CIPS L4M7 Whole Life Asset Management Exam Practice Test

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Total 255 questions
Question 1

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?

A. Long-term commitment to pay installments even if not using the asset B. Costs are known and agreed in advance C. The usage of the asset is usually capped D. The total cost of ownership is not applicable as the asset is leased



Answer :

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 2

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

A. 1 and 2 only B. 1 and 3 only C. 2 and 3 only D. 3 and 4 only



Answer :

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 3

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 The current labeling system is outdated and unreliable.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?

A. Standard certification B. Order tracking C. Bar coding D. Product tagging



Answer :

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 4

Buffer stock is a level of stock which ...

A. is when the physical ordering process should start to replenish used items B. is half of the actual stock that needs to be in the warehouse C. is the maximum stock in inventory D. is the minimum stock level below which actual stock should not fall



Answer :

Buffer stock serves as a safety net to prevent stockouts by ensuring that a minimum stock level is always maintained. This strategy is essential in whole-life asset management to manage demand fluctuations and minimize the risk of supply chain disruptions.


Question 5

A company does not have enough space to hold inventory to satisfy an external foreign market. Therefore, the board of directors has decided that the company would buy stock in bulk and pay a fee for storage to a third-party warehouse provider local to the foreign market. This would allow the company to focus on other aspects of the business. The stock will be called off as and when required. Which of the following strategies is being pursued by this company?



Answer : C

Outsourcing involves contracting a third party to manage storage or logistics functions, which allows the company to concentrate on core business activities. In this case, outsourcing the warehousing needs aligns with whole-life asset management, as it optimizes resources and mitigates the challenges of limited storage capacity.


Question 6

Which of the following are examples of subjective methods of forecasting? Select TWO that apply.

Trend line analysis

Moving averages

Market research

Expert opinion

Seasonal variations



Answer : B

Subjective forecasting methods, like market research and expert opinion, rely on qualitative judgment rather than numerical data. These methods are valuable when historical data is limited, or when anticipating market changes. Whole-life asset management may use subjective forecasts for long-term planning and to account for factors not captured in quantitative data.


Question 7

A computer in a warehouse prompts an operator to pick a list of the items associated with an order. After picking the items, the operator scans them. The computer reads the items to ensure that the correct items are picked and adjusts the inventory levels. Which of the following order tracking technology is used in this warehouse operation?



Answer : B

A bar coding system enables operators to scan items as they are picked, updating inventory levels in real-time. This system minimizes errors and ensures efficient inventory tracking. In whole-life asset management, barcoding helps maintain accurate records, reduces picking errors, and improves warehouse productivity.


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Total 255 questions