CSCP Leak Questions

The primary objective of a lean enterprise is to analyze and focus on the value stream across all functions to maximize value for the ultimate customer. This involves identifying and eliminating waste (non-value-added activities) in processes to streamline operations and enhance efficiency. The focus is on creating value from the customer's perspective, ensuring that every step in the process contributes to this goal. Continuous improvement (Kaizen), employee development, and supplier collaboration are also essential elements of lean, but the overarching objective is maximizing customer value through value stream optimization.

According to the APICS CSCP - Supply Chain Management Certification, order quantity discounts are price reductions offered by suppliers for buying larger quantities of a product or service. Order quantity discounts can lower the purchasing cost per unit, but they also increase the holding cost per unit, as more inventory is stored for longer periods of time. A firm should compare the price savings and the extra holding cost to determine whether an order quantity discount is beneficial or not.

In a service environment, a long-term decrease in demand can lead to increased costs of service due to several factors:

Fixed Costs: Many service environments have high fixed costs (e.g., facilities, equipment) that do not decrease with lower demand, leading to higher per-unit costs.

Economies of Scale: Lower demand can result in the loss of economies of scale, as the cost per unit increases when services are spread over a smaller number of customers.

Resource Utilization: Decreased demand can lead to underutilization of resources (e.g., staff, infrastructure), further driving up the cost per service unit.

References

Fitzsimmons, J. A., Fitzsimmons, M. J., & Bordoloi, S. (2014). Service Management: Operations, Strategy, Information Technology. McGraw-Hill Education.

Heskett, J. L., Sasser, W. E., & Schlesinger, L. A. (2015). The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value. Free Press.

In a period of rising raw material costs, the First In, First Out (FIFO) inventory accounting method would maximize reported company assets. FIFO assumes that the oldest inventory items are sold first, which means the cost of goods sold (COGS) is based on the older, lower costs of raw materials. Consequently, the remaining inventory on the balance sheet is valued at the more recent, higher costs, thus reflecting higher asset values. Last In, First Out (LIFO) would do the opposite, and Activity-based cost and Moving average cost do not specifically take advantage of rising prices in this manner.