CPIM Practice Exam

What does an increase in demonstrated capacity imply?

1. Decreased production costs

2. Better resource utilization

3. Enhanced operational efficiency

4. Increased total production

The correct answer is: Increased total production

An increase in demonstrated capacity indicates a firm's ability to produce more goods or services. This concept is closely tied to the total production output, meaning that with enhanced capacity, the organization can generate a greater volume of products within a given timeframe. This increase in total production typically stems from improved machinery, better-trained personnel, or optimized processes, all contributing to the capacity to produce at a higher rate. While improved resource utilization, operational efficiency, and decreased production costs can potentially result from increased capacity, they are not direct implications of the term itself. Instead, these aspects are typically seen as favorable outcomes that may follow an increase in production capability.