CPIM-Part-2 Exam Dumps : Certified in Planning and Inventory Management(Part 2)

 Customer service performance is the degree to which a product or service meets or exceeds customer expectations. The most relevant measure of customer service performance is how the customer perceives the service compared to what they expected. This measure reflects the customer’s satisfaction and loyalty, which are key factors for business success. Other measures, such as service promised versus measured, customer complaints, or positive feedback, are more related to the supplier’s perspective and may not capture the customer’s true perception of service quality. References : CPIM Part 2 Exam Content Manual, Domain 3: Plan and Manage Demand, Section A: Demand Management, Subsection 4: Customer Service Management, Page 11.

 Vendor-managed inventory (VMI) is a type of supply chain collaboration where the supplier takes responsibility for managing the inventory levels and replenishment orders of the buyer. VMI provides a benefit to the buying company in several ways, such as improving service levels, reducing stockouts, increasing visibility, and enhancing trust. One of the specific benefits of VMI is that it reduces administrative expenses for the buying company. Administrative expenses are the costs associated with the general operations and management of the business, such as salaries, rent, utilities, office supplies, and communication. VMI reduces administrative expenses by eliminating or simplifying the tasks related to inventory management, such as forecasting, ordering, invoicing, and payment. VMI also reduces administrative expenses by streamlining the communication and coordination between the buyer and the supplier, and by reducing the errors and disputes that may arise from inventory discrepancies.

References: CPIM Exam Content Manual Version 7.0, Domain 7: Plan and Manage Distribution, Section 7.1: Develop Distribution Plans, Subsection 7.1.3: Describe how to develop supplier-customer relationships (page 66).

A reduction in purchased lot sizes will reduce inventory levels. Purchased lot sizes are the quantities of inventory that a stage of the supply chain either produces or purchases at a given time1. Inventory levels are the amount of stock available throughout the distribution network2. By reducing the purchased lot sizes, a company can lower the amount of inventory it holds, which can reduce the inventory costs, such as holding costs, shortage costs, and order costs3.

Holding costs are the costs associated with storing and maintaining inventory, such as rent, utilities, insurance, taxes, depreciation, and obsolescence4. Shortage costs are the costs incurred when demand exceeds supply, such as lost sales, customer dissatisfaction, and backorder costs4. Order costs are the costs involved in placing and receiving orders, such as transportation, inspection, setup, and administrative costs4.

Reducing the purchased lot sizes can lower the holding costs by decreasing the average inventory in the supply chain due to either production or purchases in lot sizes that are larger than those demanded by the customer1. This is also known as cycle inventory1. Reducing the purchased lot sizes can also lower the shortage costs by increasing the frequency of orders and decreasing the lead time between orders5. This can help avoid stockouts and meet customer demand more consistently. Reducing the purchased lot sizes can also lower the order costs by optimizing the order quantity based on the trade-off between holding costs and order costs. This is also known as economic order quantity (EOQ).

Therefore, a reduction in purchased lot sizes will reduce inventory levels and inventory costs.

References: 1: Chapter 11 Flashcards by Amy Horton 3 2: Optimal Inventory Levels: Calculate & Manage Your Stock Levels 2 3: Inventory Levels Explained: The Highs & Lows Of Optimal Stock 1 4: Economic Order Quantity Model in Inventory Management 4 5: Dual sourcing: Advantages and disadvantages : Economic Order Quantity: What Does It Mean and Who Is It For5