CIPS L4M7 Exam Practice Test Instant Access

Question 1

The time period between placing an order and its receipt in stock is known as what?

ALead time

BCarrying time

CShortage time

DOver time

Answer : A

Lead time is the duration from ordering to receipt and is a critical metric in inventory management. Reducing lead time enhances supply chain responsiveness and allows for more accurate planning. Whole-life asset management prioritizes reducing lead times to optimize inventory levels and meet demand effectively.

Question 2

'The main consideration in designing the layout of a warehouse is the size of the storage space utilized.'

Is this statement TRUE?

AYes, because large space provides assurance that stocks will not run out

BYes, because suppliers need to be assured that the orders they receive will have storage when delivered

CNo, because other considerations such as the traffic flow within the store are important

DNo, because the most important consideration in stores design is the location of the main exit

Answer : C

While storage space is important, traffic flow and accessibility are crucial for efficient warehouse design. Proper layout ensures safe, quick movement of goods and minimizes bottlenecks, reducing operational costs and enhancing efficiency. In whole-life asset management, effective space utilization and efficient layout planning are key for long-term warehouse performance.

Question 3

An organization might find it more beneficial to lease and use an asset over a predetermined period. After this period, the lessee has the right to secure outright ownership of the asset by paying an agreed amount; otherwise, the asset would be repossessed by the lessor. Which of the following is an advantage of leasing?

ALong-term commitment to pay installments even if not using the asset

BCosts are known and agreed in advance

CThe usage of the asset is usually capped

DThe total cost of ownership is not applicable as the asset is leased

Answer : B

Leasing allows an organization to predict costs accurately, as installment payments are pre-agreed. This makes financial planning simpler, which is especially beneficial in whole-life asset management where minimizing upfront capital expenditure is often a priority. Leasing also reduces the risk associated with asset obsolescence.

Question 4

One of the classifications of inventory is referred to as 'indirect supplies.' Which of the following items are examples of indirect supplies in a water bottling plant?

Lubricants for maintenance of production machines

Computer cartridges for the procurement office

Reams of printed labels to stick on water bottles

Blue-colored plastic caps to seal the water bottles

A1 and 2 only

B1 and 3 only

C2 and 3 only

D3 and 4 only

Answer : A

Indirect supplies support operations but are not part of the finished product. For a bottling plant, items like lubricants for machine maintenance and office supplies are indirect supplies, as they aid in operation but do not enter the final product. Managing these supplies in whole-life asset management is critical for cost efficiency and operational support.

Question 5

Staff at DIY Products Inc. (DPI) have been experiencing issues with the identification of stock items. The current labeling system is outdated and unreliable. DPI has therefore invested in a machine-readable approach. Each item has a unique number that is attached visibly to the packaging. This number can be deciphered by a scanner to aid identification. This approach is known as which of the following?

AStandard certification

BOrder tracking

CBar coding

DProduct tagging

Answer : C

Barcoding allows DPI to label each item uniquely, making it scannable and easy to track. This method increases efficiency, accuracy, and traceability, key aspects of whole-life asset management that improve inventory control and reduce errors in item identification.

Question 6

Long-term forecasting of demand using a subjective method is based on a ...

Apredicted cash flow forecast levels used by the organization

Bquantitative, explicit, statistical, or formal method

Cqualitative, informal, clinical, experienced-based or intuitive method

Dmethod of calculating the price in detail within the supply chain

Answer : C

Subjective demand forecasting relies on qualitative methods that draw on expert experience and intuition rather than quantitative data. This includes techniques like the Delphi method, where experts provide insights based on their judgment. In whole-life asset management, subjective forecasting may complement data-driven forecasts when historical data is limited or demand patterns are unpredictable.

Question 7

What cost factors should be considered for the maintenance and repair of manufacturing equipment?

Direct labor cost

Cost of utilities during the use of the equipment

Cost of the goods being sold

Guarantee and warranty cost

A2 and 3 only

B1 and 4 only

C3 and 4 only

D1 and 2 only

Answer : B

Maintenance and repair costs include:

Direct labor: Expenses for personnel performing maintenance tasks.

Warranty costs: Expenses associated with warranty obligations or repairs within the warranty period.

These costs are part of whole-life asset management, which aims to accurately budget for and manage ongoing equipment expenses.

CIPS L4M7 Whole Life Asset Management Exam Practice Test