CPIM Practice Exam

Protective capacity is necessary for what reason?

1. To ensure the system operates at maximum efficiency

2. To provide some capacity above the required level for catching up

3. To minimize production costs

4. To increase the production speed

The correct answer is: To provide some capacity above the required level for catching up

Protective capacity refers to the additional capacity that is built into a system to absorb unexpected fluctuations in demand or disruptions in supply. The primary reason for implementing protective capacity is to provide a buffer that allows the organization to adapt and recover from unexpected circumstances. This ensures that the system can maintain service levels and meet customer demands even when facing unforeseen challenges. By having this extra capacity, a company can effectively "catch up" when there are spikes in demand or delays in supply, thus preventing an overall disruption in service or production. This capability is especially important in supply chain management, where variability and uncertainty can lead to significant operational challenges. In contrast, while maximizing efficiency is important, it typically involves closely matching capacity to demand, which doesn’t allow for the flexibility that protective capacity provides. Minimizing production costs and increasing production speed are also important considerations, but they can often lead organizations to operate at full capacity without the necessary buffers, which could result in missed opportunities during peaks or problems during unexpected events. Therefore, the justification for protective capacity lies in its role as a safety net that helps organizations remain resilient in the face of variability.