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CIPS L4M7 > L4M7 revision questions Part 2 > Flashcards

L4M7 revision questions Part 2 Flashcards

1
Q
  1. Stock redundancies can be avoided in all situations if buyers purchase items more frequently in smaller quantities. Is this true or false? Why?
A

False – customer requirements change

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2
Q
  1. Manufacturers should reduce packaging of plastics and other oil-based products in line with responsible environmental practice. What other factor should a manufacturer try to minimise in line with this practice?
    a) Purchase of raw materials overseas
    b) Hazardous substances when waste is incinerated
    c) Purchase price of the raw materials
    d) The amount spent on media advertising
A

b) Hazardous substances when waste is incinerated

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3
Q
  1. Which of the three following factors influence stockholding policy for slow moving items?
    a) Item cost
    b) Surplus cost
    c) Shortage cost
    d) Lead time
A

a) Item cost

c) Shortage cost
d) Lead time

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4
Q
  1. Is it correct to say that the type of goods that a warehouse will be required to hold affect the way that the warehouse is designed and built? Why?
A

Yes, temperature, racking, security, infrastructure, location, size of products, perishability/ shelf-life, value etc.

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5
Q
  1. Which of the following features should be considered following the purchase of a capital asset? Select two:
    a) Who owns the equipment
    b) Compatibility with existing equipment
    c) Contribution to turnover
    d) Cost of maintenance
A

c) Contribution to turnover
d) Cost of maintenance

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6
Q

6.Which of the following are required in order to calculate the rate of stock turn? Choose two:
a) Total stock usage for the period
b) Average stock for the period
c) Average sales for the period
d) Closing stock for the period

A

a) Total stock usage for the period
b) Average stock for the period

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7
Q
  1. The time period between placing an order and its receipt in stock is known as what?
    a) Lead time
    b) Carrying time
    c) Shortage time
    d) Overtime
A

a) Lead time

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8
Q
  1. Which of the following should be included in an informal business case document? Choose two:
    a) Introduction and background
    b) Preferred supplier details
    c) Associated costs and risks
    d) Decommissioning process
A

a) Introduction and background

c) Associated costs and risks

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9
Q
  1. An organisation has decided to use a freight forwarder to transport a large piece of equipment from overseas. Is this the best course of action to take?
    a) No, as the freight forwarder will have little control over schedules or shipments
    b) Yes, as the freight forwarder will be aware of hidden costs such as insurance and overseas documentation
A

b) Yes, as the freight forwarder will be aware of hidden costs such as insurance and overseas documentation

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10
Q
  1. Which of the following are dependant demand items of stock? Choose two:
    a) They depend on the production levels of the user departments
    b) They depend on the production capacity of the supplier
    c) They can be managed using JIT systems
    d) They become obsolete within a short time
A

a) They depend on the production levels of the user departments

c) They can be managed using JIT systems

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11
Q
  1. Which of the following are dependant demand items of stock? Choose two:
    a) They depend on the production levels of the user departments
    b) They depend on the production capacity of the supplier
    c) They can be managed using JIT systems
    d) They become obsolete within a short time
A

a) They depend on the production levels of the user departments

c) They can be managed using JIT systems

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12
Q
  1. The main purpose of the Bill of Materials (BOM) is that it is used by the inventory manager to ensure that materials are issued to production using the first in first out approach. Is this true?
    a) Yes, because the BOM is more detailed than the inventory records
    b) Yes, because the BOM is developed from the inventory system and records
    c) No, because the first in first out method can still be applied without the BOM
    d) No, because the BOM is used only for stock evaluation purposes
A

c) No, because the first in first out method can still be applied without the BOM

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13
Q
  1. A buyer has discovered that two pallets of items in the storeroom are obsolete. If these components are written off which of the following are true?
    a) Stock levels will decrease
    b) Profits will increase
    c) Profits will decrease
    d) Stock levels will increase
A

a) Stock levels will decrease

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14
Q
  1. Name a benefit of barcode scanning systems?
A

Access pricing and other details – universally recognised

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15
Q
  1. A procurement manager is assessing the cost of a proposed new machine. He has taken account of the purchase price, the expected life of the machine in years, the annual running costs such as the wages of the operator, the cost of training staff to operate the machine, fuel consumption and both the cost and availability of spares. What other factor will the manager have to take into account?
    a) Disposal value of the machine
    b) The costing system used by the company
    c) Whether the costs are fixed or variable
    d) Whether the costs are direct or indirect
A

a) Disposal value of the machine

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16
Q
  1. The only reason that stocks become obsolete is because it has been held in stock for a very long time. Is this a valid statement?
    a) Yes, because all obsolete items result from overstocking
    b) Yes, because the users assume that the items are no longer in stock
    c) No, because stock held for a long time are called buffer stock
    d) No, because some items can become obsolete because of changing consumer needs
A

d) No, because some items can become obsolete because of changing consumer needs

17
Q
  1. In which of the following situations would a total cost of ownership model be appropriate?
    a) A stock item for resale where the annual expected sales are more than 30% of total sales
    b) A logistics contract over a five year term with annual reviews of service performance
    c) A capital asset with a five year expected lifespan replacing a similar piece of equipment
    d) A contract for the design of a new warehouse
A

c) A capital asset with a five year expected lifespan replacing a similar piece of equipment

18
Q
  1. JIT has several objectives in the control of inventory, such as:
    a) That the cost of inventory is directly proportional to the value of the inventory
    b) All products will be free from defects
    c) Increase the level of buffer stocks to reduce stockouts
    d) Reduction of work in progress and finished goods inventories to zero
A

d) Reduction of work in progress and finished goods inventories to zero

19
Q
  1. Why is it important to consider the value of opening stock in the accounts?
    a) It allows the calculation of the acquisition costs of the stock items
    b) It provides information to calculate the rate of stock turnover in the organisation
    c) If unsold stock is not included, it can create an inflated profit or even a loss in the organisation’s finances
    d) It indicates the number of days the current stock will last if sales continue at the unanticipated rate
A

c) If unsold stock is not included, it can create an inflated profit or even a loss in the organisation’s finances

20
Q
  1. What factors should you consider when decommissioning and disposing of a machine at the end of its useful life?
A

Cost of disposal, environmental impact, H&S, disposal period rebates, recycling, residual value

21
Q
  1. In order for an environmental policy to be effective, which two must apply?
    a) It must be an energy saving policy
    b) It must reflect the nature of the business
    c) Full account must be taken of the cost of the policy
    d) It must be endorsed by senior management
A

b) It must reflect the nature of the business

d) It must be endorsed by senior management

22
Q
  1. What are the advantages of using automation in a warehouse?
A

Removal of labour costs, creates efficiencies, less chance of pilferage etc.

23
Q
  1. What is the formula that needs to be used to determine lifecycle costs?
A

Initial costs + maintenance costs – residual value = LCC

24
Q
  1. Buffer stock is….
A

Safety stock to ensure against stockouts

25
Q
  1. What are the holding costs of inventory?
A

Storage, handling, management, opportunity, obsolescence, transport, depreciation, redundancy

26
Q
  1. the maintenance manager has decided to implement a Planned Preventative Maintenance Programme on a number of key pieces of equipment which takes 30 minutes at the beginning of each shift. Is this an advantage to the company? Why?
A

Yes, logs issues, proactive, reduces downtime, lowers maintenance costs etc

27
Q
  1. Name three advantages of using RFID.
A

Tracks products in real time
Holds information
Triggers alarm – useful for security as it helps to prevent theft

CIPS L4M7 (3 decks)

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