L4M7 Final revision questions Part 3 Flashcards
- What is depreciation?
The actual decrease in value of an asset over its useful life. The idea is to match the cost of the asset to the revenues it helps to generate over its useful life.
- What are the benefits of purchasing capital equipment rather than hiring or leasing it?
It goes on the company’s balance sheet as a long term asset
it is a capital investment in the organisation – you build equity in the equipment
tax incentives to purchase rather than lease- eg tax savings for almost any business equipment through depreciation deductions
- Is inventory controlled because it increases the cost of insurance?
If inventory is not controlled well the cost of insuring it would increase – eg if there is a continuation of obsolete, damaged or redundant stock.
- Which of the following techniques are likely to be a more accurate prediction of actual demand for stock?
a) Obtain whole year sales trends and regularly revise predictions based on live demand
b) Use weighted averages and economic indicators as an additional basis for predictions
c) Reduce retail process for overstocked items to compensate for differences
d) Require suppliers to provide stock on shorter lead times
a) Obtain whole year sales trends and regularly revise predictions based on live demand
- A logistics manager is due to replace the current fleet of forklift trucks and has decided to lease rather than purchase them. Is this the right thing to do?
a) Yes, it assists an organisation’s cash flow position by spreading the costs over a period of time
b) No, as no transfer of ownership has taken place and the organisation will have to return them after the lease period has finished.
c) Yes, as rental payments are usually higher than purchasing the trucks because there is a relatively short time commitment in the rental
d) No, as the logistics manager may have to raise finance to pay for the lease of the forklift due to the high initial cost of investment in the lease.
a) Yes, it assists an organisation’s cash flow position by spreading the costs over a period of time
- A regional distribution centre has two floors with entry and exit points only at ground floor level. A lift connects the two floors. Which of the following layout options is the most appropriate?
a) All items arranged by product code, starting on the first floor and working towards the dispatch point
b) Pallet loads, bulky stock items and roll cages stored on the ground floor, tote boxes with lighter items on the first floor
c) Low and medium frequency use items stored on ground floor, high frequency items on the first floor and ground floor
d) Bulky stock and high value items on the ground floor, low value items on the first floor with warehouse administration
b) Pallet loads, bulky stock items and roll cages stored on the ground floor, tote boxes with lighter items on the first floor
- A warehouse manager has decided to invest in some AGVs, after reviewing their use for work in a non-repetitive environment. Are they right to do this?
a) Yes, it will reduce the costs of labour by replacing a human worker
b) Yes, it will increase stock picking accuracy and productivity
c) No, they are only suitable for repetitive tasks
d) No, it commits the organisation to a large capital cost
c) No, they are only suitable for repetitive tasks
- What is meant by the economic life of an asset?
a) It is the age beyond which it is not worth keeping an asset from a cost point of view
b) It is the point beyond which it is not possible to obtain any spare parts for the asset
c) It is the point beyond which it is not possible to find anyone who has the skills to operate the asset
d) It is worth the assets effective performance is below the standard required by the organisation
a) It is the age beyond which it is not worth keeping an asset from a cost point of view
- A space cost in a warehouse is £1.50 per cubic metre per day. If the space taken up by a pallet is 0.5 cubic metres and it is stored in the warehouse for 5 days, what is the overall storage cost?
£3.75
- An organisation needs to increase stock to meet seasonal demand but has limited cash resources. Which do the following techniques will provide the greatest impact?
a) Bulk ordering
b) Consolidated deliveries
c) Variety reduction
d) Consignment stock
d) Consignment stock
- Which of the following is an acquisition cost?
a) Cost of stock outs
b) Holding costs
c) Proportional costs
d) Post-placement costs
d) Post-placement costs
- Calculate the ending inventory if the opening inventory is 600 units, demand is 900 units and production is 700 units.
400
- How do you calculate the rate of stock turn?
P131 no of issues/average inventory amount
- Which of the following are classes of inventory? There are more than one:
a) Raw materials
b) Machines
c) Finished products
d) Sub-assemblies
e) Scrap components
f) Forklift trucks
a) Raw materials
c) Finished products
d) Sub-assemblies
e) Scrap components
- Is the quality of the local workforce the main factor when deciding where to locate a retail warehouse?
No – proximity to the retail outlets the customers are buying from to minimise distribution costs, access to major transport routes, easy access to the site for articulated trucks, appropriate size and space etc and availability of a local workforce is more important than its quality.
