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 When a certified supplier’s delivery performance declines, a company should respond initially by communicating with the supplier to investigate the source of the problem. A certified supplier is a supplier that has met certain quality, delivery, and service standards and has been approved by the company to supply goods or services without inspection or testing. A certified supplier is expected to maintain a high level of performance and reliability, as well as to report any issues or deviations that may affect the delivery process. However, sometimes a certified supplier may experience a decline in delivery performance, which can cause delays, disruptions, or dissatisfaction for the company and its customers.

The best way to deal with a decline in delivery performance from a certified supplier is to communicate with the supplier and find out the root cause of the problem. Communication is essential for maintaining a good relationship with the supplier and for resolving any issues or conflicts that may arise. Communication can help the company and the supplier to understand each other’s expectations, needs, and challenges, as well as to identify and implement corrective actions or preventive measures. Communication can also help to restore trust and confidence between the parties and to prevent further deterioration of performance.

Tightening performance criteria for the supplier is not an appropriate initial response when a certified supplier’s delivery performance declines. Tightening performance criteria means imposing stricter standards or requirements on the supplier, such as reducing lead times, increasing penalties, or demanding more frequent reports. Tightening performance criteria may seem like a way of holding the supplier accountable and motivating them to improve their performance, but it can also have negative consequences. Tightening performance criteria can create more pressure and stress for the supplier, which can affect their quality, productivity, or morale. It can also damage the relationship with the supplier, as it may signal a lack of trust, respect, or cooperation from the company.

Establishing a temporary buffer of finished goods inventory at the supplier is not an effective initial response when a certified supplier’s delivery performance declines. Establishing a temporary buffer of finished goods inventory means storing extra units of products at the supplier’s location to compensate for any delays or shortages in delivery. Establishing a temporary buffer of finished goods inventory may seem like a way of ensuring availability and continuity of supply, but it can also have drawbacks. Establishing a temporary buffer of finished goods inventory can increase inventory costs, such as holding costs, transportation costs, or obsolescence costs. It can also reduce inventory visibility and control, as it may be difficult to track or manage the inventory at the supplier’s location. Moreover, establishing a temporary buffer of finished goods inventory does not address the root cause of the decline in delivery performance, but rather masks or postpones it.

Increasing the standard lead time of the component to allow for supplier delays is not a suitable initial response when a certified supplier’s delivery performance declines. Increasing the standard lead time of the component means extending the time between placing an order and receiving it from the supplier. Increasing the standard lead time of the component may seem like a way of adjusting to the decline in delivery performance and avoiding late deliveries, but it can also have disadvantages. Increasing the standard lead time of the component can reduce customer satisfaction and loyalty, as it may result in longer waiting times or missed deadlines for the customers. It can also reduce operational efficiency and flexibility, as it may limit the ability to respond to changes in demand or supply. Furthermore, increasing the standard lead time of the component does not solve the problem of the decline in delivery performance, but rather accepts or tolerates it.

References := Supplier Performance Metrics and Scorecard - IADC.org, Delivery Performance Explained (Measures, KPIs, and How to Improve), How to manage supplier performance - gatekeeperhq.com

 Process improvement is a method of analyzing and enhancing the production methods and techniques to increase productivity and performance. Process improvement aims to reduce costs, waste, defects, and errors, as well as to improve quality, efficiency, and customer satisfaction. When considering process improvement, the first approach that should be considered is making better use of existing resources. This means that the production system should optimize the utilization andallocation of the available resources, such as materials, labor, machines, and space. This can be achieved by implementing various techniques, such as lean manufacturing, six sigma, kaizen, or 5S. Making better use of existing resources can help to improve the process without requiring additional investment or expenditure.

The other options are not the first approaches that should be considered as part of process improvement. Hiring more skilled people to perform the job is not the first approach, as it may increase the labor cost and require more training and supervision. Hiring more skilled people may not necessarily improve the process if the existing methods and techniques are inefficient or ineffective. Buying better and faster equipment is not the first approach, as it may involve a large capital outlay and a long payback period. Buying better and faster equipment may not necessarily improve the process if the existing resources are underutilized or misallocated. Applying stricter quality control is not the first approach, as it may increase the inspection and testing cost and time. Applying stricter quality control may not necessarily improve the process if the existing methods and techniques are prone to errors or defects. References: CPIM Exam Content Manual Version 7.0, Domain 8: Manage Quality, Continuous Improvement, and Technology, Section 8.2: Continuous Improvement Concepts, p. 46; Process Improvement; Process Improvement Definition.

The most appropriate action by the master scheduler is to forward the request to senior management. According to the Time Fence Control (MRP and Supply Chain Planning Help) - Oracle, the demand time fence is a period within which the planning process does not consider forecast demand when calculating actual demand, and the planning time fence is a period within which the planning process does not alter the current material plan or master schedule. The master scheduler can make changes to the master schedule within the planning time fence, but only with approval from senior management. The request from marketing falls between the demand and the planning time fences, which means that it may affect the current material plan or master schedule, as well as the capacity and resource requirements of the production system. Therefore, the master scheduler should forward the request to senior management, who can evaluate the impact and feasibility of the request, and decide whether to approve or reject it.

Producing to backorders means that the company only produces goods when there is a confirmed customer order. This strategy is most appropriate during times of highly fluctuating demand, as it allows the company to avoid holding excess inventory that may incur high carrying costs and become obsolete. Producing to backorders also enables the company to adjust its workforce according to the actual demand, which can be easily changed as the question states. This strategy can improve customer satisfaction, as the products are tailored to the specific needs and preferences of each customer. However, producing to backorders also has some drawbacks, such as longer lead times, higher production costs, and lower economies of scale.

The other strategies are less suitable for highly fluctuating demand. Producing at a constant level means that the company produces goods at a fixed rate regardless of the demand fluctuations. This strategy can result in either excess inventory or stockouts, depending on whether the demand is lower or higher than the production level. Producing to the sales forecast means that the company produces goods based on the projected demand for a certain period. This strategy can be effective if the forecast is accurate, but it can also lead to inventory imbalances if the forecast is inaccurate or if there are unexpected changes in demand. Producing to demand means that the company produces goods based on the current demand in the market. This strategy can be responsive and flexible, but it can also be challenging to implement, as it requires high visibility, coordination, and agility in the supply chain.

References : CPIM Part 2 Exam Content Manual, Domain 4: Plan and Manage Supply, Section B: Production Planning and Control, Subsection 1: Production Strategies and Techniques, Page 19.

ABC classification is an inventory categorization technique that divides items into three classes based on their usage value, which is the product of the number of units sold and the cost per unit. Class A items have the highest usage value and account for a large proportion of the total inventory value, but a small percentage of the number of items. Class B items have a moderate usage value and account for a moderate proportion of the total inventory value and the number of items. Class C items have the lowest usage value and account for a small proportion of the total inventory value, but a large percentage of the number of items1.

An advantage of applying ABC classification to a firm’s replenishment items is that it allows planners to focus on critical products. Replenishment items are items that are regularly ordered or produced to maintain a certain level of inventory. By using ABC classification, planners can prioritize the replenishment of class A items, which have the highest impact on the firm’s profitability and customer satisfaction. Planners can also apply different inventory management techniques and policies for each class of items, such as more frequent reviews, tighter controls, lower safety stocks, and higher service levels for class A items, and less frequent reviews, simpler controls, higher safetystocks, and lower service levels for class C items234. This way, ABC classification can help planners optimize the replenishment process and reduce costs, waste, and stockouts.

The other options are not advantages of applying ABC classification to a firm’s replenishment items, because they are either irrelevant or incorrect. ABC classification does not distinguish independent demand from dependent demand, which are two types of demand that depend on whether the item is sold to customers or used as a component in another item5. ABC classification does not provide better order quantities than the economic order quantity (EOQ), which is a formula that calculates the optimal order quantity that minimizes the total inventory costs6. ABC classification does not allow the firm to utilize time-phased order point (TPOP), which is a method that determines when to place an order based on the projected inventory position and the lead time7.

A process capability study is a method of evaluating how well a process can produce outputs that meet the specifications or requirements. A process capability study involves collecting data from a sample of the process output, calculating the process mean and standard deviation, and comparing them with the specification limits1. A process capability study can help identify the sources and causes of variation, measure the performance and quality of the process, and determine the potential for improvement2.

A process capability study would be necessary in a laboratory when frequent failures are occurring. Frequent failures indicate that the process is not capable of producing reliable and consistent results, and that there may be some problems or defects in the process. A process capability study can help diagnose the issues and suggest corrective actions to reduce or eliminate the failures. For example, a laboratory that performs blood tests may conduct a process capability study to find out why some of the test results are inaccurate or invalid, and what factors affect the accuracy and validity of the test results.

The other options are not situations that would require a process capability study, because they are either unrelated or irrelevant to the process performance or quality. A test results are consistently late (A) is a problem of timeliness, not capability. A new technician is hired © is a change of personnel, not process. Hours of operation are to be extended (D) is a change of schedule, not process.

References:

Process Capability Analysis Cp, Cpk, Pp, Ppk - A Guide - 1factory

What is Process Capability? Capability Estimates & Studies | ASQ

A sales forecast that is based solely on shipment history is a method that uses past sales data to predict future sales. This method assumes that the sales pattern will remain consistent over time, and does not account for any changes or fluctuations in demand or supply1. Therefore, this method can be distorted by any factors that affect the availability or delivery of the products, such as material shortages.

Material shortages are situations where the supply of raw materials, components, or finished goods is insufficient to meet the demand. Material shortages can be caused by various reasons, such as natural disasters, supplier issues, transportation disruptions, quality problems, or demand spikes2. Material shortages can have a negative impact on the sales forecast that is based solely on shipment history, because they can reduce the amount of products that can be shipped to customers, and thus lower the sales revenue. Material shortages can also create a backlog of orders that cannot be fulfilled in time, and thus create a gap between the actual and forecasted sales3.

The other factors listed in the question typically would not distort a sales forecast that is based solely on shipment history, because they do not affect the shipment history directly. Labor rate changes are changes in the wages or salaries paid to workers. They may affect the production costs and profits, but not necessarily the sales volume or revenue4. Currency exchange rates are the rates at which one currency can be exchanged for another. They may affect the competitiveness and profitability of international sales, but not necessarily the sales volume or revenue5. Customer demands are the needs and preferences of customers for products or services. They may affect the sales potential and market share, but not necessarily the sales volume or revenue.

 A focused differentiation strategy is a type of focus strategy that targets a narrow buyer segment and pursues a unique competitive advantage. A focus strategy is a business-level strategy that involves concentrating on a specific market niche or segment and tailoring the products or services to the needs and preferences of that niche1. A differentiation strategy is a business-level strategy that involves creating a product or service that is perceived as unique, distinctive, or superior by the customers, and charging a premium price for it2. A focused differentiation strategy combines these two approaches by offering a differentiated product or service to a narrow market segment that has unique demands or characteristics. This strategy allows the firm to create value for its customers and charge higher prices than its competitors, while avoiding direct competition with firms that target a broader market or offer lower-cost products or services3.

An example of a focused differentiation strategy is Lululemon, a Canadian company that sells high-end yoga and athletic apparel. Lululemon targets a niche market of health-conscious, affluent, and fashion-oriented women who are willing to pay premium prices for its products. Lululemon differentiates itself from other sportswear brands by offering high-quality, stylish, and innovative products that are designed to enhance the performance and comfort of its customers. Lululemonalso fosters a strong brand identity and community among its customers by providing yoga classes, fitness events, online platforms, and social media engagement4.

References:

Focus Strategy - Definition, Types and Examples | Marketing Tutor

Differentiation Strategy - Definition & Examples | Marketing Tutor

Focused Differentiation Strategy: Definition & Examples - Video & Lesson Transcript | Study.com

Lululemon’s Focused Differentiation Strategy - Business Strategy Hub

Mean time between failures (MTBF) is the predicted elapsed time between inherent failures of a mechanical or electronic system during normal system operation1. MTBF can be calculated as the arithmetic mean (average) time between failures of a system1. MTBF is a useful measure of reliability, because it indicates how long a system is likely to work before failing. The higher the MTBF, the more reliable the system2. Reliability is the probability that a system will perform its intended function without failure for a specified period of time under specified conditions3.

The other statements about MTBF are false. MTBF is not used for non-repairable products, but for repairable systems. For non-repairable products, mean time to failure (MTTF) is used instead4. MTTF is the expected time to failure for a non-repairable system1. An increase in MTBF is not proportional to an increase in quality, because quality is not only determined by reliability, but also by other factors such as performance, functionality, durability, and customer satisfaction5. MTBF is not the same as operating life or service life, because operating life or service life is the total time that a system can operate before it reaches the end of its useful life, while MTBF is the average time between failures during the operating life6.

The sales and operations planning (S&OP) process is a cross-functional process that aligns the demand and supply plans of an organization. The S&OP process consists of several steps, such as data gathering, demand planning, supply planning, pre-S&OP meeting, executive S&OP meeting, and S&OP implementation. The output of the S&OP process is the production plan, which is a statement of the resources needed to meet the aggregate demand plan over a medium-term horizon. The production plan can be stated in different units of measure depending on the type of manufacturing environment. In a repetitive manufacturing environment, where the same or similar products are produced continuously or at regular intervals, the production plan can be stated in terms of the number of products planned for shipment. This unit of measure reflects the volume and mix of products that are expected to be sold and delivered to the customers. The number of products planned for shipment can also be used to calculate the capacity requirements, material requirements, and inventory levels for each product family.

References: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1: Develop Supply Plans, Subsection 4.1.2: Describe how to develop a production plan (page 36).