L4M7 Whole-life Assets Management Exam Dumps

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Full version: L4M7 Exam Dumps Questions
1. Opinions
2. Jugdement
A. 3 and 4 only
B. 1 and 2 only
C. 2 and 3 only
D. 1 and 4 only
Answer: C
Explanation:
Subjective forecasting uses qualitative methods (surveys, opinions) which relay on perception and
opinion. Objective forecasting uses quantitative methods (facts and figures). Both methods have to
make assumption about how closely (or not) the future will resemble the present and the past.
Forecasting is never exact.
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Reference: CIPS study guide page 111-112
LO 2, AC 2.3
3.Which of the following allow the operators to access higher levels in warehouse facility? Select
TWO that apply:
A. Carousel
B. Grab
C. Order picker
D. Scissor platform
E. Stacker crane
Answer: C, D
Explanation:
It is important to ensure safe working in storage facilities, and access to higher shelves or racking
presents a challenge. Lifting at full reach becomes a problem at relative low weight. There can also
be danger for other workers who are around someone working at height, from the movement of
equipment or dropping stock from a height.
Scissor platforms are used in high-roof warehouses to gain access to lighting, high-racking units and
sections of wall and roof.
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ORDER PICKER is manual or powered device - some with ride-on capability and some without. This
allow for low-level, medium-level and high-level picking of various items. Many are equipped with
forks to allow transfer capability of larger picked boxes. Higher-level and narrow or very narrow - aisle
versions have the ability to elevate operators on the front platform to higher racking to pick items.
Grabs are designed to hold stock either width-wise or from above. These are either specific devices
designed for grabbing materials or are available as an accessory to forklift trucks.
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Carousels are space-efficient, rotating devices which allow access to a large range of product from a
single location. Designs are variable, with carousels rotating horizontally or vertically until the required
items can be retrieved.
Stacker-cranes are designed for the automated storage and retrieval of unit loads, in high-bay
warehouses. They travel in aisles equipped with guide rails, electrical supply, data transmission and
control systems. To ensure the storage and retrieval functions, the stacker-crane carries out three
types of movement: long-travel, lifting and picking.
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Reference: CIPS study guide page 52-55
LO 1, AC 1.3
4.In just in time production system, when is an upstream production triggered?
A. When the inventory level reaches the reorder point
B. After the management team forecasts the future demands
C. When downstream operations summon the upstream production
D. When the production workers are idle
Answer: C
Explanation:
Along with Jidoka, Just-in-time (JIT) production is one of the pillars of the two Toyota Production
System. It is a production method that fundamentally changed the way large-scale production
occurred in the 20th century, and is the basis for Lean Manufacturing (Lean for short), which is the
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school of thought many modern companies have modeled themselves after.
JIT production is often called a pull system because instead of using traditional push production
where scheduling is done based on historical data and demand forecasting, production is scheduled
based on actual customer orders. Rather than predicting demands from customers, the JIT method
requires that actual customer demand exists. Production doesn't begin before an order triggers it.
This system not only reduces the amount of extra inventory, but also reduces the amount of work in
progress at one time.
Reference:
- Just-in-Time Production
- CIPS study guide page 122-127 LO 2, AC 2.3
5. U-shape layout
6.With D is the annual demand (units), S is cost per order, H is annual carrying cost per unit; the
formula for Economic Order Quantity is....?
A. ?(D*S/2H)
B. ?(2D*S/H)
C. ?(D*S*H)
D. ?(D*S/3H)
Answer: B
Explanation:
LO 2, AC 2.3
7.1.XYZ Ltd organises a meeting in order to decide on the safety stock level of a strategic material
which is used in XYZ latest product - DMD. To do this, they must forecast the future demand for this
new product. In the meeting, external consultants are invited to join with cross-functional team. Each
person of the group anonymously replies to questionnaires and subsequently receives feedback in
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the form of a statistical representation of the "group response," after which the process repeats itself.
The goal is to reduce the range of responses and arrive at something closer to expert consensus.
XYZ Ltd is using which forecasting method?
A. Objective forecasting technique
B. Delphi method
C. Holt-Winters seasonal method
D. Time series analysis
Answer: B
Explanation:
Delphi method was developed in the 1950s, originally to forecast the impact of technology on warfare.
The method entails a group of experts who anonymously reply to questionnaires and subsequently
receive feedback in the form of a statistical representation of the "group response," after which the
process repeats itself. The goal is to reduce the range of responses and arrive at something closer to
expert consensus. The Delphi Method has been widely adopted and is still in use today. Delphi
method is a subjective forecasting technique Holt-Winters forecasting is a way to model and predict
the behavior of a sequence of values over time?a time series. Holt-Winters is one of the most popular
forecasting techniques for time series. It’s decades old, but it’s still ubiquitous in many applications,
including monitoring, where it’s used for purposes such as anomaly detection and capacity planning.
Time series analysis is a statistical technique that deals with time series data, or trend analysis. Time
series data means that data is in a series of particular time periods or intervals.
Objective forecasting approaches are quantitative in nature and lend themselves well to an
abundance of data. There are three categories of objective forecasting methods: time series,
causal/econometric, and artificial intelligence.
LO 2, AC 2.3
8.When using ABC analysis to classify inventory, which factors must be considered?
9.A retailer wants to improve its service level in inventory management from 95% to 97%.
Which of the following is the best course of action?
A. Increasing safety stock
B. Expanding replenishment lead time
C. Decreasing safety stock
D. Holding more cycle stock
Answer: C
Explanation:
For single items, an extra investment in inventory (higher levels of safety stock) will always in-crease
customer service levels. Conversely, higher service levels imply larger quantities of safety stocks and
an increased investment in inventory. (Procurement and Supply Chain Management - 9th Edition)
Reference: CIPS study guide page 104-105
LO 2, AC 2.2
10. Reactive maintenance
11. Environmental impact of losses due to lack of packaging
12. Raw materials
A. 1 and 3 onlyB. 2 and 4 only
C. 1 and 2 only
D. 3 and 4 only
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Answer: B
Explanation:
Raw materials are basic input materials - they are only processed limitedly or have not been
processed at all. Their values are equal to acquisition cost and are the lowest value of stock held.
Secondary components are the products that are combined with others to produce the finished
goods. They are acquired in the processed state. Their value is higher than raw materials, but still at
acquisition cost.
Work in progress is the stock part-way through manufacture that has not been finished. It is typically
not completed yet, so it doesn't have full value. But the costs of processing already carried out makes
it more valuable than materials and components.
Finished goods are completed and ready to be used or sold. Finished goods are the most expensive
and need to be stored in good conditions.
Reference: CIPS study guide page 82-83
LO 2, AC 2.1
13.Ranger Mobile Ltd is a emerging smartphone manufacturer. The manufacturer adopts the just-in-
time method: First, the customers make orders, then it will decide which components to be purchased
according to the bill of materials.
These components are known as which of the following?
A. Indirect items
B. Capital goods
C. Dependent demand items
D. Independent forecast items
Answer: C
Explanation:
Dependent demand is the requirement for stock item which is directly related to and therefore de-
pendent upon the rate of production (examples are: raw materials, components, energy). The com-
ponents in the scenario are dependent demand items.
Independent demand is the requirement for stock item which is not directly related to, and is therefore
independent of rate of production.
Reference: CIPS study guide page 95-98
LO 2, AC 2.1
14.When accounting for the disposal of fixed assets, the gain or loss on disposal is equal to...?
A. The difference between resale price and the cost or valuation less accumulated depreciation up to
the date of disposal
B. The difference between resale price and the cost of that asset
C. The difference between resale price and the cost or valuation plus depreciation up to the beginning
of the year in which disposal took place
D. The difference between resale price and the cost of the asset less depreciation up to the beginning
of the year in which disposal took place
Answer: D
Explanation:
Fixed assets may be sold anytime during their useful life. This gives rise to the need to derecognize
the asset from balance sheet and recognize any resulting gain or loss in the income statement.
The accounting for disposal of fixed assets can be summarized as follows:
- Record cash receive or the receivable created from the sale: Debit Cash/Receivable
- Remove the asset from the balance sheet
- Recognize the resulting gain or loss Debit/Credit Gain or Loss (Income Statement) Example
ABC LTD purchased a machine for $2000 on 1st January 2001 which had a useful life of 5 years and
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an estimated residual value of $500. The machine was being depreciated on straight line basis.
However, ABC LTD decided to sell the asset on1 January 2003 for $1500 in order to raise cash for
the purchase of a new machine.
The disposal of the fixed asset will be recorded as follows: Record cash received or the receivable
arising from the sale: Debit Cash $1,500
Remove the asset from the balance sheet
As a fixed asset is recognized in the balance sheet at the Net Book Value (i.e. Cost less Accumulated
Depreciation), the machine will be removed from the accounts of ABC LTD in two parts:
First, the Machine Cost must be removed by crediting the ledger: Credit Machine Cost $2,500
Second, the Accumulated Depreciation in respect of the machine must be removed by debiting the
ledger:
Debit Accumalated Depreciation $600* *Accumulated Depreciation: (2000 - 500)/5 x 2 Years
The combined effect of the above two transactions would be to remove the machine's net book value
of $1400 (2000 - 600) from the balance sheet.
Recognize the resulting gain or loss on the sale of machine
ABC LTD received $1500 for an asset with a balance sheet worth of $1400. It therefore earned a gain
of $100. The gain will be recorded as follows:
Credit Gain on Disposal $100
Reference:
- Accounting for Disposals
- CIPS study guide page 197-198 LO 3, AC 3.3
15.An organisation may incur additional costs in stockout events.
Which of the following is an example of costs of inventory stockouts?
A. The costs of storage space owned that cannot be used for other profitable purposes when
inventories decrease
B. The lost contribution margin on sales forgone as a result of customer dissatisfaction due to
unavailability of goods
C. The costs of obsolescence and costs of insurance that change with the quantity of inventory held
D. The return forgone by investing capital in inventory rather than elsewhere
Answer: B
Explanation:
Stockout is a situation where an inventory item is not available when required.
The costs associated with a stockout include the following:
- Lost of production output - there will be no production until the stockout is resolved (new stock is
acquired). For factory operating 24/7 with no spare capacity, this lost output will not be able to be
recovered.
- Costs of machine downtime and of overhead spread over a reduced level of output
- Costs of any action required to deal with the stockout...
- Loss of customer goodwill through inability to supply or late delivery
- Loss of sales or new orders
- Loss of market creditability
Reference: CIPS study guide page 101-102
LO 2, AC 2.2
16.XYZ Inc opens a tender to purchase new forklift trucks for their new established warehouse. In the
final round, there are two suppliers remain who offer two different bids. Supplier A's bid has high initial
investment. After calculating the net present value, the NPV in year five is positive. On the other
hand, supplier B's bid has low purchase price, with the NPV in year five is negative.
If the NPV is the sole selection criterion, XYZ Inc should select the bid which has...?
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A. Positive NPV
B. The lowest NPV
C. Zero NPV
D. Negative NPV
Answer: A
Explanation:
Net present value (NPV) is the 'today' net value that deprives from 'future' cash flow of an investment
or a capital purchase. Net Present Value is a helpful tool for assessing the total lifetime value of an
investment. Procurement professionals or investors can base on this value to make decision to
achieve value for money. Generally, an organisation should select the offer which has the highest
NPV among their options. Preferably, the NPV of an capital investment should be positive, which
means the investment eventually adds value to the business.
Reference: CIPS study guide page 177
LO 3, AC 3.2
17.Multiple approval levels for a small purchase request is an example of which type of waste?
A. Over-processing
B. Not using talent
C. Over-production
D. Inventory
Answer: A
Explanation:
Lean thinking aims to remove wastes from work processes. Before diving into the 8 wastes, it is
important to understand what waste is. Waste is any action or step in a process that does not add
value to the customer. In other words, waste is any process that the customer does not want to pay
for.
The original seven wastes (Muda) was developed by Taiichi Ohno, the Chief Engineer at Toyota, as
part of the Toyota Production System (TPS). The seven wastes are Transportation, Inventory, Motion,
Waiting, Overproduction, Overprocessing and Defects. They are often referred to by the acronym
‘TIMWOOD’. The 8th waste of non-utilized talent or ‘Skills’ of workers was later introduced in the
1990s when the Toyota Production System was adopted in the Western world. As a result, the 8
wastes are commonly referred to as ‘TIMWOODS’.
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Source: The lean way
Multiple approval levelsfor a small purchase request is an example of over-processing since this
adds more unnecessary work to users and procurement professionals.
Reference: CIPS study guide page 127-129
LO 2, AC 2.3
18.Which of the following statements holds true about inventory holding costs?
A. They decline as the cost of the inventory item rises
B. They always exceed total ordering costs
C. They depend upon the opportunity cost of tying up funds and the average value of the stock
holding
D. They are independent of the average stock level
Answer: C
Explanation:
Holding costs (carrying costs) are the costs associated with the storage and handling of physical
stock.
There are two different types of holding costs:
- Costs related to the value of the goods: financial costs (i.e. the interest on the working capital tied up
in inventory, which may be the bank borrowing rate or the company's target for return on capital); cost
of insurance; losses due to product deterioration; losses due to obsolescence and redundancy of
inventory; losses due to theft, accidental damage etc.
- Costs related to the physical characteristics of the inventory include the following: storage space;
power, heat and lighting of the store; movement equipment; labour costs; administration costs.
Reference: CIPS study guide page 100-101
LO 2, AC 2.2
19. Stock decreases
20. Installing mezzanine floor
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A. 1 and 3 only
B. 2 and 4 only
C. 1 and 2 only
D. 3 and 4 only
Answer: D
Explanation:
Possible solutions to the high irregular or seasonal demand problems are listed below:
• Take advantage of the height of the warehouse - Mezzanine floor
- High racking system (increase storage capacity but require high-reach material handling equipment)
• Eliminate dead stock or inventory
• Improve material flow
• Improve storage location method
• Consider using aisle space during demand peak
• Narrow aisles between racks (require narrow handling equipment)
• Carousel-type storage system
• Auto-storage and retrievals system (ASRS)
Reference: CIPS study guide page 22
LO 1, AC 1.1
21.Which of the following is the material handling equipment which uses the suction force to lift an
item?
A. Vacuum lifter
B. Sack truck
C. Dolly
D. Pallet stacker
Answer: A
Explanation:
VACUUM LIFTER uses the vacuum pad which attaches itself to a product. The suction force al-lows
the product to be lifted (and rotated and placed). Vacuum lifters are used for moving and positioning
glass sheets, but are also seen lifting boxes, plastic sacks, sheets of building materials and pipework.
Some models feature hydraulic arms which allow easy movement of the lifted load. The lifting system
will have a number of sucker pads and vacuum capability which determines the maximum weights
and largest items that can be lifted.
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DOLLY consists of stack and sets of wheels (either casters or rollers) under the stack that allow the
dolly and the heavy object on top of it to move easily and smoothly. For moving in a straight line,
rollers is ideal. If you want to move maneuverability, dolly with sets of casters will let you swivel and
turn.
SACK TRUCK (hand truck) is an L-shaped box-moving handcart. It comprises a small base plat-form
with two wheels at the base and a larger vertical structure. A small ledge to set objects on flat against
the floor when the sack truck is upright. When moving, the truck and object are then tilted backward
based on the vertical structure until the weight is balanced over the large wheels, making otherwise
bulky and heavy objects easier to move.
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PALLET STACKER is designed to lift and stack pallets. This one is fully mobile so can move easily
around the warehouse. An operator would typically sit or stand while driving like a counter-balanced,
reach or straddle lift truck.
LO 1, AC 1.3
22. Environmental impact of excess packaging
A. 2 and 3 only
B. 2 and 4 only
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C. 1 and 3 only
D. 1 and 4 only
Answer: D
Explanation:
ISO 18602:2013 is about Packaging and the environment - Optimization of the packaging system.
ISO 18602:2013 specifies requirements and a procedure for assessment of packaging to ensure that
the weight or volume of its material content is optimized consistent with the functions of packaging.
This is one of several options for reducing the impact of packaging on the environment. It also
provides methodologies and procedures for
- determining the amount and minimization of substances or mixtures hazardous to the environment,
and - determining the amount of four heavy metals (lead, cadmium, mercury, hexavalent chromium)
in packaging.
The optimum balance in this standard weighs the environmental impact of losses that may happen
with no packaging or inadequate packaging against the environmental impact from excess packaging.
The process for packaging design, including material selection, is not part of ISO 18602:2013. The
procedure for applying ISO 18602:2013 is contained in ISO 18601.
Reference: CIPS study guide page 69 LO 1, AC 1.3
23.Which of the following is the definition of work in progress inventory?
A. Inventory that has finished the production process
B. Inventory introduced into production but not completed as of the stocktake date
C. Inventory not yet introduced into the production process
D. Obsolete inventory
Answer: B
Explanation:
Work in progress is the stock part-way through a manufacturing process; in the service sectors the
term is also used for anything between order and delivery.
Reference: CIPS study guide page 83
LO 2, AC 2.1
24.Decommissioning, removal and disposal of assets may have impact on the environment. An
organisation should have policies and procedures in place to enhance its environmental performance.
Which standard family provides the guidance on environmental policies and procedures?
A. ISO 22000 family
B. ISO 9000 family
C. ISO 14000 family
D. ISO 27000 family
Answer: C
Explanation:
The ISO 14000 family of standards are developed by ISO Technical Committee ISO/TC 207 and its
various subcommittees. For a full list of published standards in the series see their standards
catalogue. ISO 14001 provides requirements with guidance for use that relate to environmental
systems. Other standards in the family focus on specific approaches such as audits, communications,
labelling and life cycle analysis, as well as environmental challenges such as climate change.
ISO 27000 family of standards concerns information technology, with the goal of improving security
and protecting company assets. Started in 2005, the two most popular standards are ISO 27001:2013
and 27002:2013. 27001 is management-based system, whereas 27002 is a technical document,
focused on the individual and putting a code of conduct in place. Organizations can choose either
standard; ISO 27001 has over 22,000 certifications worldwide. It is a broad standard, and for this
reason the certification can be customized to fit the needs of the organization, and is not mandatory.
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ISO 22000 sets out the requirements for a food safety management system and can be certified to it.
It maps out what an organization needs to do to demonstrate its ability to control food safety hazards
in order to ensure that food is safe. It can be used by any organization regardless of its size or
position in the food chain.
ISO 9001 is a family of quality management standards, there are fourteen in total. Of these, ISO
9001:2015 is the only one that can be certified to. It was first published in 1987, and has since been
updated about every 7 years. The standard details how to put a Quality Management System (QMS)
in place to better prepare your organizationto produce quality products and services. It is customer
focused, and places an emphasis on continuous improvement and top management processes that
extended throughout the organization.
Reference:
- ISO website
- Top 10 Most Popular ISO Standards
- CIPS study guide page 193
LO 3, AC 3.3
25.The width of aisles within a warehouse is determined by...?
A. Turning cycle of forklift and the size of pallets
B. The length of storage racking
C. The location of goods-in and goods-out doors
D. The height of the building
Answer: A
Explanation:
Below is a formula from Toyota you can use to make an informed decision.
26.Assuming that all other factors are constant except one, the net present value of a capital
expenditure increases when...?
A. The initial cost of a project increases
B. The discounted rate increases
C. Net cash flow during a time period increases
D. Cash outflow during a time period increases
Answer: C
Explanation:
Net present value (NPV) is the 'today' net value that deprives from 'future' cash flow of an invest-ment
or a capital purchase.
The following formula is used to calculate NPV
Where:
Rt is the net cash flow (cash inflow - cash outflow) during the period t
i is the discount rate
t is the number of time periods
As you can conclude from the above formula, the net present value increases when the numerators
(net cash flows) increase and/or denominators (1+i) decrease. So the correct answer should be "Net
cash flow during a time period increases"
The purpose of this exercise is to help you identify the factors that influence the net present value and
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how to increase/decrease NPV in real-world scenario.
Reference:
- Net present value in capital expenditure
- CIPS study guide page 177
LO 3, AC 3.2
27.Which among the following are the tools for reducing acquisition costs in purchasing?
28. To bring the product cost down
29. Start with the basic right-angle stacking width
30. Disposal costs
31.Which of the following is the correct statement about total ordering cost?
A. Rise as the average stock level rises
B. Equal the number of orders placed times the cost of placing an order
C. Rise as the order quantity rises
D. Fall with the per period usage rate
Answer: B
Explanation:
Typically, ordering costs include expenses for a purchase order, labor costs for the inspection of
goods received, labor costs for placing the goods received in stock, labor costs for issuing a
supplier’s invoice and labor costs for issuing a supplier payment. These costs are irrelevant from the
size of the order and are incurred every time a firm places an order.
The total ordering cost will be equal to ordering cost per order multiply with number of orders.
Reference: CIPS study guide page 99-100
LO 2, AC 2.2
32. Procurement card
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