CPIM Practice Exam

What is the cumulative variance after three periods of input data?

1. -8 standard hours.

2. -4 standard hours.

3. 4 standard hours.

4. 8 standard hours.

The correct answer is: -8 standard hours.

To determine the cumulative variance after three periods of input data, it's important to understand the concept of cumulative variance in the context of performance measurement, often used in supply chain management and production settings. Cumulative variance is calculated by examining the difference between the actual input and the standard input over the observed periods. In a scenario where negative values reflect underperformance (more time taken than standard) and positive values indicate overperformance (less time taken than standard), a cumulative variance of -8 standard hours signifies that, over the three periods, the actual performance has fallen short of the standard performance by 8 hours. This indicates that the organization has not met its efficiency targets and has utilized more time than expected during these three periods. Understanding the implications of this variance is essential for identifying areas where improvements can be made in operational efficiency to align actual performance more closely with the standards set.