United Nations Global Compact
addresses corporate sustainability in the
world economy by asking companies to
embrace, support, and enact a set of
24 ©APICS
core values in the areas of human
rights, labor standards, the
environment, and anticorruption.
B. Operating Environments
Global, domestic, environmental, and
stakeholder influences affect the key com-
petitive factors, customer needs, culture,
and philosophy of a company. This
environment becomes the framework in
which business strategy is developed and
implemented.
1. The definition and impact of the
operating environment depends on
customer expectations; cumulative lead
times, inventory, sustainability, product
design, and life cycles.
2. Process choices for products and
services include flow, intermittent, and
project.
3. Production environment strategies
include engineer-to-order, make-to-
order, assemble-to-order, make-to-stock,
and remanufacturing.
C. Financial Fundamentals
Basic financial statements define the
financial reporting common to most
businesses. Underlying costs and analysis
terms provide further understanding of
statement information and often serve as
the basis for management decisions.
1. Balance sheets, income statement, and
cash flow statement make up the
standard financial reporting tools.
2. Financial reporting must take into
account the cost of goods sold, general
and administrative costs, and fixed
versus variable costs.
3. Financial data are used to analyze cash
flow, profit and loss, margin and
throughput, inventory velocity, and the
 make-or-buy decision as it relates to
total cost.
D. Enterprise Resources Planning (ERP)
ERP is a framework for organizing, defining,
and standardizing the business processes
necessary to effectively plan and control an
organization so it can use its internal
knowledge to seek external advantage. The
objective for using ERP is the cross-
functional integration of planning,
executing, controlling, and measuring
functions required to effectively operate a
business organization to meet customer
expectations.
Key characteristics of ERP include its use
as an integrated knowledge and decision-
making tool, cross-functional alignment
within the organization and also with its
partners, the closed loop (feedback)
mechanism, what-if simulation
capabilities, and integrated financial data
and performance measurement functions.
E. Lean
Lean is a philosophy that emphasizes the
minimization of the amount of all the
resources (including time) used in the
various activities of the enterprise.
1. Lean objectives are comprised of the
elimination of waste, providing value
from the customer’s perspective, and
continuous improvement.
2. Key characteristics include flow
manufacturing, process flexibility, quality
at the source, supplier partnerships,
employee involvement, total productive
maintenance, pull systems, and work
cells.
F. Quality Fundamentals
Quality management focuses on customer
needs using a variety of tools and
techniques. The objective of quality
management is to increase profitability
and customer satisfaction. Quality
incorporates: quality control tools, quality
costs, quality function deployment,
employee involvement and empowerment,
continuous process improvement, six
sigma, variation, process capability and
control, and benchmarking.
G. Theory of Constraints (TOC)
A philosophy that focuses the resources of an
organization on managing throughput and
financial performance. Key characteristics
and techniques include product flow analysis;
throughput accounting; constraints
management; and continuous improvement.
References: 1; 10 (chapters 1, 2, 6, 9, 14–
16); 13; 19; 20
Note: The first number indicates the sequence
number for the reference in the Bibliography
section on pages 9–10 and the numbers in
parenthesis indicate the relevant chapters
within that reference.
II. Demand Management
This section covers sources of demand for goods
and services, including a basic understanding of
markets, voice of the customer, and an overview
of demand planning.
A. Market Driven
Consumer needs, competitive sources,
economic conditions, and government
regulations determine the demand
experienced by suppliers.
B. Voice of the Customer
Actual customer word descriptions of the
functions and features that customers desire
for goods and services
C. Demand Management
Demand management is the function of
recognizing all sources of demands for goods
and services to support the marketplace.
Demand management serves as a key input
CPIM Part 1 Content 25
 into the sales and operations plan and master
production schedule (MPS).
1. Sources of independent demand that
must be considered are forecasts along
with customer, service, replenishment,
and inter-company orders.
2. Forecast management consists of
understanding the principles of
forecasting, the characteristics of
demand, various forecasting techniques,
forecast error measurement, and
managing the variability of demand.
3. Order processing occurs upon receipt of
a customer’s order. Goods or services
will be fulfilled based on the operating
environment.
References: 1; 10 (chapters 1, 8, 16)
III. Transformation of Demand into Supply
This section includes the design of products
and services, capacity management, planning,
execution and control, and performance
measurements.
A. Product and Process Design
Design affects product and process, the
resulting framework of planning system
parameters, and the requirement for data
appropriate in source, content, and
accuracy. Collaboration with customers and
suppliers will improve product and process
design.
1. Products and the processes used to
make them are designed to create
products more appealing to customers,
to improve productivity, competitiveness,
and sustainability.
2. Participative design/engineering ensures
that the final design meets all the needs
of the stakeholders and should ensure
products or services can be quickly
brought to the marketplace while
maximizing quality and minimizing costs.
26 ©APICS
3. Information systems should follow
product and process design. Data
governance is necessary to ensure data
record accuracy.
B. Capacity Management
This section includes the function of
establishing, measuring, monitoring, and
adjusting limits or levels of capacity to
execute all schedules. Capacity management
encompasses resource requirements
planning, rough-cut capacity planning,
capacity requirements planning, input/output
controls, and constraints management.
C. Planning
Includes the process of setting goals for
the organization and choosing how to use
the organization’s resources to achieve
them. These different planning techniques
vary depending on traditional, lean, or
Theory of Constraints operating
environments.
1. Strategic planning/hoshin planning
2. Business planning
3. Sales and operations planning,
production planning, and resource
requirements planning
4. Master production scheduling and rough
cut capacity planning
5. Material requirements planning and
capacity requirements planning
6. Final assembly scheduling and input/ output
control
7. Advanced planning and scheduling
8. Project management
D. Execution and Control
The interrelationships between production
activity control techniques (input/output
control, kanban, constraints management)
and planning schedules are synchronized to
meet customer service requirements.
1. The output of material requirements
planning is used to execute the production
plan and material releases.
2. Operations are executed using forward,
backward, finite, infinite, mixed model,
kanban, drum-buffer-rope and constraint
scheduling.
3. Techniques for maintaining and
communicating shop floor order status
include capacity control, production
reporting, priority control, and flow control.
4. An important part of execution and control
is focusing on quality assurance by
measuring quality, monitoring process
variation, and improving process control.
E. Performance Measurements
B. Purchasing Cycle
Key performance indicators are metrics
used to assess organizational
performance against strategic and tactical
goals.
References: 1; 10 (chapters 1–7, 9–11, 14–
16)
IV. Supply
This section includes the actual or planned
provision of a product, component, or service
and its sustainability.
A. Inventory
The stocks or items used to support
production (raw materials and work-in-
process items), supporting activities
(maintenance, repair, and operating
supplies), and customer service (finished
goods and service parts).
1. Inventories can be classified according to
their functions. This includes buffer,
transportation, lot size, anticipation,
fluctuation, hedge, as well as
maintenance, repair, and operating
supplies (MRO).
2. Inventories are monitored using the
following methods: ABC classification,
physical inventory, cycle counting, record
accuracy, days of supply, and inventory
turns.
3. Inventories can be replenished using
push or pull systems.
4. Inventory management decisions must
consider: item costs, carrying costs,
ordering costs, stockout costs, and
capacity-associated costs. These include
strategies and policies related to
customer service and return on
investment.
5. Accounting uses four methods to value
inventory: first in first out, last in first
out, average cost, and standard cost.
The function and responsibility for
understanding demand, sourcing, procuring
materials, supplies, or services, receiving
goods, and approving invoices for payment.
1. The purchasing process begins with any
of the following signals: requisition,
material requirements planning (MRP)
output, kanban, and buffer.
2. Sourcing includes supplier selection,
certification, agreements, and partnerships,
including vendor-managed inventory (VMI).
Total acquisition costs must be considered.
3. Order processing includes purchase
release, defining terms and conditions,
and monitoring supplier performance.
4. Order completion includes receipt of
goods and approval of invoice.
CPIM Part 1 Content 27
C. Distribution
The activities associated with the movement of
material between the supplier, manufacturer,
and customer. These activities encompass the
functions of transportation, warehousing,
inventory control, material handling, order
administration, site and location analysis,
industrial packaging, data processing, and the
communications network necessary for
effective management. It includes all activities
related to physical distribution, as well as the
return of goods to the manufacturer.
1. Global distribution encompasses the
movement of goods around the world.
Decision factors include lead time,
tariffs, and regulatory compliance.
2. Transportation is the function of
planning, scheduling, and controlling
activities related to mode, carrier type,
and movement of inventories across the
supply chain.
3. Warehousing consists of the activities
related to receiving, storing, and
shipping materials.
4. Distribution inventory typically consists
of service parts and finished goods
located in a distribution system.
5. A distribution channel is the route, from
raw materials through consumption, along
which products travel. A transaction
channel is a distribution network that
deals with change of ownership of goods
and services including the activities of
negotiation, selling, and contracting.
6. Reverse logistics is a complete supply
chain dedicated to the reverse flow of
products and materials for the purpose
of returns, repair, remanufacture, or
recycling.
28 ©APICS
7. The total-cost concept takes the position
that all logistical decisions providing
equal service levels should favor the
option that minimizes the total logistical
costs across all areas versus a cost
reduction in a single area.
References: 1; 10 (chapters 7, 9–13, 15)
Key Terminology
An understanding of the list of terms on pages 11-
22 of this document is strongly recommended.
The list is intended to be thorough but not
exhaustive. The candidate is also expected to be
familiar with the definitions of terms identified in
the content outline. Definitions of these terms can
be found in the APICS Dictionary, 15th edition.
Bibliography
All test candidates should familiarize
themselves with the references for this
examination. The recommended references
pertaining to the diagnostic areas are listed at
the end of each section of the content outline.
The first number indicates the sequence
number for the reference in the Bibliography
section on pages 9-10 and the numbers in
parenthesis indicate the relevant chapters
within that reference. The text, Introduction to
Materials Management, covers the majority of
the material for the CPIM Part 1 exam. The
other references provide coverage of some of
the topic areas and can enhance candidates’
understanding of the body of knowledge. The
APICS Dictionary is available from the APICS
Book store; please visit apics.org/shopapics.
Other references can be found at the APICS
Amazon store at,
astore.amazon.com/apics01-20.
CPIM Part 1 Sample Questions 4. Which of the following statements about
The following ten multiple choice questions forecasting is true?
and four Technology Enhanced Item (TEI)
question examples are similar in format and (A) Forecasts are more accurate for
content to the questions on the exam. These individual products.
questions are intended for practice and to (B) Forecasts are most useful for items
illustrate the way questions are structured. with dependent demand.
The degree of success you have in answering (C) Forecasts should include an
these questions is not related to your potential estimate of error.
for success on the actual exam and should (D) Forecasts typically are more
not be interpreted as such. accurate when projected over a
longer period.
Read each question, select an answer, and
check your response with the explanation on 5. Intrinsic forecast data should be based
pages 50-51. on which of the following
considerations?
1. The shipping buffer in the drum-buffer-
rope scheduling process serves which of (A) Judgment, intuition, and informed
the following functions? opinions
(B) Economic indicators
(A) It is used to create the master (C) Shipment history
production schedule. (D) Sales history
(B) It provides protection for the order
due date. 6. Which of the following approaches
(C) It provides protection to the represents the longest planning range in
constraint. capacity management?
(D) It is used to release work to the
floor. (A) Capacity requirements plan
(B) Resource requirements plan
2. When using the 5S approach, which (C) Rough-cut capacity plan
step is implemented last? (D) Input/output control

(A) Sequence 7. An order of 10 components requires 16

(B) Sort standard hours. How much time should
(C) Straighten be allocated if the work center has an
(D) Self-discipline efficiency of 80% and a utilization of
80%?
3. Which of the following statements is
best used to understand a company's (A) 22.40 hours
ability to pay its bills? (B) 10.24 hours
(C) 16.00 hours
(A) Cash flow (D) 25.00 hours
(B) Income
(C) Balance sheet
(D) Market-share

CPIM Part 1 Content 29

 8. The primary objective of a random- Technology Enhanced Items (TEI)
location storage system is to improve: Technology enhanced items are exam
question and answer sets that include
(A) distribution. specialized interactions for collecting exam
(B) kitting. question response data. Different types of
(C) access to stock. TEI’s include items with multiple responses
(D) use of space. (select all that apply), building lists / ordering
processes, fill in the blank, and drag and drop.
9. Which of the following types of carriers
lease or own their equipment, operate it The following examples were created to
themselves, and are typically company- familiarize exam candidates with
owned? technologically enhanced items that can be
found on the CPIM Part 1 exam.
(A) Common
(B) Contract Example 1: Fill in the Blank
(C) Private
(D) Parcel Average Current Retained Annual Cost
Inventory Inventory Earnings of Goods Sold
10. What type of inventory creates
independence between supply and the
use of material? $200,000 $400,000 $300,000 $800,000

(A) Cycle Given the data above, the inventory turnover

(B) Transit is _______ times. Please round answer to the
(C) Decoupling nearest whole number.
(D) Hedge

Example 2: Unordered List

Which of the following documents must be in

agreement before payment is made to the
supplier? Select all that apply.

 Bill of lading

 Customs documentation

 Invoice

 Packing list

 Purchase order

 Purchase requisition

 Receiving report

30 ©APICS
Example 3: Ordered List with Drag and Drop

Please use the drag and drop functionality to

answer the following question.

From the following options, please select the

sales and operations planning (S&OP) steps
involved in the monthly planning cycle and
place them in the correct order.

Example 4: Ordered List with Drag and Drop

Please use the drag and drop functionality to

answer the following question.

Place the 5S steps in the proper sequence for

implementation

CPIM Part 1 Content 31


APICS CPIM Part 2
Examination Committee
Andrea M. Prud’homme (Chair), Ph.D.,
CFPIM, CIRM, CSCP, CLTD
The Ohio State University
Al Bukey, CFPIM, CIRM, CSCP, SCOR-P
Abcan Consulting
Carol M. Bulfer, CPIM
Parker Hannifin Corporation
Matt Drake, Ph.D., CFPIM, CLTD
Duquesne University
Murray Olsen, CFPIM, CIRM, CQA, CMQ/OE,
CSSGB
Northrop Grumman
Michael A. Roman, CPIM
Manufacturing Practices, Inc.
Jaap Stumphius, CFPIM, CLTD
Telio Nederland
Rosemary Van Treeck, CPIM, CIRM, CSCP
Gateway Technical College
Scope of the Subject Matter
Please read the introductory material in this
manual for essential information pertaining to
the examination. This exam includes the
following four major subject areas: Master
Planning of Resources, Detailed Scheduling
and Planning, Execution and Control of
Operation, and Strategic Management of
Resources. The concepts included in this
subject area apply to manufacturing and
service organizations.
Master Planning of Resources includes
principles and techniques of demand
management, sales and operations planning,
master scheduling, and distribution planning.
It includes forecasting, order servicing,
demand shaping, customer relationship
management, and distribution network and
replenishment. Also included is the integration
between the sales and operations plan,
production plan, and master production
schedule.
32 ©APICS
Detailed Scheduling and Planning includes
principles and techniques of inventory
management, material requirements
planning, capacity requirements planning, and
procurement and supplier planning.
Recognizing the importance of supply chain
management, this subject area also covers
deployment of supply chain strategies related
to scheduling, planning, and sourcing. This
supports the strategies and objectives
established by the company, as constrained
by lead time, cost, equipment, personnel,
sustainability considerations, or other
constraints. This encompasses requirements
to bridge the master planning with the
execution and control subject areas.
Execution and Control of Operations
encompasses the principles and techniques
necessary to execute, control, and manage
operations, and participate in design
decisions. This subject area provides
feedback about how good plans are being
executed, as well as providing information for
customers and suppliers about the status of
services and products in process. The
importance and emphasis of these
approaches are relative to the operation’s
environment, the labor environment, the
physical organization of the facility, and the
effectiveness of management and employees.
Strategic Management of Resources includes
higher-level thinking on strategic planning and
implementation of operations. This requires
an understanding of how market requirements
and strategic position of the organization drive
the resources and processes of an
organization. This includes how operational
strategies are developed and implemented,
change management and risk implications.
The successful candidate will have a thorough
understanding and be able to apply all key
terms, principles and techniques contained
within the four subject areas, analyze
situations to determine which approaches are
applicable, and recognize when to escalate
issues.
CPIM Part 2 Content Outline
The following table identifies the four main
topics of the exam and shows the percentage
designated for each section of the exam.
Diagnostic Main topic Percentage
part of exam
I Master Planning of 25%
Resources
II Detailed Scheduling 25%
and Planning
III Execution and 25%
Control of
Operations
IV Strategic 25%
Management of
Resources
I. Master Planning of Resources
A. Demand Management
Strategic and business planning is closely
related to the management of demand,
including forecasting and managing the
customer interface.
1. Principles of demand management:
Successful planning requires an
understanding of how components,
concepts, and linkages of the strategic
plan, the business plan, and the master
planning of resources interact.
Principles include:
a. The planning hierarchy
b. Relating the planning process to
manufacturing and service
environments
c. Demand forecasting concepts
d. The relationship between the
purpose of the forecast and required
timeliness, and accuracy of the data
e. Management considerations related
to forecast method selection
f. Selecting a time horizon and
interval, and a level of aggregation
2. Techniques of forecasting demand:
Effective demand forecasting requires
knowledge of the uses of a forecast,
methods of forecasting, fitting a forecast
to the situation, and tracking its
performance over time. Techniques
include:
a. The application of basic qualitative
and quantitative techniques
b. Evaluation of forecasting
performance
c. Collaboration with customers and
suppliers to improve forecast
accuracy
3. Management of the customer interface:
Effective management of the customer
interface involves making realistic order
delivery promises and maintaining
positive customer relationships.
Principles and techniques include:
a. Customer relationship management
(CRM) concepts
b. Setting customer service policies,
safety stock, and performance
targets
c. Maintaining effective customer
communications
d. Techniques for measuring order
delivery performance
e. Influencing demand to better align
with supply
References: 1; 4; 16 (chapters 3-4)
Note: The first number indicates the sequence
number for the reference in the Bibliography
section on pages 9–10 and the numbers in
parenthesis indicate the relevant chapters
within that reference.
B. Sales and Operations Planning (S&OP)
Sales and operations planning (S&OP) concepts
and techniques are used to link strategic goals to
operations and coordinate the various planning
efforts of the functional areas, including
operations, sales, sourcing, product
development, marketing, and finance in a variety
of business environments.
CPIM Part 2 Content 33
 1. Principles of sales and operations
planning: S&OP is the process executive
management uses to control and guide
the business. It coordinates the various
business functions to ensure they
support the overall organizational
strategy and enhance customer service.
It integrates the multiple plans
developed within a business and
provides direction for more detailed
short-term to medium-term planning.
Principles include:
a. The role of S&OP in the planning and
control hierarchy
b. Key linkages to the S&OP process
c. Different methods for balancing
supply and demand
d. Trade-offs related to different
volume/mix combinations
e. The impact of different business
environments including
manufacturing and services on the
S&OP process
f. Evaluating alternative plans and
associated risks
g. Assessing the financial implications
of the plan
h. Identifying stakeholders and their
responsibilities in the process
i. Identifying the planning horizon and
the appropriate aggregation level
j. Trade-offs between customer service
levels and inventory or backlog
levels
2. Techniques of sales and operations
planning: There are several steps
involved in the process of establishing a
sales and operations plan. A key output
of S&OP is the production plan.
Techniques include:
a. The various levels of management
involved and their roles
b. The sequential steps of the S&OP
process and their interactions
c. The various inputs and outputs of
each of the S&OP steps
d. Performance measures of the S&OP
process
34 ©APICS
e. Developing and validating a
production plan in a variety of
production environments
f. Executing resource planning
g. Assessing the desirability of
alternative production plans
References: 1; 4; 16 (chapters 5, 10)
C. Master Scheduling
Master scheduling is the process of translating
higher-level aggregate plans into feasible
schedules that operations and suppliers can
execute.
1. Principles of master scheduling: The
master scheduling process
disaggregates the production plan into
an executable schedule that links
shipment of customer orders to
material management. A master
schedule must be developed that
promotes operational stability and good
customer service while maintaining
realistic priorities. Principles include:
a. The role of master scheduling in the
planning and control hierarchy
b. Linkages with other planning
processes within the planning and
control hierarchy
c. Relationships between master
scheduling, capacity management,
and materials management
d. The impact of different business
environments including manufacturing
and services on the master scheduling
process
e. The relationship between the
manufacturing environment and
product structure
f. Determining the level in the bill of
material where the master schedule
should be developed
2. Techniques of the master scheduling
process: The process of developing a
master schedule involves numerous
decisions related to the mechanics and
the selection of techniques and tools.
 Effective master scheduling requires
significant insights into each of these
choices. Techniques include:
a. Identifying and quantifying sources
of demand to be considered in the
master scheduling process
b. The mechanics of creating,
maintaining, and using the master
schedule
c. Reviewing capacity requirements
and the role of rough-cut capacity
planning (RCCP)
d. Developing and using a final
assembly schedule (FAS)
e. Measuring performance of the
master scheduling process
f. The roles and responsibilities of the
master scheduler
g. Planning and coordinating changes
in inventory levels, backlog, capacity,
major customer orders, time fences,
product and process designs, and
suppliers
h. Maintaining the integrity of the
master schedule
i. Dealing with the consequences of an
unrealistic master schedule
j. Measuring actual performance
against the master schedule
3. Advanced planning and scheduling
(APS): APS systems employ advanced
computer capabilities and algorithms to
perform many of the functions related
to master planning of resources in real
time. Principles and techniques
include:
a. Major components of an APS system
b. Impact of APS techniques on master
production schedules
c. APS techniques based on
simulation, optimization, or
constraints management
approaches
References: 1; 4; 16 (chapters 7, 10)
D. Distribution Planning
Distribution planning covers the planning of
distribution networks and replenishments in
the distribution environment. It also covers
concepts and techniques used to plan the
location of distribution centers, the
transportation logistics between supply sources
and outlying locations, and the replenishment
of these locations in a variety of business
environments.
1. Principles of distribution planning:
Methods and elements of logistics
planning are used to establish the
supply channel locations and
transportation schemes. Principles
include:
a. Various distribution strategies and
network configurations
b. Transportation planning, controlling
and scheduling activities
c. Inventory levels and locations
required within the distribution
channel
d. Risk management and sustainability
considerations
2. Techniques of distribution planning:
Various approaches are used to
evaluate performance of the
distribution network and planning
process. Techniques include:
a. Developing a distribution location-
specific product forecast
b. Developing the replenishment
planning parameters for each
stockkeeping unit (SKU) within the
distribution network
c. Methods of time-phased planning
logic inherent in distribution
requirements planning (DRP)
d. Methodologies for linking DRP to the
S&OP and master scheduling
processes
e. Supporting specific marketing
efforts and managing supply
shortages
f. Pull systems
CPIM Part 2 Content 35
 g. Push systems
h. Data collection methods for effective
feedback
i. Key distribution performance
indicators
j. Feedback on distribution network
design decisions, distribution planning
process improvements, and execution
of the plan
References: 1; 4; 8 (chapters 7-15); 16
(chapters 14–16)
II. Detailed Scheduling and Planning
A. Inventory Management
Inventory management principles, policies,
and techniques impact many other decisions
throughout the organization, including
stocking levels, order quantities, safety
stocks, handling and storage requirements,
and financial management.
1. Principles of Inventory Management:
Inventory management policies are put in
place to meet both operational and
financial objectives in the organization.
Principles include:
a. Types and classifications of inventory,
including raw materials, work in
process (WIP), finished goods,
maintenance, repair, and operating
(MRO) supplies, returned goods,
excess, inactive, obsolete, scrap, and
distressed and perishable inventory
b. Trade-offs in stocking levels,
customer service, environmental
impact, and inventory accuracy
targets in different business
environments
c. Inventory performance measures as
they relate to business objectives,
such as inventory turnover,
customer service levels, and
inventory accuracy
d. Differences between dependent and
independent demand as related to
various inventory models and
sources of demand
36 ©APICS
e. Lean concepts that improve
throughput and reduce or eliminate
inventories, including value-stream
mapping techniques and pull
systems
f. The impact of global sourcing risks,
such as financial, political,
transportation, and environmental,
on inventory planning decisions
2. Techniques of Inventory Management:
Effective inventory management
includes understanding and applying the
appropriate techniques for the different
types of inventory, business
environment and desired objectives of
inventory investment and customer
service. Techniques include:
a. Order review methodologies,
including material requirements
planning (MRP), reorder point (ROP),
periodic review, visual review, and
kanban/pull system triggers
b. Lot-sizing techniques for
independent and dependent
demand applied to different types of
production and service
environments in support of inventory
investment strategies
c. Safety stock and safety lead time
techniques and their effects on inventory
and customer service objectives
d. Inventory valuation methods, including
FIFO, LIFO, transfer pricing, standard
and actual cost, and project and
process cost
e. Cycle counting, physical inventory,
and ABC classification methods for
improving and sustaining part count
and inventory investment accuracy
f. Storage, flow and material handling
options, including stock location
systems, automated storage/
retrieval systems (AS/RS), vendor-
managed inventory (VMI), and
consignment, as well as proper
transaction management
g. The importance of proper
identification, country of origin
declaration, documentation,
 tracking, and traceability of
inventory movement including bar
coding and radio frequency
identification tagging
References: 1; 2; 7 (chapters 1, 2, 4–6, 8–
10); 9; 10 (chapters 9–12); 14 (chapters 1, 2,
8, 9, 15); 15 (chapter 4); 16 (chapters 8, 9,
13–14, 16);
B. Planning Material Requirements to Support
the Master Schedule
Planning material requirements driven by the
master production schedule (MPS), including
material requirements planning (MRP), deals
with dependent demand parts and
interrelationships that require planning at any
given time. It also includes independent
demand planning for service parts, matching
supply with demand, and managing demand
at aggregate and disaggregate levels.
1. Principles of the material planning
process: The inputs used in calculating
requirements for inventory items,
including accuracy, timeliness and
completeness, are critical to the
detailed material planning process.
Principles include:
a. Defining inventory data, including item
description, current usage rates, stock
balances, and tracking historical
demand as required to support the
material planning process.
b. Using master schedule data to
describe types, quantities, sources,
priorities, customer orders,
forecasts, and time phasing of
product demand generated as a
result of the master planning
process
c. Defining engineering data for
product structure and
parent/component relationships,
including information on part
interdependencies, lead times, and
effective management of
engineering changes
d. Making decisions to facilitate
material planning, establish
priorities, resolve conflicts through
pegging relationships, and support
other decisions and productivity
measures based on the type of
environment and product life cycles
e. Monitoring system feedback
mechanisms to enable the appropriate
actions necessary to balance supply and
demand
f. Using various safety policies to
minimize the impact of uncertainty
on the planning process
g. Integration with master planning,
final assembly, and configuration
processes to ensure material
availability matches demand
quantities, timing, and priorities
2. Techniques of the detailed material
requirements planning (MRP) process:
Demand for dependent components is
calculated by exploding bills of material
(BOM), netting requirements, and
determining time-phased inventory
needs based on inventory policies.
The output from the planning process
recommends the placement and
replanning of supply orders to maintain
the validity of order priorities.
Techniques include:
a. Generating time-phased
requirements to create material
plans that support company and
supplier needs for long range and
short range planning
b. Using the MRP time-phased grid to
display gross requirements, scheduled
receipts, projected available, net
requirements, planned order receipts
and planned order releases
c. System replanning of order priorities
to respond to changes of demand and
supply and resynchronize the material
plan with the current material
requirements
d. Revising planning parameters to
adjust lead time, lot size, safety stock
quantity, kanban quantity, cycle times,
CPIM Part 2 Content 37
 and other parameters to reflect
product life cycles, current conditions,
and company strategy
e. Utilizing what-if analysis and
simulation tools, methodologies, and
techniques to evaluate viable
alternatives without changing the
existing material plan
3. Managing the project plan: Planning
material requirements for specific project
activities requires the implementation of
additional tools. Principles and
techniques include:
a. A project planning process that
includes a statement of work, work
breakdown structure, project
schedule, responsibility matrix,
resource requirements, and budget
b. A project implementation phase that
includes selecting the project team,
scheduling the work, and managing
the team dynamics, schedule, and
budget
References: 1; 2; 7 (chapters 1, 14) 10
(chapters 4, 11); 16 (chapters 7–9); 18
(chapters 3–4, 11–13, 17, 22)
C. Planning Operations to Support the Priority
Plan
Capacity management encompasses
planning, establishing, measuring, monitoring,
and adjusting levels of capacity to execute the
master schedule and related materials plan. It
addresses the balancing of the material plans
with available internal and external resources
and supporting activities, including constraint
management, line and flow balancing, and
variability and capacity in a transient state.
1. Principles of the detailed capacity
planning process: Work center and
routing data are used to schedule the
projected load from the material
requirements plan by time period.
38 ©APICS
Principles include:
a. Evaluating the availability of
theoretical, demonstrated, and rated
capacity, qualified by efficiency and
utilization factors in different types
of environments
b. Calculating load from planned and
released orders, repetitive schedules,
past-due orders, rework, and work in
process
c. Assessing impacts of industry-
specific conditions, such as
remanufacturing, byproducts, co-
products, and recycled material
d. Identifying the impact of unplanned
work and quality problems on
resources
e. Scheduling, queuing, and managing
throughput in various industries,
including service
2. Techniques of the detailed capacity
planning process: Various approaches
can be used for applying the process
within different production and service
environments. The output of detailed
capacity planning is used to adjust the
levels of capacity or load to complete
scheduled work within the required
timeframe. Techniques include:
a. System design techniques including
infinite and finite capacity planning,
queuing and sequencing, constraint-
based finite scheduling, load
balancing for scheduling
manufacturing operations, and
establishing projected load on
manufacturing resources
b. Simulation and modeling techniques
that enable a variety of scheduling
and loading conditions for
transformation processes
c. Loading operations and adjusting for
capacity reductions or increases, to
support business and customer
service targets and to accommodate
process variability
d. Recognizing intangible and variable
capacity characteristics to manage
load in a service industry
 e. Integration with master planning,
final assembly, shop floor activities,
and configuration processes to
ensure that capacity availability
matches demand
f. Using safety capacity in
environments that must
accommodate unplanned load
variability
g. Various methods of balancing
capacity and load including
rescheduling or splitting orders,
outsourcing, workforce
development, changing capacity
through workforce changes, and
modifying order quantities and
priorities
h. Managing constraints and balancing
flow using process flow scheduling
in process industries, in either batch
or continuous mode
i. Measuring the capacity planning
process on the ability to balance
workload with available capacity and
support on-time performance
References: 1; 2; 10 (chapters 5–6, 15); 16
(chapters 10–12)
2. Techniques for supplier partnerships:
D. Planning Procurement and External
Sources of Supply
Procurement and supplier planning
encompasses planning and evaluation
activities to qualify suppliers and establish
effective communication channels. Ongoing
relationships require defining mutual business
needs, sharing of product and process
information, the impact of global sourcing,
sustainability practices, and quality
management. This includes approaches to
communicating forecasts, orders, and
schedules to ensure that purchased capacity
and materials will be available in the required
quantities and at the required time.
1. Principles of supplier relationships:
Establishing long-term supplier
partnerships is necessary to ensure
competitive advantage and continuous
improvement, including the application
of supply chain strategies to actual
sourcing techniques and the principle
of total procurement costs. Principles
include:
a. Varying degrees of partnership,
including strategic alliance, joint
venture, retailer-supplier, distributor
integration, contract manufacturing,
and technical and operational
partnering
b. Supplier selection alternatives
including single or multiple sourcing,
domestic and foreign providers, and
special services
c. The inclusion of additional supply
chain links; including retail,
distribution, and transportation
companies
d. Environmentally responsible
purchasing to minimize the impact
the organization and its suppliers
have on the environment
e. The effect of procurement planning,
new product introduction, and
engineering change control on
supply chain performance
Elements of supplier relationships can
vary, based on supplier relationship
management (SRM) principles and
activities, as well as different
competitive environments and markets.
Techniques include:
a. Methods of procuring materials and
services including contracts,
kanbans, blanket orders, purchase
orders, consignment, pricing
agreements, outsourcing and e-
commerce
b. Delivery approaches including
traditional modes of transportation,
third-party logistics (3PL), cross-
docking, point-of-use delivery, direct
shipment and vendor-managed
inventory (VMI).
c. Supplier participation in product
design, quality requirements, related
technology, sustainable business
CPIM Part 2 Content 39
 practices, delivery, and accounting
processes
d. Defining goals and benefits of the
partnership, including improvements
in technology, inventory levels,
customer service, quality, lead
times, visibility, value-chain
forecasting, cost, impacts on the
environment, damage and loss
prevention, continuous
improvement, access to new
markets, and time to market
e. Applying a supplier rating system to
encompass quantitative measures,
such as cost and on-time delivery,
product quality, environmental
impact, and qualitative measures
such as social performance,
workforce diversity, human rights,
labor, and anticorruption
f. Understanding effective
communication techniques, cultural
differences, commercial versus
government interests, and
information technology
g. Using data necessary for
collaboration including risk sharing,
technical and quality specs,
engineering changes, supply chain
inventories, and future demand
2. Techniques of executing operations: A
References: 1; 2; 7 (chapters 3, 6–11, 14); 9;
10 (chapters 7, 13, 16); 14 (chapter 15); 15
(chapters 3, 5–9); 18 (chapter 8)
III. Execution and Control of Operations
A. Execution of Operations
The execution of operations includes
understanding the scheduling processes that
translate plans into operational activities. This
includes applying methods of authorizing and
releasing work, and the management of
resources required to accomplish the work. All
execution activities rely on an understanding
of the decisions made about the
organizational environment, strategies, and
objectives.
1. Principles of executing operations: An
understanding of the key principles of
40 ©APICS
executing activities is necessary for
effective operations management.
These principles are influenced by the
policies that determine how work will
be accomplished, such as push versus
pull environments. Principles include:
a. Flow principles, including locating
bottlenecks, constraints management,
minimizing waste, and coupling and
decoupling operations
b. Batch principles that employ the
concepts of process batch, transfer
batch, lot size, and reorder point
(ROP)
c. Scheduling principles that commit
resources to a timetable, including.
expediting, resolving imbalances,
time fence policies, lead time
components, schedule composition,
resource constraints, final assembly
scheduling (FAS), and preventive
maintenance
d. Integrating pull systems with
material requirements planning
(MRP) and enterprise resources
planning (ERP) systems to align
shop floor activity with customer
demand and takt time
variety of techniques are available to
guide the execution of operations
plans. It is important to understand the
distinctions and applicability of using
different techniques based on the
manufacturing or service environment.
Techniques include:
a. In a push environment, making
decisions on sequencing rules for
work and the impact on setup time
and changeovers, the movement of
materials, the use of alternate
routings, forward and backward
scheduling, load leveling,
input/output control (I/O), and
adjusting constrained resources
b. In a pull environment, allowing work
to flow without interruption by using
mixed-model scheduling, rate-based
 scheduling, pulling work to fulfill
internal or external customer
demand, synchronization, line
balancing, and adjustments to
constrained resources
c. Elimination of non-value-added
activities to reduce the time to
process goods and services,
lessening cost to the organization
and improving competitive
advantage
d. Using the five S methodology to
organize, clean, develop, and
sustain a productive work
environment
References: 1; 3; 10 (chapters 6, 12, 15); 11
(chapters 6, 14, 17, 19) 13; 16 (chapters 10,
11, 13, 16, 17)
B. Control of Operations
Control of operations encompasses the ongoing
review and management of operational results
in comparison to the established near-term
plan, followed by analysis and application of any
corrective action required to align performance
with the plan. Control includes the principles
and techniques to accomplish the plan using
both internal and external resources.
1. Principles of controlling operations: The
principles of operational control focus on
the organization’s goals, feedback from the
process, and management of the control
process. An understanding of the
operation’s environment and the
distinction between internal and external
elements is essential in establishing
appropriate measures. Principles include:
a. Expressing the detailed operational
plan in units, hours, labor, and
inventory objectives
b. Analysis and review of the capability,
stability, and permissible tolerance
flexibility levels of operations
c. Applying control goals of product and
service design and vendor certification
d. Using feedback to provide data
necessary to maintain valid plans,
evaluate variances to standard
performance, and determine
performance process stability,
process capability, and theoretical
and demonstrated capacity
e. Managing the control process
through established standards and
procedures in support of the
organization’s goals and bottom line,
including the use of relevant and
measurable performance measures.
f. Using safety and environmental
standards to control and protect the
organization and its environment.
2. Techniques: The objective of control is
to compare actual to planned results.
Tools and sources of data vary
depending on the environment.
Techniques include:
a. Using costing methods, including job
costing, absorption costing, activity-
based costing (ABC), and process
costing to compare actual to
planned, budgeted or standard costs
b. Capturing variances in cost through
inventory valuation, obsolescence
review, scrap, rework, repairs,
returns, and defective output
c. Measuring costs related to quality
including internal and external
failure costs, as well as appraisal
and prevention costs
d. Evaluating and recording levels of
process activity to determine
variation and conformance to
standards by using statistical
process control (SPC) methods such
as P charts, X-bar charts, R charts,
and capability indices
e. Evaluating throughput by measuring
efficiency, utilization, productivity,
takt time, cycle time, visual signals,
and units of throughput such as
quantities of materials, services,
hours, or dollars
References: 1; 3; 10 (chapters 6, 9, 16); 11
(chapters 5, 6, 7, 14, 16, 17, 18, 20, 21, 22,
24, 25) 13; 16 (chapters 10, 17)
CPIM Part 2 Content 41
C. Quality, Communication, and Continuous
Improvement
Management defines the quality and continuous
improvement goals of the organization, and uses
meaningful communication techniques to educate
others and bring about those goals.
1. Principles of quality, communication and
continuous improvement: Management
principles address the organization,
training, and motivation of work teams
and other groups of persons assigned
purposeful activities. Understanding that
there are a number of different and often
conflicting goals within the organization
requires considering a broad range of
possible solutions. Principles include:
a. Group principles, including multiple-
criteria decision making, consensus-
building, gatekeeping, problem-
solving processes, meeting skills,
understanding the capabilities and
work of others, engaging in cross-
training, and gaining skills in effective
group formation and leadership
b. Individual principles including task
definition and guidance, managing
“up” and “down” in the organization,
self-assessment, motivation of self
and others, understanding of work
elements, asking diagnostic
questions, and utilizing time
appropriately
2. Techniques of quality, communication
and continuous improvement:
Techniques apply the principles and
include thoughtful problem definition
and its impacts, criteria for evaluating
solutions, and choice of the most
effective solution given the criteria.
Techniques include:
a. Basic tools of quality management
including check sheets, cause-and-
effect analysis, Pareto charting and
analysis, the use of histograms,
scatter charts, control charting, and
flow charting
42 ©APICS
b. The define, measure, analyze,
improve, control technique (DMAIC)
as an organized six sigma
procedure for close examination of
a process
c. The Shewhart/Deming cycle, also
known as plan-do-check-action
(PDCA), which moves from planning
through the observation or data
gathering, validation, and execution
phases of the problem-solving
process
d. A3 problem solving including root
cause analysis, current and target
conditions, implementation, and
follow-up plans to ensure an
objective has been met
e. Considering the impact of
management style and contingency
planning on communication,
problem solving, and decision-
making
References: 1; 3; 11(chapters 2, 4, 5, 6, 7,
14, 15, 16, 19, 20, 21, 24, 25); 13
D. Design Concepts and Trade-Offs
Successful execution system design balances
competing organizational objectives. Effective
execution system design will incorporate the
appropriate flow approach, customer definition
of quality, market demand for speed, use of
available technologies, and the appropriate
workforce training, to simultaneously achieve
desired system outcomes, profitability, and
sustainability.
No single operational design is appropriate for
all organizations or standard industry
classifications. The operational design must
be adapted to deliver competitive
manufacturing or service capability to the
marketplace. As an organization’s operations
personnel may be asked for input into new or
changing design systems; they must
understand general principles and techniques
and tradeoffs of the underlying product,
organization, and process designs.
1. Principles of design concepts and tradeoffs:
Design principles are classified as product
design, organizational or plant layout, and
process design, and apply at the local,
network, and global level. Principles include:
a. Local design principles that pertain
to internal organizational processes,
and the selection of the appropriate
engineering approach which impacts
the execution system flexibility,
process choice, and speed to
market
b. Making local process design trade-
offs and improvements in a portion
of the workspace, a department, or
entire facility, including application
of lean principles, quality systems,
automation, use of technology,
environmental footprint, cost-
volume-profit relationships, and
other tools that affect process
outcomes
c. Shaping the relationship with up and
down stream customers and
suppliers through network
principles, including the use of
collaboration technologies such as
voice of the customer (VOC), supply
chain management, logistics
practices, lean tools, and quality
principles
d. Forming the basis of an
organization’s relationship to the
world at large through global
principles, including costs and
benefits to society, green and
sustainable manufacturing, and
other corporate social
responsibilities
e. Understanding the tradeoffs and
compromises within the
relationships of variables and design
parameters that often compete with
each other, such as the level of
product or service customization the
execution system will be responsible
for delivering
2. Techniques of design concepts and
tradeoffs: Design techniques consist of
the processes a manager might invoke
to arrive at an appropriate trade-off
given stated objectives. Product design
techniques that influence operations
include engineering methods that
increase flexibility of service delivery.
Process design techniques can include
the use of technology and lean
principles. Techniques include:
a. Continuous improvement design
activities that enhance the internal
performance and relationships with
upstream and downstream
customers and suppliers, including
collaboration technologies,
incorporation of the voice of the
customer (VOC), and supplier
feedback
b. Work area design activities including
setting specifications, work
orientations, flows, layouts,
changeovers, simulation, modeling,
shop-based technology
improvements, automation, and
employee training
c. Using collaboration and visual
techniques in local work and
employee groups to improve
performance in the workspace,
process, and information flow
d. Utilizing quality systems and tools
including quality function
deployment (QFD), concurrent
engineering, modular design, and
feature postponement to make
execution systems more likely to
produce desired outcomes
e. Using design of experiments (DOE)
to measure controllable and
uncontrollable process variables and
their effects on managing
satisfactory outputs from the
process or system under analysis
References: 1; 3; 10 (chapters 7, 14); 11
(chapters 4, 5, 6, 11, 14, 15, 17, 20, 22, 23)
13; 16 (chapters 13, 15, 17)
CPIM Part 2 Content 43
IV. Strategic Management of Resources
A. Understanding the Business Environment
and Developing Corporate Strategy
Operations strategy must be integrated with
the corporate strategy of the firm, reflecting the
external environment, as well as organizational
priorities and philosophies. The operations
strategy development process must capture
and assimilate that information to provide
context for alignment with corporate strategy.
Corporate strategy development must consider
business environmental factors.
1. Environmental analysis: An analysis of
the strategic environment, structure,
and infrastructure will enable
organizations to more effectively align
resources with the strategic plan to
create a competitive advantage.
Understanding the broad
environmental content in which a
company’s industry is situated is
required. Principles and techniques
include:
a. Knowledge of the external
environment
b. Performing an industry analysis (five-
force model)
c. Performing an internal analysis (core
competencies)
d. Performing a value chain analysis by
identifying the primary activities and
related support activities that create
customer value
e. Performing a situation analysis
(SWOT) to assess strengths and
weaknesses, market opportunities,
and external threats to future well-
being
2. Strategy formulation: In order to
formulate an operations strategy, the
organization must identify appropriate
strategic components and understand
the alignment of and relationships
between operations with corporate
strategic objectives. Principles include:
a. Development of a corporate strategy
44 ©APICS
b. Development of a business strategy
c. Development and alignment of
functional strategies
d. Development and alignment of
operating strategies
3. Sustainability: Everyone within an
organization must understand the
importance and impacts of the three
parts of sustainability (economic,
environmental, and social, also known
as the triple bottom line (TBL) to the
organization, stakeholders, and the
supply chain. Sustainability must be
purposely integrated with corporate
strategy. Principles include the
implication of sustainability on:
a. Product and process design
b. Supply chain design, including
reverse logistics
c. Waste hierarchy and circular
economy implications
d. Sustainability risk identification and
mitigation
e. Sustainability metric identification,
reporting, and verification
References: 1; 6 (chapters 3–9); 15
B. Developing the Operations Strategy
The operations strategy development process
must align with the business strategy and
reflect the analysis of the business
environment. This includes the processes of
identifying, evaluating, and choosing among
alternatives in the context of the business
strategy, and understanding the significance
of the various factors in developing the
operations strategy.
1. Performance objectives/goals:
Choosing how performance is
measured and how success is
determined should be considered
during the development of the
operations strategy.
2. Product/service design: In order to
determine the strategy for product or
 service design, the firm’s capabilities
and processes must be matched with
market needs and product life cycles.
Principles include:
a. A knowledge of competitive priorities
b. Determination of the firm’s order
winners and qualifiers
c. Production environment strategies
including: engineer-to-order, make-
to-order, assemble-to-order,
configure-to-order, make-to-stock,
and remanufacturing
3. Structure and infrastructure: Making
structure (capital-related) and
infrastructure (organizational) choices
is a key step in developing the
operations strategy. This includes
understanding that all decision areas
have both structure and infrastructure
implications. Principles and techniques
include:
a. A paradigm or philosophy to provide
a consistent framework for decision-
making using tools such as lean,
theory of constraints (TOC) and
enterprise resource planning (ERP)
b. Process design such as the product-
process matrix and the product
service design matrix
c. Vertical and horizontal integration
alternatives
4. Coordination strategy: During the
development of an organizational
strategy, consideration must be given
to aligning internal operations and
external supply chain partners.
Principles and techniques include:
a. Planning for capacity, such as lead
and lag
b. Integrating materials management
strategies across the supply chain,
including inventory levels, location,
and ownership
c. Sharing key information
appropriately throughout the
organization, such as sales forecast,
capacity plans, and product planning
d. Planning human resource and
technology requirements
5. Measurement: Measurements must be
carefully chosen to support
performance objectives, including how
they will drive human action and
behaviors. Measurement techniques
include:
a. Financial statement analysis to
appraise a company’s past financial
performance and its future potential
by analyzing financial statements,
including horizontal analysis, vertical
analysis and ratio analysis
b. Cash flow results from cash receipts
and cash payments due to
operating, investing and financial
activities
c. Capital investment due to
commitment of resources to new
product development, computer
systems, or a project that results in
benefits spread over several time
periods, including obtaining new
facilities, expansion or replacement
of existing facilities such as property,
plant and equipment
d. Costing methods that determine the
cost of producing a product,
including absorption, variable,
activity-based costing (ABC) and job
order costing
e. Nonfinancial concepts, such as
balanced scorecard and operational
and process measures
f. Cost-volume profit analysis of how
profit and costs change with
changes in volume, including break-
even analysis, target income
volume, and sales mix analysis
6. Logistics: An understanding of logistics
includes the principles and techniques
of forward and reverse supply chain
design, asset ownership, and
outsourcing options such as third- and
fourth-party logistics (3PL and 4PL)
CPIM Part 2 Content 45
 7. Organizational commitment process: In
order to gain broad acceptance of the
operations strategy from management
and the rest of the organization, it is
necessary to understand any issues that
may prevent a commitment of resources
8. Risk assessment: It is critical to
understand the sources and
probabilities of risk, impacts of
potential failures, and the risk
tolerance of the organization, as well
as prevention, recovery, and resiliency
strategies in developing the
operations strategy
References: 1; 5 (chapters 1–5); 6 (chapters
2, 10, 12); 12; 15; 17
C. Implementing the Operations Strategy
Various strategic leadership activities,
leadership roles, and responsibilities are
necessary for the successful implementation
of the operations strategy.
1. Risk management: In order to mitigate
existing and changing risks, actions are
required including failure prevention,
mitigation, and recovery
2. Change management: Change
management requires understanding
the strategic elements of successful
organizational change and how to apply
them. Principles and techniques
include:
a. Roles and responsibilities in leading
change
b. Change process activities utilizing
typical project techniques
c. Preparing others for change and
understanding the needs and
strategies to involve all stakeholders
3. Infrastructure systems: It is necessary
to understand how to configure various
systems during implementation of the
operations strategy. Principles and
techniques include:
46 ©APICS
a. Management involvement in the
organizational structure,
measurement systems, and human
resource policies and practices
b. Analysis of value creation, including
product/service and
production/delivery
c. Implementation of quality strategies
and methodologies
d. The use of information through
technology, visual management, and
sharing processes
4. Structural deployment: An organization
must identify and implement any
required modifications to existing
operational structures to be consistent
with the operations strategy. Principles
and techniques include:
a. Aligning the facilities strategy
b. Positioning equipment to support
process flow
c. Identification and management of
assets, such as inventory and
vehicles.
References: 1; 6 (chapter 11); 12; 15; 17
(chapters 7, 9, 10)
Key Terminology
An understanding of the list of terms on pages 11-
22 of this document is strongly recommended.
The list is intended to be thorough but not
exhaustive. The candidate is also expected to be
familiar with the definitions of terms identified in
the content outline. Definitions of these terms can
be found in the APICS Dictionary, 15th edition.
Bibliography
All test candidates should familiarize
themselves with the references for this
examination. The recommended references
pertaining to the diagnostic areas are listed at
the end of each section of the content outline.
The first number indicates the sequence
number for the reference in the Bibliography
section on pages 9–10 and the numbers in
parenthesis indicate the relevant chapters
within that reference.
CPIM Part 2 Sample Questions
The following twelve questions are similar in
format and content to the questions on the
exam. These questions are intended for
practice and to illustrate the way questions
are structured. The degree of success you
have in answering these questions is not
related to your potential for success on the
actual exam and should not be interpreted as
such.
Read each question, select an answer, and
check your response with the explanation on
pages 52-54.
1. The forecast interval would typically be
longest for forecasts used as input to
which of the following processes?
4. To create an effective customer-supplier
partnership, it is essential to:
(A) establish stability in schedules that
enable suppliers to react within their
lead time.
(B) evaluate the suppliers based on
price and then send the purchase
order.
(C) establish a delivery schedule with a
corresponding purchase order and
send them to the suppliers.
(D) establish a preventive maintenance
program to avoid quality problems
due to machine troubles.
Use the information below to answer
questions 5.

(A) Business planning Lead time: 2 Lot size: 30

(B) Final assembly scheduling (FAS) Demand time fence: 3 On hand: 15
(C) Sales and operations planning Planning time fence: 7 Safety stock: 6
(S&OP)
(D) Master production scheduling (MPS) Period 1 2 3 4 5
Forecast 10 22 20 24 28
2. In a distribution environment, which of the Customer 5 26 15 6 30
following will occur if the planner fails to orders
address exception messages during the Projected
planning cycles? available
balance
(A) Planned orders are not converted on time Available-to-
(B) Replenishment lead times are incorrect promise
(C) The statistical order point is increased Master
(D) The planning horizon is too short production
schedule
3. Cause-and-effect analyses are made
with the help of which of the following? 5. For the master schedule, what is the available-
to-promise for Period 4 if the discrete method
(A) Fishbone chart is used?
(B) Statistical process control (SPC)
method (A) 22
(C) Critical path method (CPM) (B) 24
(D) Pareto analysis (C) 35
(D) 37

CPIM Part 2 Content 47

 6. Given the following purchase cost data 10. Which of the following is an advantage
for product Z: of using a lag capacity (chase) strategy
approach in implementing operations
0 on hand (December 27) strategy?
100 @ $10 = $1,000 (December 28)
10 @ $11 = $110 (January 3) (A) High facility utilization rate
10 @ $8 = $80 (January 10) (B) Revenue maximization
(C) Reaction to short-term demand
If this company is using a weighted changes
average costing method and 100 units (D) Product mix flexibility
were sold on January 8, the cost per unit
for the sale is: 11. Part number 762-4521 is being
processed as an order for a lot of 50
(A) $9.17 pieces due on day 200. The lot is
(B) $10.00 currently in queue at Operation 3. The
(C) $10.09 facility is currently running one eight-
(D) $8.00 hour shift. Based on routing and status
information for part number 762-4521
7. Which of the following is a significant below, what is the priority for Operation
factor in determining the level of work- 3 on Day 195 calculated on the basis of
in-process (WIP) inventory when a pull slack time rule (in days) per remaining
system is employed? operation?

(A) Number of open shop orders Operation Standard Pieces

(B) Quantity of parts represented by hours per produced
each signal piece through day
(C) Number of workstations in the 195
process 1 0.05 51
(D) Takt time required for the process 2 0.15 50
3 0.10 0
8. A make-to-order organization competing 4 0.20 0
on delivery speed would consider which 5 0.02 0
of the following to be a significant
impact on its competitive position? (A) -3.70
(B) 0.58
(A) Relocation of suppliers (C) 1.00
(B) Increased labor costs (D) 3.00
(C) Outsourcing of customer service
(D) Shifts in customer demand

9. Which of the following measures is a key

indicator of a firm’s asset utilization?

(A) Profit margin

(B) Current ratio
(C) Inventory turnover
(D) Cost of goods sold (COGS)

48 ©APICS
12.

The MRP Grid

Technique
Order quantity / Lot Size – lot-for-lot (L4L)
On hand: 500
Safety stock: 0
Allocated quantity: 0
Low-level code: 0
Lead time: 4
Periods
1 2 3 4 5 6 7 8
Gross requirements 100 300 200 400
Scheduled receipts
Projected available 500 400 100
x Net requirements
Planned order receipts
Planned order releases

The chart shows the gross requirements for

an item in a material requirements planning
system. Stock on hand is 500, and there is
nothing on order. The item has a lead time
of four periods and is being ordered lot-for-
lot. Which of the following would be the
correct planned order release for the item?

(A) 100 in Period 1, 400 in Period 3

(B) 100 in Period 4, 400 in Period 6
(C) 100 in Period 5, 400 in Period 7
(D) 500 in Period 5

CPIM Part 2 Content 49


Answers to Sample
Questions
Note: References to the content outline
appear in parentheses.
CPIM Part 1
1. B (IG) A shipping buffer prevents missed
due dates. A is incorrect because the
drum is the rate of production set by the
system’s constraint. C is incorrect
because a constraint buffer is used to
buffer the constraint. D is incorrect
because the rope is the communications
process for releasing work.
2. B (IE1) The order of the five Ss approach
is sort, straighten, shine, standardize,
and sustain. A is incorrect because
sequence is not one of the five Ss. C is
incorrect because straighten is the
second step. D is incorrect because self-
discipline is not one of the five Ss.
3. A (IC1) A cash flow statement shows the
flow of cash and its timing into and out
of an organization. B is incorrect
because an income statement shows
profit and loss over a period of time. C is
incorrect because a balance sheet
shows the resources owned, the debts
owed, and the owner’s equity at a given
point in time. D is incorrect because a
market share report indicates how well a
firm is doing in the market.
4. C (IIC2) Forecasts are usually wrong,
therefore, every forecast should include
an estimate of error. A is incorrect
because forecasts are more accurate for
families or groups. B is incorrect
because forecasts are not used for
independent demand items. D is
incorrect because forecasts are more
accurate for near-term periods.
5. D (IIC2) Intrinsic forecast data is based on
interior factors such as sales history. A and
B are incorrect because these are extrinsic
data. C is incorrect because shipment
50 ©APICS
history may not show the actual demand if
product was unavailable for shipment.
6. B (IIIB) Resource requirements planning is
long-range capacity planning completed at
the production plan level. A is incorrect
because capacity requirements planning is
done at the MRP level. C is incorrect
because rough-cut capacity planning is
done at the master schedule level. D is
incorrect because input/output control is
completed during execution of the plan and
is the shortest planning range.
7. D (IIIB) To calculate how much actual
time will be needed to complete 16
standard hours of work, divide the
capacity required by the efficiency times
the utilization (actual time = capacity
required / (efficiency) (utilization) (actual
time = 16 / (80%) (80%). A is incorrect
because it was incorrectly calculated by
multiplying the 16 hours required by 40
percent (the difference in the capacity
and utilization from 100 percent) and
adding the amount to the 16 hours
required ((16 × 40% = 6.4), then (16 +
6.4 = 22.4)). B is incorrect because it
was incorrectly calculated by multiplying
efficiency and utilization and then
multiplying the required standard hours
(80% × 80% = .64, then .64 × 16 =
10.24). C is incorrect because it is the
standard hours required and does not
consider the efficiency and utilization of
the operation.
8. D (IVC3) Random-location storage
enables parts to be placed in any space
that is empty. This method often
required less storage space than a fixed-
location storage method. A is incorrect
because distribution is the activities
associated with the movement of
material from the manufacturer to the
customer. B is incorrect because kitting
is the process of constructing and
staging kits. C is incorrect because
access to stock is usually an advantage
of fixed-location storage.
 9. C (IVC2) Private carriers lease or own
their own transportation equipment.
Operating costs include not only
investment in equipment, but insurance,
permits and maintenance expenses as
well. Most are company-owned and haul
only their own goods. A is incorrect
because common carriers carry goods
for anyone wanting their services. B is
incorrect because contract carriers haul
only for those with whom they have a
contract. D is incorrect because parcel
carriers carry goods for the public.
10. C (IVA1) Decoupling creates
independence between supply and use
of material. A is incorrect because it is
lot size inventory. B is incorrect because
it is inventory in transit between
locations. D is incorrect because hedge
is a form of inventory buildup to buffer
against some event that may not
happen.
Answers to TEI Example
Questions
Technology Enhanced Items (TEI’s)
3. (IIIC3) The answer is data gathering,
demand planning, supply planning,
pre-S&OP meeting, executive meeting.
The S&OP five-step process can be
summarized as data gathering,
demand planning, supply planning,
pre-S&OP meeting and executive
meeting. The step “Generate the MPS
is not part of the process.
4. (IE1) The answer is sort, simplify,
scrub, standardize, sustain.
Five terms beginning with “S” used to
create a workplace suitable for lean
production: sort, simplify, scrub,
standardize, sustain Sort means to
separate needed items from
unneeded ones and remove the latter.
Simplify means to neatly arrange
items for use. Scrub means clean up
the work area. Standardize means to
sort, simplify, and scrub daily. Sustain
means to always follow the first four
Ss. Sometimes referred to by the
Japanese equivalents: seiri, seiton,
seiso, seiketsu, and shitsuke

1. (IVA2) The inventory turnover is 4

times. A frequently used method to
compute inventory turnover is to
divide the annual cost of goods sold by
the average inventory level.

2. (IVB4) The answer is invoice, purchase

order, receiving report. The purchase
order, receiving report and the invoice
should be consistent regarding items
and quantities, so that the items and
quantities the supplier will be paid for
are consistent with the items and
quantities that were ordered and
received. The bill of lading, packing
list, and customs documentation can
be seen as information related to the
transport of the goods and not
impacting the invoice approval. The
purchase requisition precedes the
purchase order and is not required for
invoice approval.

CPIM Exam Content Manual 51


Answers to Sample
Questions
Note: References to the content outline
appear in parentheses.
CPIM Part 2
1. A (IB4) Business planning is performed
at the highest level of aggregation and
over the longest horizon and would
typically be done for fiscal quarters or
years. The other processes would have
shorter horizons and intervals.
2. A (IVB) Answers B, C, and D refer to
system parameters that exception
messages would not address. Answer
(A) is a condition and exception
messages address conditions
3. A (IIIB) The fishbone chart is a diagram
of the possible causes of a problem. The
causes are determined with the aid of
brainstorming techniques. The diagram
resembles a fish skeleton. B, C, and D
are incorrect. Statistical process control
(B) focuses on the continuous
monitoring of a process. The critical path
method (C) is a technique used to plan
and control the activities of a project.
Pareto analysis (D) is a technique to
rank order the relative frequency of
occurrences.
4. A (IVA) Partnerships require a
commitment to stability within the
agreed-upon response parameters. B
and C are short-term and tactical in
nature. D is something that needs to be
done without any regard to partnering.
52 ©APICS
5. B (IIID) Available-to-promise for Period 4
is the master production schedule (MPS)
of 30 for that period, less the customer
orders of 6 for that period. Because
another MPS of 30 will occur in Period
5, demand for that period is not
considered by the available-to-promise
for Period 4. Based on the explanation
for the calculation for discrete available
to promise, Answers A, C, and D are
incorrect.
6. C (IB) Standard costing is a method of
setting a new standard based on various
parameters. A is incorrect because of
average cost after January 10. B is
incorrect because it is the FIFO cost of
the product. C is correct because this is
the weighted average on January 8. D is
incorrect because this is the last cost
paid for each item.
7. B (IIB) The level of work-in-process (WIP)
inventory when a pull signal is employed
is a function of the number of pull
signals and the quantity represented by
each pull signal. A, C, and D are
incorrect. Shop orders (A) are
characteristic of a push system and are
not relevant in a pull system. The
number of workstations (C) in the
process determines the minimum work
in process (WIP) level, but does not
determine the total WIP level. The takt
time (D) determines the rate at which
the process needs to operate. It does
not determine the WIP level.
8. D (IIB2) As customer demand shifts, the
organization may find itself with capacity
in excess or less than required. Neither
situation is ideal. If the demand shift
leaves capacity short, we see a situation
where the operation does not have
sufficient capacity to meet market
needs.
 9. C (IIE1) Profit margin is a profitability
measure (net income/sales). The
current ratio is a liquidity measure
(current assets/current liabilities). The
price-to earnings (P-E) ratio is a market
value measure (price per
share/earnings per share). Inventory
turnover (cost of sales/inventory level) is
one of the principal measures of a
company’s asset utilization.

10. A (IID1) A pure chase demand plan is

usually adopted by operations that
cannot store their output such as a call
center. Thus, the strategy avoids the
wasteful provision of excess staff that
occurs with a level capacity plan.

11. C (IB) The slack time per remaining

operation formula is:

Due date – date now – standard processing

days remaining

The result in divided by the number of remaining

operations.

Operation Standard Pieces Process

hours produced remaining
hours
1 0.05 51 0
2 0.15 50 0
3 0.10 0 5
4 0.20 0 10
5 0.02 0 1

The priority of Operation 3 is calculated as

follows:

CPIM Exam Content Manual 53

 12. A (IIC)

The MRP Grid

Technique
Order quantity / Lot Size – lot-for-lot (L4L)
On hand: 500
Safety stock: 0
Allocated quantity: 0
Low-level code: 0
Lead time: 4
Periods
1 2 3 4 5 6 7 8
x Gross requirements 100 300 200 400
Scheduled receipts
Projected available 500 400 100
Net requirements 100 400
Planned order receipts 100 400
Planned order releases 100 400

54 ©APICS
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