Spring Special Limited Time 70% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code = getmirror

Home
CIPS
CIPS Level 4 Diploma in Procurement and Supply
L4M7
Whole Life Asset Management Questions and Answers

Pass the CIPS Level 4 Diploma in Procurement and Supply L4M7 Questions and answers with ExamsMirror

Practice at least 50% of the questions to maximize your chances of passing.

Exam L4M7 Premium Access

View all detail and faqs for the L4M7 exam

Go to Exam

744 Students Passed

93% Average Score

92% Same Questions

Viewing page 7 out of 9 pages

Viewing questions 61-70 out of questions

Questions # 61:

An organisation may incur additional costs in stockout events. Which of the following is an exam-ple of costs of inventory stockouts?

Options:

The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease

The lost contribution margin on sales forgone as a result of customer dissatisfaction due to unavailability of goods

The costs of obsolescence and costs of insurance that change with the quantity of in-ventory held

The return forgone by investing capital in inventory rather than elsewhere

Answer

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]

Questions # 62:

Your employers have expanded rapidly over the past five years and have acquired a number of smaller companies in the same industry. Unfortunately, all of the companies purchased have manual inventory systems. Your employer is setting up a computerised inventory control system and wishes to ensure that all stock is classified under the appropriate headings. Under what classification would semi-finished goods be classified?

Options:

Indirect inventories

Direct inventories

Acquisition costs

Material costs

Answer

Questions # 63:

Which of the following is the most suitable container of fasteners (screws, nails, nuts and bolts,...)?

Options:

Bar rack

Pallet

Tote box

Stock cage

Answer

Explanation

Tote box is the reusable storage box. These can be open or have lids or flaps to close them and come in a large variety of sizes and weight loadings.

A tote is ideal for holding and hauling items such as: tools, fasteners, bark dust, dry cement, cords, wires, smaller boxes,...

Pallets are the platform structures designed to support a load and be lifted using the forks (typically seen on forklift trucks and other equipment). These are in a variety of standard sizes and can be made of many materials including plastics, resin, board or timber. Pallets are not containers, but support platforms.

Bar racks are designed to store bars and pipes

Stock cages are available in many sizes and can hold single items or groups of items

[Reference: CIPS study guide page 18, LO 1, AC 1.1]

Questions # 64:

A procurement manager has agreed a contract for the acquisition of a piece of capital equipment and has negotiated a staged payment contract of 30% with order, 30% on delivery, and the remaining 40% on acceptance testing. Was this the right thing to do?

Options:

No, as it commits the organisation to purchasing the equipment and the supplier to deliver it

Yes, as the payments can be linked directly to a specific performance milestone of the contract

Yes, as it means the contract warranties are easier to change

No, as it is an unfair contract term and places the supplier at a disadvantage in the contract

Answer

Questions # 65:

Stockyards are suitable for specific materials with which of the following characteristics? Select TWO that apply.

Options:

Equipment only suited for inside storage

Equipment with a long delivery lead time

Items that are bulky and individually packed

Small equipment that is of relatively low value

Equipment that requires larger specialised handling

Answer

C, E

Questions # 66:

Company XYZ is a candy manufacturer. Company XYZ makes a batch of 1,000 Christmas candy canes that are no longer edible after December 31. Company XYZ is able to sell 750 canes of the batch, but the other 250 are sitting in the warehouse. December 31 comes, and these candy canes is no longer sell-able. The batch of 250 candy canes belongs to which type of inventory?

Options:

Obsolete inventory

Buffer stock

Redundant inventory

Stockout

Answer

Explanation

Obsolescent stock is stock, usually finished goods, which is in good condition and satisfactory working but for which demand is irreversibly falling towards zero. Once this demand reaches zero the stock can be considered 'obsolete'. It cannot be used or sold in its current state. Food ingredients (like candy canes) which are out of date are another example.

[Reference: CIPS study guide page 86-88, LO 2, AC 2.1]

Questions # 67:

Which of the following materials handling equipment can be used in the warehouse? Select THREE that apply.

Options:

Forklift

Electronic data exchange

Bar coding

Pallet dollies

Conveyor system

Answer

A, D, E

Questions # 68:

Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory belongs to which of the following?

Options:

Acquisition costs

Purchase price

Holding costs

Costs of stockouts

Answer

Explanation

Direct and indirect costs of holding inventory include the following:

- Acquisition costs

- Holding costs: There are 2 different types of holding costs: costs related to the value of the goods (including opportunity costs, costs of insurance, losses due to product deterioration, etc) and costs related to the physical characteristics of this inventory.

- Costs of stockouts

[Reference: CIPS study guide page 100-101, LO 2, AC 2.2]

Questions # 69:

When decommissioning a piece of equipment, there may be an amount of contaminated hazardous waste that will need to be disposed of. Which of the following would need to be considered?

Whether it would be possible to recycle the waste and reuse it in another production process

Determining the most cost-effective method to dispose of the waste to minimize cost to the business

What the type of waste is and if it needs to be disposed of by a specialized organization

The applicable waste management legislation that applies in the country concerned

Options:

1 and 2 only

1 and 3 only

2 and 3 only

3 and 4 only

Answer

Explanation

When disposing of hazardous waste, it is essential to:

Identify the type of waste: Some waste requires special handling and disposal by certified organizations.

Comply with legislation: Proper disposal is mandated by local, national, or international waste management laws, ensuring public safety and environmental protection.

Whole-life asset management emphasizes responsible decommissioning practices to minimize environmental impact and adhere to regulatory compliance.

Questions # 70:

Under a Hire Purchase Agreement, ownership is transferred to the hirer...

Options:

at the beginning of the contract

when all installments have been paid

when half the installments have been paid

if the items are damaged by the hirer

Answer

Explanation

In a Hire Purchase Agreement, ownership of the asset transfers only after all installments are fully paid. This financing option allows organizations to use an asset immediately while spreading out payments. In whole-life asset management, hire purchase is suitable for assets with long service lives, allowing organizations to use them without a large initial investment.

Viewing page 7 out of 9 pages

Viewing questions 61-70 out of questions