WSHMMA CMRP Overview

WSHMMA CMRP Overview

Chris Matala, CMRPDirector, Supply Chain & Sterile ProcessingIsland Hospital

Dave Hinkle, FACHE, CMRPDirector, Supply Chain Outreach and ValueSourceProvidence Health & Services

Your Presenters – Chris Matala• Credentials

– BS, Central Washington University– MBA Prepared, St. Martin College– Certified Materials Resource Professional, Association for Healthcare Resource & Materials Management– WSHMMA Board Member– AHRMM Education Committee

• Twenty Four years HealthCare Managment• Director, Supply Chain & Sterile Processing, Island Hospital • Recent Positions

– Purchasing Manager Harrison Medical [email protected]

Your Presenters – David Hinkle• Credentials

– BS, Missouri State University– MHA, Baylor University– MPA, Clark University– Mouse Ears, Disney University– Fellow, American College of Healthcare Executives– Certified Materials Resource Professional, Association for Healthcare Resource & Materials Management

• Ten year presenter, AHRMM CMRP Training• Director, Supply Chain Outreach, Providence Health and Services

– Manages relationships with Providence’s non-owned Supply Chain affiliates– Manages Providence’s internal Supply Chain consulting activities

• Recent Positions– President, Pinnacle Consulting Services– Senior Director, VHA’s Consulting Services– Director, Operations Redesign, Johnson & Johnson/The McFaul & Lyons Group– Director, Support Services and Supply Chain, Hillcrest Baptist Medical Center, Waco, Texas

[email protected]

CMRP Overview Session Disclaimer

• Please be advised that this is only an overview of the Materials Management Review Guide and assumes the attendee has read and is familiar with the guide.

• It should not be inferred that test items in the examination are selected from any single reference or set of references or that participation in this review session guarantees a passing score on the examination.

• No portion of this presentation may be reproduced by an attendee without the expressed written permission of the presenter.”

*Nothing is guaranteed in life. No such thing as a “free lunch”. But if you study, you should pass.

A Mark of Distinction

CMRP status allows you to:– Have a premier credential based on a sound assessment to

distinguish yourself in an increasingly competitive marketplace.

– Enjoy the pride of recognition and knowing you are among the elite in the field of healthcare materials management.

CMRP status sets you apart from your peers

American Hospital Association Certification Center

The CMRP process is:• Governed by a Board of Directors• An independent body affiliated with the AHA• Certification Program Committee

– Content experts– Test development– Scoring and analysis

• Designed to test full scope competency of individuals involved in healthcare supply chain management

Eligibility - Concept In 2003, the CMRP eligibility requirements changed to include job challenges faced by supply chain professionals in both the

hospital and healthcare industry related settings on a daily basis. The requirements are constantly reviewed and continue

to blend experience and education. Participants should include experienced healthcare supply chain

leaders and professionals. There is no membership requirement but the fee is significantly

reduced if you are a member.

CMRP Eligibility• Baccalaureate degree plus three (3) years of associated healthcare resource

and materials management* experience; or

• Associate degree or equivalent plus five (5) years of associated healthcare resource and materials management* experience; or

• High school diploma or equivalent plus seven (7) years of associated healthcare resource and materials management* experience.

*Experience includes persons who are involved in the materials functions of healthcare facilities; or are active in the healthcare supply chain, including manufacturers, vendors, distributors, consultants, and employees of group purchasing organizations.

Steps for Administration• Application for examination processed• Eligibility confirmation sent to candidate• Confirmation notice received• Fees

– Members - $275 (Periodically AHRMM awards CMRP scholarships to members.)

– Non-members - $425• Schedule appointment; reschedule once within 4 business days

at no charge • Rescheduled within 90 days - $100 rescheduling fee• Reschedule after 90 days must resubmit application and pay a

fee of $275/members or $425/nonmembers

Steps for Administration• Selected H&R Block computer centers or AHRMM National Meeting• Photo ID (2 forms of ID)• Computer-based

– 2 hours– 110 questions (10 potential future use but don’t count)

• Results immediately upon completion• Notice of successful completion

– Letter of congratulations– Pin– Renewal packet– Employer notification letter– Your name on the CMRP website identifying you as a Supply Chain

professional

Exam ContentThe AHRMM role delineation study identified real-world tasks that were grouped into categories and weighted to produce exam specifications.

1. Purchasing/Product Value Analysis2. Inventory/Distribution Management3. Information Systems4. Finance5. Strategic Planning/Leadership/Support Services

This is how the examination is organized. However, like real-life, day to day problems don’t come batched together by category, the same is true with the examination.

Earlier this year the exam content was changed.

Exam Questions Categorized

Recall– The ability to recall or recognize specific information

Application– The ability to comprehend, relate or apply knowledge

to new or changing situationsAnalysis

– The ability to analyze and synthesize information, determine solutions and/or to evaluate solutions

Test ItemsTo ensure reliability and validity, test items are:

Written by experienced healthcare resource and materials managers;

Geared to test application of knowledge - not just recall of facts; and,

Reviewed to ensure clarity.

Notes on Terminology

Important Notice: The various statements, terms, and definitions provided

herein (and in the CMRP Examination Review Guide) are what the AHRMM CMRP Committee considers the most common use of these expressions. Should another use of these statements, terms and definitions be found in “industry”, it is recommended to pay close attention to how these items are used in this presentation and review guide. Note that the AHRMM “definition” will be the one used to process the examination.

Measurement Expertise

To ensure the highest standards in testing, the AHA Certification Center engaged Applied Measurement Professionals, Inc. (AMP) to assist with:

Test development; Test administration; and Scoring, score reporting, and analysis.

Administration

The CMRP Examis offered on computers at over 150 secure test centers throughout the U.S.

Scores are private. Only the applicant receives the scores.

AdministrationThe examination application is contained inside the CMRP Handbook and Application and is available by downloading a copy from:

• The AHA Certification Center,

www.aha.org then click on “Certification; or

• Call Applied Measurement Professionals, Inc. (AMP) at 888-519-9901

• AHRMM’s Web site, www.ahrmm.org

http://www.aha.org/

http://www.ahrmm.org/

Exam ProvisionsThe Examination fee is:

$275 for any PMG or At-Large Member; or $425 for a nonmember.

Certification is valid for three years. (45 hours to recertify so start keeping track.)• Keep copies of training agendas to document attendance• You get “two times” the credit for programs you present• This is not a program to start a month before your renewal• If you fail to recertify, you must re-take the examination

Preparing for the Exam• AHRMM CMRP Candidate Handbook and Application (White Book, free)

– http://www.aha.org/certifcenter/files/12CMRPhandbook.pdf– CMRP Examination Content Outline provides valuable information on the topics

AHRMM deems important• AHRMM CMRP Study Guide, 5th edition (White Book, $75, members; $95, non-

members)• CMRP preparation presentations

– AHRMM, National Meetings– AHRMM Webinars– AHRMM Regional and State Chapters

• Optional purchase of the “pre-test” from AHRMM• Optional purchase of this Webinar CD from AHRMM• Non-AHRMM study materials, such as flash cards (not endorsed)• Presenter’s study materials-free upon request • Develop internal study sessions (brown-bag-lunch) with your local peers or at your

facility site-consider dividing up the various sections

http://www.aha.org/certifcenter/files/12CMRPhandbook.pdf

Preparing for the ExamExamination Content• The following five sections provide a brief overview of the

examination elements, as provided by AHRMM in the Candidate Handbook, CMRP Examination Content Outline.

• Each section provides a list of those job elements and expertise a supply chain professional should possess in order to be successful in managing the hospital department.

• A study suggestion would be to review the elements and then read the Materials Management Review Guide with a focus on those areas.

• After you take the practice exam you can focus on the areas where you missed questions.

Procurement/Product Value Analysis

25 percent

RequisitionsPurchase Orders

Purchasing Terms and ConditionsLegal Aspects of Purchasing

The Materials Management ToolboxValue AnalysisCQO Process

Procurement• Direct the program to purchase materials, supplies, and capital equipment being

mindful of:1) specific patient needs (e.g., pediatric, geriatric, bariatric).2) green initiatives (Leadership in Energy and Environmental Design (LEED)).

• Participate in the organization’s purchasing process, including:1) budgeting2) contracting or sourcing3) purchasing4) receiving5) inventorying

• Participate in the organization’s capital purchasing process, including:1) budgeting2) evaluating/selecting3) negotiating

Procurement• Implement advanced purchasing and procurement techniques for:

1) contract negotiation2) competitive bidding3) material use evaluation4) comparative costing5) product standardization

• Evaluate purchase agreements for:1) product quality consistent with standards for patient care2) lowest possible total procurement cost3) cost protection for extended periods of time4) cost increase ceilings5) consignment agreements with competitive prices6) stockless purchasing agreements

Procurement• Develop systems and procedures that minimize the customer cost of ordering,

storing, and using supplies, services, and equipment.• Ensure that timely order placement, expediting and supplier performance analysis

take place and are continuously reviewed for effectiveness.• Direct audit activities, including the review of discrepancies, purchase orders,

invoice price, payment terms, lost rebates, performance criteria, contract terms and conditions.

• Lead focus groups for review and analysis of products and supplier services.• Prepare cost benefit analyses that support best product recommendations.• Negotiate competitive pricing, terms, and service levels.• Review contracts that optimize value to the organization considering

standardization, utilization, and compliance.

Procurement• Develop supplier performance standards program to include the auditing and

monitoring of:1) product quality2) pricing3) discounts4) rebates5) service charges6) invoicing7) service levels8) vendor competency

• Develop supplier performance standards program to include the auditing and monitoring of The Joint Commission (TJC) standards for vendor tracking.

• Direct and understand the components of the value analysis process.

Procurement• Evaluate purchasing reports (e.g., cost savings, price index, order processing time,

purchase order error rates, work load volume, freight expenditures).• Assure that catalogs, price lists, inventory records, purchase order files, and

product/supplier files are updated and current.• Participate and provide support to materials management standardization,

consolidation and/or re-engineering processes.• Interact with physicians and clinicians to coordinate and integrate

products/services consistent with cost elements and quality management programs into existing departmental services by assisting with:

1) program development2) data collection and analysis3) implementation4) monitoring5) measurement and evaluation

Procurement

• Collect and analyze data relating to the therapeutic efficacy and cost effectiveness of products, equipment, and technology.

• Coordinate service training for new products or equipment.• Provide consultation to departments requiring assistance in resource allocation.• Initiate and implement a product utilization review process.• Identify opportunities for reduction in resource consumption.• Provide process review and physician resource analysis of various clinical

applications.• Adhere to a code of ethics to ensure corporate compliance.

Value Analysis and CQO

• Value Analysis:• Multidisciplinary approach• Identifies potential alternatives to the product• Reviews the total delivered cost, not just acquisition cost• Patient focused, looks at quality and patient impact, not

just price• Cost Quality Outcome:• Minimizing Cost, while maximizing Quality Patient

Outcomes• A way to organize your efforts in meeting the challenges of

the ACA and future trends

Inventory Distribution Management

20 percent

Inventory Programs and StrategiesInventory Management

Warehouse DesignDistribution Methodologies

Monitoring Performance


• Assure that the organization’s acquisition and distribution strategies and practices improve the overall healthcare system supply chain.

• Develop strategies and procedures to integrate all resource functions of the overall healthcare system.

• Monitor and determine causes of inventory variance, and implement corrective strategies.

• Develop inventory reduction targets and process to achieve targets.• Determine effective space for storage (e.g., on-site vs. offsite).• Evaluate warehouse design factors related to:

1) flexibility (e.g., ease of expansion and contraction).2) total, overall system rather than specific subsystems.3) automation of materials management function.4) back-up systems available.


• Manage the following inventory and distribution programs and strategies:1) consignment strategy2) just-in-time strategy3) stockless strategy4) consolidation strategy5) Vendor Managed Inventory (VMI)6) electronic point of use systems7) Periodic Automatic Replenishment (PAR)8) electronic requisitions9) random requests and emergency requisitions10) back-orders

• Monitor work flow for returned goods, product recalls and conversions, and arrange for pickup and/or exchanges


• Determine effective receiving process (e.g., centralized, decentralized).• Oversee distribution processes and accountability (e.g., accurate reporting of

customer activity, discrepancies between receipts and supplier invoices).• Determine an appropriate data management system (e.g., tracking of packing slips

and purchase orders, set-up of filing systems, computer systems and receiving logs).

• Develop a Performance Improvement (P1) mechanism for monitoring performance of the receiving process.

• Resolve customer concerns by providing a central point of access, and serve as a liaison to customer departments and suppliers.

• Determine appropriate internal and external material transport devices and systems to use ((e.g., carts, pneumatic tube systems, automated guided vehicles (AGV)).

• Review and evaluate distribution system performance.


• Identify and calculate ratios for inventory management (e.g., inventory turn rates).• Understand implications of regulations and logistics pertinent to delivery and

conveyance of freight to affiliated healthcare facilities (e.g., third party delivery, cross-docking, and courier services).

Information Systems and Data Management

15 percent

Functional MMIS RequirementsAssessing, Acquisition and Implementation

Supply Chain System StandardsGS1, GLN, GTIN

Records and Data StorageHIPPA


• Define functional requirements, specifications and interfaces for an automated materials management system.

• Assess existing Material Management Information System (MMIS) capabilities and gap analysis.

• Direct acquisition and implementation of an automated, system-wide materials management information system. (RFP-RFI Process)

• Promote development of supply chain system standards.• Apply supply chain data standards to organization MMIS (e.g., GLN, and GTIN).• Employ ANSI X.12 EDI transaction sets.• Establish guidelines and procedures in conjunction with MIS or external users for

participation in the materials management system.• Analyze and present data and analysis to task forces, departmental personnel,

administration, and physicians.


• Collaborate with Information Technology and Health Information Management to facilitate records management storage, archival and retrieval including Health Insurance Portability and

• Accountability Act (HIPAA) compliance.• Investigate software and hardware technologies integrating medical equipment

data and the patient record (e.g., safety infusion pumps).

Finance

20 percent

Financial Terminology (GAAP)Financial Report Interpretation

Expense Management and Savings InitiativesRegulatory Standards

Finance• Review capital requests for compliance with standardization efforts and contract

requirements.• Ensure that the materials management system has comprehensive pricing

information for instruments, supplies, and equipment for budgetary planning.• Review and analyze supply expense and utilization trends to support both clinical

and financial goals, and recommend appropriate budgetary adjustment.• Prepare annual objective and budgetary recommendations including:

1) analysis of budgetary data.2) coordination of departmental expenditures.

• Establish a purchasing and financial document retention and filing system in accordance with regulatory requirements.

• Manage non-labor budgetary expenses.

Finance• Communicate with Accounts Payable to ensure the following best practices:

1) Generally Accepted Accounting Principles (GAAP) adherence2) invoice reconciliation3) timely application of rebates and credits

• Demonstrate knowledge of the impact that reimbursements have on the revenue cycle (e.g., capitation, diagnosis-related groups (DRG’s), CMS, private payers, charity).

• Manage cost-saving programs, including:1) equipment maintenance2) capital equipment selection3) technology assessment4) consumable product evaluation5) procurement, inventory management, utilization, and selection of products

and services

Finance• Understand the relationship to Supply Chain and apply standards from:

1) Robinson-Patman Act2) Uniform Commercial Code3) Safe Harbor Regulations4) Sarbanes-Oxley Act

Strategic Planning, Leadership and Compliance

20 percent

Sterile ProcessingSupport Department Management

Customer ServicePerformance Improvement and Benchmarking

Safety and Emergency PreparednessLegal and Accreditation Standards


• Oversee tasks in cleaning and preventive maintenance to ensure a high level of sanitation and infection control.

• Manage hazardous waste disposal policies and procedures in accordance with regulatory requirements.

• Demonstrate knowledge of universal precaution guidelines.• Integrate data findings of departmental performance into operational and

strategic planning.• Incorporate key principles of performance improvement in daily operation (e.g.,

customer driven, key player involvement, continuous improvement).• Participate in Performance Improvement (P1) efforts (e.g., benchmarking, analysis

of process flow, operational needs assessment).• Participate in Performance Improvement and Environment of Care Committees,

Corporate Compliance, space planning and construction programs.


• Develop position descriptions and employee responsibilities.• Develop department goals and objectives in concert with the organization’s

mission and strategic plan.• Manage staffing requirements and human resources issues (e.g., patient/customer

focus, union compliance, staff training and development).• Develop customer satisfaction plans, communication links, and measurement

tools.• Analyze market conditions and statistical data and interview suppliers and other

sources to assist in the development of business plans and/or creation of new business ventures.

• Train employees regarding the procedures for product recall.• Participate with purchasing/materials management organizations, including GPO

affiliations and local, state, and national purchasing/materials/sterile processing organizations (e.g., central sterile supply organizations).

Strategic Planning, Leadership and Compliance• Ensure compliance with legal, regulatory, guidance documents, and accreditation

standards or codes to include:1) Environmental Protection Agency (EPA)2) Department of Transportation (DOT)3) Hazard Communication Standard (HCS) including Material Safety Data Sheet (MSDS)4) Association for the Advancement of Medical Instrumentation (AAMI)5) The Joint Commission (TJC)6) Health Insurance Portability and Accountability Act (HIPAA)7) Americans with Disabilities Act (ADA)8) National Fire Protection Association (NFPA)9) Occupational Safety and Health Administration (OSHA)10) Centers for Disease Control and Prevention (CDC)11) Centers for Medicare & Medicaid Services (CMS)12) National Incident Management System (NIMS)13) Hospital Emergency Incident Command Systems (HEICS)


• Participate in supplier diversity procurement programs (e.g., Minority Business Enterprises (MBE) initiatives, women-owned businesses, small businesses).

• Ensure code compliance through inspections of specific areas (e.g., medical gasses).

• Comply with waste stream requirements including compliance with management of hazardous waste.

• Recognize the importance of MSDS and Employee Right to Know.• Investigate vendor credentialing (e.g., OIG).• Participate in emergency drills and training.• Describe evacuation plans for the department/building.• Describe primary components of the Emergency Preparedness Manual.• Coordinate emergency management with other healthcare facilities, suppliers and

community partners


• Oversee the department’s safety and emergency preparedness programs:1) mass casualty or disaster response2) hazardous material and waste3) life/fire safety4) medical equipment5) safety6) security A. Develop business continuity plans in case of supply chain disruption. B. Evaluate general disaster drills and security.

Supply ChainSupply ChainDefinitionsDefinitions

48

Definitions

• ABC, Activity based costing. Usually refers to costing method that breaks down overhead costs into specific activities (cost drivers) in order to more accurately distribute the costs in product costing. Has also been applied to customer and vendor management.

• ABC stratification. Method used to categorize inventory into groups based upon certain activity characteristics. Examples of ABC stratifications would include ABC by velocity (times sold), ABC by sales dollars, ABC by quantity sold / consumed, ABC by average inventory investment, ABC by margin. ABC stratifications are used to develop inventory-planning policies, set count frequencies for cycle counting, slot inventory for optimized order picking, and other inventory management activities.

• Allocations. Allocations in inventory management refer to actual demand created by sales orders or work orders against a specific item. The terminology and the actual processing that controls allocations will vary from one software system to another.– Standard allocation is an aggregate quantity of demand against a specific item in a specific facility; I

have heard standard allocations referred to as normal allocations, soft allocations, soft commitments, and regular allocations. Standard allocations do not specify that specific units will go to specific orders.

– Firm allocation is an allocation against specific units within a facility, such as an allocation against a specific location, lot, or serial number. Firm allocations are also referred to as specific allocations, frozen allocations, hard allocations, hard commitments, holds, reserved inventory. Standard allocations simply show that there is demand while firm allocations reserve or hold the inventory for the specific order designated.

49

Definitions

• ASN, Advanced shipment notification (EDI 856). Advanced shipment notifications are used to notify a customer of a shipment. ASNs will often include PO numbers, SKU numbers, lot numbers, quantity, pallet or container number, and carton number. ASNs may be paper-based, however, electronic notification is preferred. Advanced shipment notification systems are usually combined with bar-coded compliance labeling which allows the customer to receive the shipment into inventory through the use of bar-code scanners and automated data collection systems.

• Auto discrimination. The functionality of a bar-code reader to recognize the bar-code symbol being scanned, thus allowing a reader to read several different symbols consecutively.

• Batch picking. Order picking method where orders are grouped into small batches, an order picker will pick all orders within the batch in one pass. Batch picking is usually associated with pickers with multi-tiered picking carts moving up and down aisles picking batches of usually 4 to 12 orders, however, batch picking is also very common when working with automated material handling equipment such as carousels. See also Zone picking, Wave picking.

• Blind counts. Describes method used in cycle counting and physical inventories where you provide your counters with item number and location but no quantity information.

• BOM, Bill of material. Lists materials (components or ingredients) required to produce an item. Multilevel BOMs also show subassemblies and their components. Other information such as scrap factors may also be included in the BOM for use in materials planning and costing.

• BULK. Term usually thought of as describing inventory arriving or being produced in the manufacturers standard unit of sale, usually full-case quantities.

50

Definitions

• Carrying cost. This is the cost associated with holding inventory. This includes the cost to finance the inventory purchase as well as the general inventory shrinkage (e.g., pilferage, outdating and damage to product.)

• Compliance labels. Standardized label formats used by trading partners. Compliance labels are used as shipping labels, container/pallet labels, carton labels, or piece labels, and usually contain bar codes. Many bar-code labeling software products now have the more common compliance label standards set up as templates.

• Consignment inventory. Inventory that is in the possession of the customer, but is still owned by the supplier. Consignment inventory is used as a marketing tool to make it easier for a customer to stock a specific supplier's inventory. The customer pays for the inventory only after it is resold or consumed.

• Contract warehouse. A contract warehouse is a business that handles shipping, receiving, and storage of products on a contract basis. Contract warehouses will generally require a client to commit to a specific period of time (generally in years) for the services. Contracts may or may not require clients to purchase or subsidize storage and material-handling equipment. Fees for contract warehouses may be transaction and storage based, fixed, cost-plus, or any combination. Also see Public Warehouse and 3PL.

• COGS, Cost of goods sold. Accounting term used to describe the total value (cost) of products sold during a specific time period. Since inventory is an asset, it is not expensed when it is purchased or produced. It instead goes into an asset account (usually called Inventory). When product is sold, the value of the product (the cost, not the sell price) is moved from the asset account to an expense account called cost of goods sold or COGS. COGS appear on the profit-and-loss statement and are also used for calculating inventory turns.

51

Definitions

• Cross docking. In its purest form cross docking is the action of unloading materials from an incoming trailer or rail car and immediately loading these materials in outbound trailers or rail cars, thus eliminating the need for warehousing (storage). In reality, pure cross docking is rare outside of transportation hubs and hub-and-spoke type distribution networks. Many "cross-docking" operations require large staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship. This staging may take hours, days, or even weeks in which case the "staging area" is essentially a "warehouse".

• Cube utilization. Term used in Warehouse Management Systems. Cube logic is often incorporated but seldom used in WMS systems because of its tendency to treat your product as liquid (fitting a round peg in a square hole).

• Cycle count. Refers to process of regularly scheduled inventory counts (usually daily) that "cycles" through your inventory. User determines how often certain items/locations are counted.

• DC. Distribution Center• Demand. The need for a specific item in a specific quantity. • Dimensional weight (a.k.a. Dim weight). Formula used to determine freight charges when the minimum

weight to volume ratio has not been met. Actual weight and dim weight are compared, and the larger weight is used for the freight calculation. Dim weight is calculated by: Dim weight = (Length x Width x Height)/194. All dimensional measurements are in inches.

• Distribution. Describes the process of storing, shipping, and transporting goods. Also describes the facilities (distribution operations, distribution centers) that conduct these activities. In statistical analysis, describes the measurement of a group of events or occurrences. (See Normal distribution.)

52

Definitions

• Dock leveler. Device that provides a bridge to the trailer as well as a ramp to facilitate the transition in height from dock to trailer. Dock levelers are rated by weight capacity and by the service range. The service range, also known as the height differential, rates the safe range above and below dock level you can use the leveler to transition to the trailer height.

• DRP, Distribution requirements planning. Process for determining inventory requirements in a multiple plant/warehouse environment. DRP may be used for both distribution and manufacturing. In manufacturing, DRP will work directly with MRP. DRP may also be defined as Distribution Resource Planning that also includes determining labor, equipment, and warehouse space requirements.

• Drive-in rack. Racking system designed to allow a lift truck to drive into the bay creating very high-density storage for non-stackable loads. Useful for operations with limited SKUs and high quantities of pallets per SKU. FIFO is difficult to maintain in drive-in racking systems. A.k.a. Drive-thru Rack.

• EDI, Electronic Data Interchange. A method of electronic commerce between suppliers and end users.• EDI Standard Transaction Sets

– Price/Sales Catalog 832– Request for Quote 840– Response to RFQ 843– Purchase Order 850– Product Activity Data/On Hand Inventory 852– Purchase Order Acknowledgment 855– Advanced Shipping Notice 856– Receiving Advice 861– Invoice 810– Remittance 820– Contract Compliance Reporting/Trace Sales Rebates 867– Membership 816

53

Definitions

• EOQ, Economic order quantity. Result of a calculation that determines the most cost effective quantity to order (purchased items) or produce (manufactured items). The formula basically finds the point at which the combination of order cost and carrying cost is the least. The standard formula is EOQ = Square Root [2 * (Annual Usage) * (Order Cost) / (Annual Carrying Cost/unit)]. The difficult part of implementing the formula is getting accurate values for order cost and carrying cost.

• ERP, Enterprise resource planning. Describes software systems designed to manage most or all aspects of a manufacturing or distribution enterprise (an expanded version of MRP systems). ERP systems are usually broken down into modules such as Financials, Sales, Purchasing, Inventory Management, Manufacturing, MRP, DRP. The modules are designed to work seamlessly with the rest of the system and should provide a consistent user interface between them. These systems usually have extensive set-up options that allow you to customize their functionality to your specific business needs. Unfortunately, in the real world, ERP systems rarely are sufficient to meet all business needs and a myriad of other software packages such as Customer Relationship Management (CRM), Manufacturing Execution Systems (MES), Advanced Planning and Scheduling (APS), Warehouse Management Systems (WMS) and Transportation Management Systems (TMS) are being sold to make up for these deficiencies.

• FIFO, First-in-first-out. In warehousing describes the method of rotating inventory to use oldest product first. Actually an accounting term used to describe an inventory costing method.

• Fill Rate. The percentage of line items requisitioned that are successfully supplied to the requisitioning customer. The fill rate can be calculated as the line items furnished to the customer divided by the total line items requisitioned.

54

Definitions

• Flow rack. Racking system that incorporates sections of conveyor to allow the cartons or pallets to flow to the face of the rack. Stocking is performed from the rear of the rack.

• FOB, Free on board. A freight term that refers to the point of delivery of goods, products, and equipment from the supplier to the buyer. FOB also determines the point at which title passes from supplier to the deliver site.

• FOB Destination. The supplier absorbs all transportation costs and files claims for damages incurred. The facility does not receive title until the items are received at the dock.

• FOB Shipping Point. The title of the goods passes to the facility at the origin of shipping. The facility is responsible for all shipping costs and for filing any damage claim.

• FOB Destination, Prepay Freight, and Add. The supplier prepays the freight charges and adds this cost to the facility’s invoice. The supplier is responsible for filing all damage claims. The title does not transfer until the item is received at the facility dock.

• FOB Shipping Point, Freight Allowed. The title passes to the facility when the carrier picks up the goods, but the supplier reimburses the facility for the cost of shipping.

• Forecast. A Forecast is an estimation of future demand. Most forecasts use historical demand to calculate future demand. Adjustments for seasonality and trend are often necessary.

• Forecast Consumption. Forecast Consumption describes the method(s) your inventory management software uses to reduce forecasted demand by the actual demand that occurs during the forecast period. Incorrectly set up forecast consumption parameters or lack of functionality related to forecast consumption can often create serious problems with planning systems.

55

Definitions

• Fulfillment. Describes the activity of processing customer shipments. Though most manufacturing and warehouse operations will process customer shipments, this term usually refers to operations that ship many small orders (usually parcels) to end users as opposed to operations that process larger shipments to other manufacturers, wholesalers, or resellers. Examples of fulfillment operations would include operations that process shipments for mail-order catalogs, Internet stores, or repair parts.

• High-piled combustible storage. Term used in fire codes to refer to codes relating to floor or racked storage exceeding 12 feet in height or high-hazard commodity storage exceeding 6 feet in height.

• Inventory turn. Number of times inventory turns during a one year period. Generally calculated by dividing the average dollars issued annually divided by average inventory levels (or current inventory level.)

• JIT, Just-in-time. Term usually thought of as describing inventory arriving or being produced just in time for the shipment or next process. Actually, JIT is a process for optimizing manufacturing processes by eliminating all process waste including wasted steps, wasted material, excess inventory, etc.

• Laser scanner. Device that uses a moving laser to read bar codes. Devices can be portable hand-held units, or fixed units.

• Lead-time. Amount of time required for an item to be available for use from the time it is ordered. Lead-time should include purchase order processing time, vendor processing time, in transit time, receiving, inspection, and any pre-pack times.

56

Definitions

• Lead-time demand. Forecasted demand during the lead-time period. For example, if your forecasted demand is 3 units per day and your lead-time is 12 days, your lead-time demand would be 36 units.

• LIFO, Last-in-first-out. In warehousing, describes the method for using the newest inventory first (I've never seen an operation that uses this). In accounting, it's a term used to describe an inventory costing method. See FIFO.

• Lift truck. Describes vehicles used to lift, move, stack, rack, or otherwise manipulate loads. Material handling workers use a lot of terms to describe lift trucks; some terms describe specific types of vehicles, others are slang terms or trade names that people often mistakenly use to describe trucks. Terms include, industrial truck, forklift, reach truck, motorized pallet trucks, turret trucks, counterbalanced forklift, walkie, rider, walkie stacker, straddle lift, side loader, order pickers, high lift, cherry picker, Jeep, Tow motor, Yale, Crown, Hyster, Raymond, Clark, Drexel.

• Locator system (a.k.a. Location system, Bin locations). Locator systems are inventory-tracking systems that allow you to assign locations to your inventory to facilitate greater tracking and the ability to store product randomly. Prior to locator systems, warehouses needed to store product in some logical manner in order to be able to find it (stored in item number sequence, by vendor, by product description, etc.) By using locator systems you can increase space utilization by slotting your product by matching the physical characteristics of the product to a location whose physical characteristics match that of the product. You can also increase productivity by locating fast moving product to closer, more accessible locations, and increase accuracy by separating similar items. Location functionality in software can range from a simple text field attached to an item that notes a single location, to systems that allow multiple locations per item and track inventory quantities by location. Warehouse management systems (WMS) take locator systems to the next level by adding functionality to direct the movement between locations.

57

Definitions

• Longitudinal flue space. Term used by fire codes to describe the space between the rows of back-to-back racking. Flue spaces allow the water from an overhead sprinkler system to reach lower levels of the rack. Normally a longitudinal flue space of at least 6 inches is required. It is important to note that the flue space is measured as the distance between the loads, not the distance between the racks.

• LTL, Less-than-truckload. Transportation term that describes shipments that are less than a trailer load in size. LTL also is used to describe the carriers that handle these loads. LTL carriers generally use strategically placed hubs to sort and consolidate LTL shipments into full-truck-load shipments.

• LUM, Low unit of measure. Term usually thought of as describing inventory arriving or being produced in the smallest unit of measure, usually by the each. Products are picked, packed, and shipped for a specific end-user stocking location. Packages arrive at the facility with the majority of the external packaging (cardboard) already removed. LUM is a process for eliminating package breakdown and minimizing product touch points.

• Mezzanine. A tiered structure within a building used to provide worker access to various levels. Mezzanines can be freestanding structures supported by posts and trusses, or can be a series of walkways supported by storage equipment (rack-supported mezzanine).

• Min-max. A simplistic inventory system in which a minimum quantity and maximum quantity are set for an item. When the quantity drops below Min you order up to the Max.

58

Definitions• MRP/MRPII, Manufacturing resource planning. Process for determining material, labor and machine

requirements in a manufacturing environment. MRPII is the consolidation of Material Requirements Planning (MRP), Capacity Requirements Planning (CRP), and Master Production Scheduling (MPS). MRP was originally designed for materials planning only. When labor and machine (resources) planning were incorporated it became known as MRPII. Today the definition of MRPII is generally associated with MRP systems.

• MRO, Maintenance, repair and operating inventory. Term used to describe inventory used to maintain equipment as well as miscellaneous supplies such as office cleaning supplies.

• Optional replenishment. Term used to describe the action of ordering or producing up to the Max in a Min-Max system even though inventory has not reached the Min.

• Order cycle. Also called replenishment cycle, order cycle refers to the time between orders of a specific item. Most easily calculated by dividing the order quantity by the annual demand and multiplying by the number of days in the year.

• Physical inventory. Refers to the process of counting all inventory in a warehouse or plant. Operations are usually shut down during a physical inventory.

• Pushback rack. Racking system that incorporates a carriage or other sliding device to allow you to feed multiple pallets into the same location "pushing back" the previous pallet.

• Public warehouse. A public warehouse is a business that provides short or long-term storage to a variety of businesses, usually on a month-to-month basis. A public warehouse will generally use their own equipment and staff, however, agreements may be made where the client either buys or subsidizes equipment. Public warehouse fees are usually a combination of storage fees (per pallet or actual sq. footage) and transaction fees (inbound and outbound). Public warehouses are most often used to supplement space requirements of a private warehouse.

59

Definitions

• Radio frequency (RF). In warehousing refers to the portable data collection devices that use radio frequency to transmit data to host system.

• Rail-guided. Guidance system used with very-narrow-aisle vehicles such as order selectors and turret trucks. A steel rail is mounted on each side of the aisle, and rollers are mounted on the lift truck to guide it between the rails.

• Random location storage. Refers to storage method where a product may be stored in any location. Random storage has higher space utilization and generally lower accuracy than fixed location storage.

• Reach truck (a.k.a. Stand-up reach, Straddle reach, Double-deep reach). The reach truck is a narrow-aisle (8'-10') lift truck designed specifically for racked pallet storage. It consists of outriggers in front and telescoping forks that use a hydraulic scissors-type mechanism that allow you to pick up the load and retract it over the outriggers reducing the overall truck and load length, allowing you to turn in a narrower aisle. Double-deep reach trucks use an extended reach mechanism that allows you to store pallets two-deep in specially designed double-deep rack. Reach trucks are designed for racking areas only and do not work for loading trucks or quickly moving loads over distances.

• Reorder point. The inventory level set to trigger reorder of a specific item. Reorder point is generally calculated as the expected usage (demand) during the lead-time plus safety stock.

• Reverse logistics (a.k.a. Returns). Reverse Logistics covers activities related to returned product, returned pallets and containers, returned materials for disposal or recycling.

60

Definitions

• RFID, Radio Frequency Identification. Mostly used in equipment tracking. It is an automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders. An RFID tag is a small object that can be attached to or incorporated into a product or piece of equipment. RFID tags contain silicon chips and antennas to enable them to receive and respond to radio-frequency queries from an RFID transceiver. Passive tags require no internal power source, whereas active tags require a power source.

• Roller conveyor. Type of conveyor that uses rollers to move materials. Roller conveyor may be automated (live roller) or simply use gravity (gravity roller) to move materials.

• Safety stock. Quantity of inventory used in inventory management systems to allow for deviations in demand or supply. Safety stock calculations will take into account historic deviations and use a required service level multiplier to determine the optimal safety stock level.

• Service factor. Factor used as a multiplier with the Standard Deviation to calculate a specific quantity to meet the specified service level.

• Shipping manifest system. Software used to associate shipments with carrier, service, rate, etc. Shipping manifest systems will produce a report (physical or electronic) that is sent to the carrier to be used for billing purposes. Shipping systems will usually produce shipping documents such as compliance shipping labels, bill of ladings, Export documents, and Hazmat documentation. They may also have functionality related to rate shipping, freight policy execution, freight cost management.

61

Definitions

• SKU, Stock keeping unit. Referring to a specific item in a specific unit of measure. For example, if you distributed thirty-weight motor oil in both quarts and gallons you would maintain the inventory as two SKUs even though they are both thirty-weight motor oil. Also refers to the identification# assigned to each SKU.

• Slotting. Slotting describes the activities associated with optimizing product placement in pick locations in a warehouse. There are software packages designed just for slotting, and many WMS packages will also have slotting functionality. Slotting software will generally use item velocity (times picked), cube usage, and minimum pick face dimensions to determine best location.

• Structural pallet rack. Racking system that uses bolts or other mechanical fasteners (as opposed to Boltless Pallet rack). Structural Pallet Rack is sometimes used to support the roof of the structure (Rack-supported buildings), eliminating the need for posts.

• Third-party logistics, 3PL. Describes businesses that provide one or many of a variety of logistics-related services. Types of services would include public warehousing, contract warehousing, transportation management, distribution management, and freight consolidation. A 3PL provider may take over all receiving, storage, value added, shipping, and transportation responsibilities for a client and conduct them in the 3PL's warehouse using the 3PL's equipment and employees, or may manage one or all of these functions in the client's facility using the client's equipment, or any combination of the above. Another term, 4PL is sometimes used to describe businesses that manage a variety of logistics related services for clients by using 3PLs.

62

Definitions

• Total Delivered Cost (also referred to as Total Cost of Ownership). This type of cost evaluation involves looking at all aspects of the product cycle. The key components include all of the following: Cost for placing the order, Purchase price for the product or item, Administrative costs of receiving, Warehousing, Inventorying, Issuing, and Delivery. It may also include holding costs, pilferage, obsolescence, disposal costs, and residual value offset, if any.

• Transverse flue space. Term used by fire codes to describe the space to either side of pallet in racked storage. Flue spaces allow the water from an overhead sprinkler system to reach lower levels of the rack. Normally a transverse flue space of at least 3 inches is required. Also see Longitudinal Flue Space.

• Unit of measure (U/M, UOM). The unit of measure describes how the quantity of an item is tracked in your inventory system. The most common unit of measure is "eaches", which simply means that each individual item is considered one unit. An item that uses "cases" as the unit of measure would be tracked by the number of cases rather than by the actual piece quantity. Other examples of units of measure would include pallets, pounds, ounces, linear feet, square feet, cubic feet, gallons, thousands, hundreds, pairs, dozens. Also see Unit-of-measure Conversion.

• Unit-of-measure conversions. A unit-of-measure conversion is needed whenever you work with multiple units of measure. For example, if you purchased an item in cases (meaning that your purchase order stated a number of cases rather than a number of pieces) and then stocked the item in eaches, you would require a conversion to allow your system to calculate how many eaches are represented by a quantity of cases. This way, when you received the cases, your system would automatically convert the case quantity into an each quantity.

63

Definitions• Vendor-managed inventory. Phrase used to describe the process of a supplier managing the inventory levels

and purchases of the materials he supplies. This process can be very low tech, such as an office supplies supplier or maintenance supplies supplier coming into your facility once per week to visually check stock levels and place a re-supply order, or high tech, such as an electronic component supplier having remote access to your inventory management and MRP system and producing and automatically shipping to meet your production schedule. Vendor-managed inventory reduces internal costs associated with planning and procuring materials and enables the vendor to better manage his inventory through higher visibility to the supply chain. Vendor-managed inventory may be owned by the vendor (consignment inventory) or the customer.

• Wave picking. A variation on zone picking where rather than orders moving from one zone to the next for picking, all zones are picked at the same time and the items are later sorted and consolidated into individual orders. Wave picking is the quickest method for picking multi item orders; however the sorting and consolidation process can be tricky. See also batch picking, zone picking.

• Warehouse management system, WMS. Computer software designed specifically for managing the movement and storage of materials throughout the warehouse. WMS functionality is generally broken down into the following three operations: Put away, Replenishment, and Picking. The key to these systems is the logic to direct these operations to specific locations based on user-defined criteria. WMSs are often set up to integrate with data-collection systems. In Materials Management, these systems are referred to as MMIS (Materials Management Information Systems.)

• Zone picking. Order picking method where a warehouse is divided into several pick zones, order pickers are assigned to a specific zone and only pick the items in that zone, orders are moved from one zone to the next (usually on conveyor systems) as they are picked (also known as "pick-and-pass"). See also batch picking, wave picking.

Practice Examination

Next we’ll concentrate on questions from the practice exam• We will analyze the question and decide if it is one that we may want to postpone

until later due to the time constraints. We only have two hours on test day, and some of the math related questions can be time consuming.

• We will scan for the correct answer to jump out at us• If that does not happen, we will start the process of elimination• And hopefully be able to target the answer AHRMM deems to be correct.• No penalty for guessing so take the leap of faith if you don’t know and go with

your gut.• Recommend going with your first instinct and not going back and changing

answers later.

65

Pre-Test Questions

1. Which of the following is a vertical transport system designed to accommodate a wider variety of items than a pneumatic tube system?

A. Cart liftB. MonorailC. DumbwaiterD. Conveyor

66

Pre-Test Questions2. User roles and privileges established in the material management

information system (MMIS) are important to maintain.

A. Inventory turns.B. System performance.C. Data visibility.D. System security.

67

Pre-Test Questions3. An ABC analysis is performed to

A. Improve cash flowB. Identify inventory items by high, medium, and low value/usage.C. Improve space , labor and financial resource utilizationD. Identify and segment key products for value analysis projects

68

Pre-Test Questions5. A facility is part of a 10-facility integrated delivery network (IDN). Which

of the following should be considered FIRST for cost effective disposal of surplus medical equipment?

A. Donation to a non-profit organization.B. Auction of equipment by an outside company.C. Transfer to another facility within the IDN.D. Disposal in an environmentally-friendly manner.

69

Pre-Test Questions6. Work flow in sterile processing should begin with

A. Sterilization.B. Decontamination.C. Assembly.D. Sterile storage.

70

Pre-Test Questions7. The Coalition for Healthcare eStandards

(CHeS) is an organization that

1) Is dedicated to promoting the adoption and use of open data standards in healthcare.

2) Endorses the global location number (GLN) standard.3) Operates for profit, and is driven by group purchasing organizations (GPO).4) Includes the Department of Defense and Department of Veterans' Affairs.

A. 1, 2, and 3 onlyB. 1, 2, and 4 onlyC. 1, 3, and 4 onlyD. 2, 3, and 4 only

71

Pre-Test Questions8. Which of the following can result in an inventory discrepancy that

requires adjustment?

1. Data entry error2. Inventory valuation method3. Theft4. Fill rate


72

Pre-Test Questions9. A new clinical area is being added. Which of the following best describes

a one-time investment cost?

A. Computer and printer systemB. Order transmission devices between clinical and distribution

areasC. Labor resources required to manage the new areaD. Shelving in the new area to establish PAR levels

73

Pre-Test Questions10. Which of the following are generally accepted practices if a facility receives an

accidental over shipment of a product that is routinely used? 1) The receiving clerk informs the buyer and the accounts payable clerk of the

over shipment, and documents the variance.2) The buyer consults with the customer department to learn if the over

shipment can be used and accepted.3) The buyer directs the receiving agent to accept the goods, and requests a

credit memo from the vendor.4) The buyer directs receiving to accept the goods, and instructs the accounts

payable clerk to pay the total amount due.


74

Pre-Test Questions11. Of the following, the LEAST efficient strategy for storing products in a

storeroom is by

A. Commodity group.B. Most frequently picked items.C. Stock number sequence.D. Department.

75

Pre-Test Questions12. Which of the following describes the correct order of the purchase process?

A. PO, acceptance, invoice matching, PR, delivery, paymentB. PO, delivery, invoice matching, acceptance, PR, paymentC. PR, PO, acceptance, delivery, invoice matching, paymentD. PR, PO, delivery, acceptance, invoice matching, payment

76

Pre-Test Questions13. In the event of a positive biological indicator in a sterilize load, which of the

following steps must be followed?

1) Check wrapping for integrity.2) Isolate the load.3) Rewrap and reprocess the load.4) Notify infection control and risk management if any

sets were used before the test was read


77

Pre-Test Questions14. Advantages of a Group Purchasing Organization (GPO) over a single

facility's purchasing department include

1) Aggregated volume.2) Member compliance.3) Staff time reduction.4) Product information.


78

Pre-Test Questions15. Components in calculating the total delivered cost of an item include

1) Order management administrative costs.2) Receiving costs.3) Warehousing location.4) Source of funds.


79

Pre-Test Questions

17.Which organization develops manufacturing standards for surgical instrumentation?

A. AHAB. AORNC. ASHCSPD. AAMI

80

Pre-Test Questions

16.Application-to-application exchange of business data using a standard format is

A. An electronic data interchange.B. An application service provider.C. Business-to-business e-commerce.D. An integrated delivery network.

81

Pre-Test Questions

17.Which organization develops manufacturing standards for surgical instrumentation?

A. AHAB. AORNC. ASHCSPD. AAMI

82

Pre-Test Questions

18.Processing with peracetic acid is considered to be

A. Sterilization.B. High-level disinfection.C. Decontamination.D. Disinfection.

83

Pre-Test Questions

19.The most effective means for reducing cross-contamination in a healthcare setting is

A. Decontaminating equipment.B. Handwashing.C. Training on infection control techniques.D. Ensuring clean linens are used.

84

Pre-Test Questions20.A HIPAA compliance program for a purchasing

department should include a

1) Vendor confidentiality statement covering protected information.2) Clause inserted into every contract that covers protected

information.3) Statement reflecting the facility gifting policy.4) Statement describing actions taken if a policy is violated.


85

Pre-Test Questions

21.If a vendor representative is involved in a surgical case, which of the following information may not be disclosed to the vendor's company under the Health Insurance Portability and Accountability Act (HIPAA)?

A. Items used in caseB. Physician's nameC. Case dateD. Patient diagnosis

86

Pre-Test QuestionsSCENARIO • The next two items refer to this scenario. First, study the

description of the situation. • Then select the one best answer to each question following it.

During the first quarter of a year, three products were ordered on separate purchase orders at a price of $100.00 each. Payment terms with the vendor are, "3% 10, net 30, and a contractual 5% rebate on all purchases paid quarterly." Two of the three invoices were paid in 5 days and the third was paid in 25 days. No other products were purchased from the supplier in the first quarter of the year.

87

Pre-Test Questions22.What was the total amount paid or remitted

to the vendor during the first quarter?A. $279.00B. $291.00C. $294.00D. $300.00

23.The rebate check from the vendor for the first quarter is

A. $ 5.00B. $14.00C. $15.00D. $24.00

88

Pre-Test Questions

24.A physician insists that products of multiple brands and sizes be available in the operating room stock. To maintain a neutral inventory financial position, the best negotiation strategy is

A. Consolidation.B. Just-in-time.C. Stockless.D. Consignment.

89

Pre-Test Questions

25.Which of the following is a method used to inventory patient care areas at a scheduled time where materials are inventoried and orders for needed items are filled and used to restock shortages?

A. Master cartB. Exchange cartC. Card systemD. PAR level

90

Pre-Test Questions

26.An automated, computerized information/decision support system is often used for other than its intended purpose. This problem is most likely related to

A. Garbage in/garbage out (GIGO).B. Discipline.C. Speed.D. The number of terminals.

91

Pre-Test Questions

27.A community healthcare facility has canes and crutches shipped directly to the Physical Therapy Department. This is an example of what type of distribution system?

A. Direct exchangeB. Emergency requisitionC. StocklessD. PAR level

92

Pre-Test Questions28.Which of the following should be included in

a purchasing process audit trail?

1) An authorized requisition from the requesting department2) A purchase order produced by an authorized agent3) Documents acknowledging acceptance of materials4) An invoice generated by the facility's accounts payable department


93

Pre-Test QuestionsThe following information is known:

Accounts Receivable $1,800,000Accounts Payable $600,000Payroll Taxes $ 400,000Fund Balances $4,600,000

29.What is the total value of the liabilities listed above?

A. $600,000B. $1,000,000C. $6,400,000D. $7,400,000

94

Pre-Test Questions30. Which of the following are the most important considerations when

designing a storeroom layout?

1) Safety issues2) Traffic flow3) Lighting4) Proximity to delivery dock


95

Pre-Test Questions31. Ingredients to a successful relationship between the facility and the

vendor include

1) Being open to criticism.2) Commitment to the process.3) Maintaining a confrontational position.4) Sharing expected outcomes.

1) 1, 2, and 3 only2) 1, 2, and 4 only3) 1, 3, and 4 only4) 2, 3, and 4 only

96

Pre-Test Questions33. Benefits of capital equipment product standardization include

1) Reduced maintenance cost.2) Stabilized purchase price.3) Consistency in supply price.4) Reduced days in accounts payable.

1) 1, 2, and 3 only2) 1, 2, and 4 only3) 1, 3, and 4 only4) 2, 3, and 4 only

97

Pre-Test Questions

34.Which of the following may be effective in controlling excessive trials and purchases of expensive new equipment?

A. Value analysisB. Technology assessment committeeC. Maintenance review activityD. Financial control panel

98

Pre-Test Questions

34.Which of the following may be effective in controlling excessive trials and purchases of expensive new equipment?

A. Value analysisB. Technology assessment committeeC. Maintenance review activityD. Financial control panel

99

Pre-Test Questions

35.Which of the following orders delivers a specific amount of product on a scheduled basis?

A. BlanketB. StandingC. OpenD. Capital

100

Pre-Test Questions

36.When linking activity-based costing (ABC) classification with usage frequency, existing days of inventory, and desired days of inventory, the highest possible cash flow can be achieved by increasing turnover of

A. low dollar-high usage items.B. low dollar-low usage items.C. high dollar-low usage items.D. high dollar-high usage items.

101

Pre-Test Questions

37.Capitated agreements result in set charges for specific supplies by a supplier to a facility based on

A. Break-even point.B. Number of patients.C. Number of procedures.D. Value analysis.

102

Pre-Test Questions38. A facility must purchase a new piece of equipment immediately. Capital funding is

not available until the next fiscal year. The following offers have been received:

Company A: $118,000 for equipment delivered now, not paid for until new fiscal year, no finance charges. Consumable annual cost is $15,000.

Company B: $110,000 financed, delivered now, finance charges over term additional $20,000. Consumable annual cost $12,000.

Company C: Immediate delivery, no down payment, cost of equipment with no interest added (listed as $120,000) will be added to the purchase of consumable evenly over 3 years. Total consumable cost is $39,000.

Company D: Immediate delivery, lease equipment for 3 years at a cost of $4,250 per month including all consumables. Buyout at end of 3 year lease term is $1.

103

Pre-Test Questions

38. Which of the following companies offers the best value?

A. Company AB. Company BC. Company CD. Company D

104

Pre-Test Questions

39. Which of the following is a strategic objective?

A. Reduce inventory by the end of the fiscal year.B. Reduce inventory by 15% and maintain customer satisfaction.C. Reduce inventory by 15% by the end of the fiscal year. D. Reduce inventory by 20% and increase customer communication.

105

Pre-Test Questions

40.Use of an automatic replenishment system (ARS) creates value by

A. Cataloging purchasing transactions.B. Reducing manual PAR counting.C. Automatically tracking instruments.D. Tracking capital equipment.

106

Pre-Test Questions

41. Ethylene oxide (EtO) gas is used for

A. Cleaning.B. Anesthesia.C. Disinfection.D. Sterilization.

107

Pre-Test Questions42.Key elements of an effective asset management

program include

1) Recording maintenance data in the asset information log.2) Requiring vendor-provided, no-cost in-services.3) Sequestering equipment upon receipt to permit inspection and testing. 4) Tagging assets upon acceptance.

– 1, 2, and 3 only– 1, 2, and 4 only– 1, 3, and 4 only– 2, 3, and 4 only

108

Pre-Test Questions43.Which of the following is the primary

advantage of enterprise resource planning (ERP) systems over traditional automated information systems?

A. Data sharing ability across the entire organizationB. Improved screen response timesC. Maximum flexibility for adapting to existing processesD. Superior level calculations

109

Pre-Test Questions44. Analyzing which of the following equipment criteria is considered most

important for grouping items for contract coverage to cut equipment maintenance costs?

1) Cost2) Manufacturer3) Location4) Function


110

Pre-Test Questions45. A facility is planning to move and renovate its Sterile Processing

Department. Which of the following should be considered in equipment requirements and location?

1) Proximity to the department's largest user2) Type of devices processed3) Number of loads processed4) Existing infrastructure


111

Pre-Test Questions

46.In customer service programs, the resilience is best exemplified by

A. Developing value added programs.B. The ability to respond to failures.C. Serving customers effectively.D. Performing the basics well.

112

Pre-Test Questions

47.A provider reimbursement method that generates a fixed payment per patient, independent of the cost or amount of services provided, is

A. Capitation.B. Prospective payment.C. Fee-for-service.D. Periodic interim payments.

113

Pre-Test Questions

48.Which of the following factors is most important when considering purchase of a tugger system?

A. Type of MMISB. Number of dock spacesC. Number of electrical outlets in the departmentD. History of Workers' Compensation claims

114

Pre-Test Questions

49. Demand ordering is defined as a

A. Term applied to the incoming or outgoing of supplies.B. Technique to speed product final assembly in response to actual

customer orders.C. Term used for techniques that use actual usage, rather than

forecasts, as a basis for replenishment.D. Strategic plan concept where there is only one driving force in

which a company competes.

115

Pre-Test Questions

50.Two facilities are combining their inventories under a recent merger and must determine the average cost of each product. Facility A purchased 100 cases of an item at $9.00 per case. Facility B purchased 100 cases of the same product at $8.00 per case. What is the average cost per case of the combined inventory?

A. $8.00B. $8.50C. $9.00D. $17.00

116

Pre-Test Questions51. Which of the following is the correct sequence of stages in the process

improvement cycle?

1) improve2) measure3) control4) define5) analyze

A. 1, 4, 5, 3, 2B. 2, 1, 5, 3, 4C. 4, 2, 5, 1, 3D. 5, 1, 4, 2, 3

117

Pre-Test Questions

52.Which of the following is the statute of limitations of a lease contract under the Uniform Commercial Code (UCC)?

A. 3 yearsB. 4 years C. 7 years D. 10 years

118

Pre-Test Questions

53.Completion of a returned goods authorization (RGA) should result in

A. A revised invoice.B. A freight claim.C. An original invoice.D. A credit memo.

119

Pre-Test Questions54. A healthcare facility has decided to buy a new enterprise resource planning

(ERP) system. The materials management module of the new ERP system does not support current processes. The best initial course of action is to

A. Ask IT staff to modify the software to meet required functional capabilities.

B. Urge the facility to purchase a second system to meet functional requirements.

C. Remove functional requirements not covered in the ERP system.D. Look for different ways to fulfill functionality with the new ERP

system.

120

Pre-Test Questions55. Which of the following is the proper sequence to select a vendor before

implementing a materials management information system (MMIS)?

1) Develop a task force or project team.2) Send out a request for proposal.3) Define functional requirements.4) Evaluate vendor qualifications and conduct a proposal

analysis.

A. 1, 2, 3, 4B. 1, 2, 4, 3C. 1, 3, 2, 4D. 2, 1, 3, 4

121

Pre-Test Questions56. Which of the following are requisitions used to communicate needs of a

requestor to purchasing?

1) Blanket2) Electronic3) Paper4) Traveling
