CPIM Practice Exam

How is the critical ratio (CR) calculated?

1. Processing time divided by lead time

2. (Due Date - Present Date) / Lead Time Remaining

3. Remaining setup time divided by total job time

4. (Present Date + Lead Time) / Due Date

The correct answer is: (Due Date - Present Date) / Lead Time Remaining

The critical ratio (CR) is a vital metric used in production and inventory management to gauge the relative priority of a job in relation to its due date and the lead time remaining. It is calculated using the formula (Due Date - Present Date) / Lead Time Remaining. This calculation helps in determining how well a job is positioned to meet its deadlines. The rationale behind this formula is straightforward: it provides a measure of how much time is available before the due date compared to how much time is required to complete the job. A critical ratio of 1 indicates that the job is perfectly on schedule; a ratio greater than 1 implies that there is more time remaining than required, suggesting that the job is ahead of schedule, while a ratio less than 1 signals a growing likelihood that the job will be late. The other methods provided in the choices involve different relationships and calculations that do not accurately reflect the essence of the critical ratio. For instance, processing time divided by lead time does not give a comprehensive view of time management concerning deadlines, while remaining setup time divided by total job time or manipulation of dates in relation to existing time frames does not align with the CR's aim of assessing prioritization based on due dates and resource availability. Thus, the choice