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CIPS Whole Life Asset Management Sample Questions (Q242-Q247):

NEW QUESTION # 242
Which of the following is the correct statement about total ordering cost?

  • A. Fall with the per period usage rate
  • B. Rise as the average stock level rises
  • C. Equal the number of orders placed times the cost of placing an order
  • D. Rise as the order quantity rises

Answer: C

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:
LO 2, AC 2.2


NEW QUESTION # 243
Which of the following best describes what happens when order volumes from customers increase and multiply through the supply chain?

  • A. Opitz system
  • B. Seasonal demand
  • C. Forrester effect
  • D. Pareto curve

Answer: C

Explanation:
The bullwhip effect (or Forrester effect) is a distribution channel phenomenon in which forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.
Seasonal demand: consumer interest in purchasing particular products only during a specific peri-od within the calendar year.
OPITZ is a coding system used to form Groups in Group Technology philosophy of Manufactur-ing.
The Pareto Curve is the shape created when the bars of a Pareto Chart are progressively summed and the points joined together. The final curve ends at 100% of items in the chart, which means that you can then draw a line across at 80% and 'bounce' it down to find the bar which, when combined with all bars to its left, will give 80% of all items.


NEW QUESTION # 244
Which of the following is NOT an improvement available in ERP II in compare with ERP?

  • A. ERP II offers better integration with other proprietary software
  • B. ERP II enables the organisation to collaborate with trading partners across the supply chain
  • C. ERP II systems are closed and silo-working
  • D. ERP II crosses all sectors and segments of business, including service, government and asset-based industries

Answer: C

Explanation:
The main improvements from ERP to ERP II are the following:
- ERP II is web enabled as compared to Conventional ERP Which is not.
- ERP is restricted to provide selected exhaustive or rigorous or wide-spread coverage in its mod-ules. But as compared to ERP, ERP II provides the true and accurate blend of the macro and the micro and affords customers with curative actions/measures after identifying the slip-up/error or fault;
- ERP was embattled more headed for manufacturing or industrialization and the dilemma or difficulty is conquer in ERP II by endowing clarification for all kind of industries and sectors.
- ERP is not in the position or could not possibly integrate/incorporate diverse functions from di-verse departments/divisions but ERP II could possibly do so as well as from different industries as compared to conventional ERP.
- For WEB and WAP connectivity ERP II grip CRM and SCM Functionalities.
- ERP II be obliged the function and purpose to an external/outdoor one and smooth the progress of better networks than remaining as internal/interior application.
Reference:
- Next Generation Enterprise Resource Planning: ERP II
- CIPS study guide page 119-122
LO 2, AC 2.3


NEW QUESTION # 245
XYZ Ltd is a highly profitable leading industrial distributor with over 60,000 products and an enviable record for customer service. After undertaking preliminary discussions it was decided to analyse the value-adding activities that contribute to XYZ's flagship products. The company is conducting which of the following activities?

  • A. Silo-working
  • B. Postponement
  • C. Value stream mapping
  • D. Kanban

Answer: C

Explanation:
According to Hines and Rich, value stream refers to specific parts of the firms that actually add value to the specific product or service under consideration. XYZ Ltd is mapping the value stream by analysing the value- adding activities that contribute to their most important product.
Postponement is a business strategy which maximizes possible benefit and minimizes risk by delaying further investment into a product or service until the last possible moment. An example of this strategy is Dell Computers' build-to-order online store. One of the earliest references to the concept was in a paper by Zinn and Bowersox in the Journal of Business Logistics. They highlighted five types: Labelling, Packaging, Assembly, Manufacturing and Time postponements.
Kanban (##) (signboard or billboard in Japanese) is a scheduling system for lean manufacturing and just-in- time manufacturing (JIT). Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. Kanban is one method to achieve JIT. The system takes its name from the cards that track production within a factory. For many in the automotive sector, kanban is known as the "Toyota nameplate system".
Put simply, silo working occurs when several departments or groups within that organisation do not want to share information or knowledge with other individuals they work with.
Reference: CIPS study guide page 128-129
LO 2, AC 2.3


NEW QUESTION # 246
A manufacturer aims at increasing the service levels to 99% from 97% through expanding the safety stock.
Safety stock can be used to accommodate which of the following?
1. Variability of stock turn
2. Variability of holding costs
3. Variability of demand
4. Variability of lead time

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

Answer: C

Explanation:
Safety stock is also known as buffer stock. As this name suggests, this type of stock provides some kind of
'buffer', which means safety stock will help the business to reduce the shocks induced by volatile demand or disruption on the supply chain. In other words, safety stock will reduces the probability of stockouts. The following graph would explain the reason why an organisation should have safety stock:
Chart, histogram Description automatically generated

Figure 1: Safety stock graph
As it is only the buffer against uncertainty, safety stock level should be equal to the deviation of demand or replenishment time. Safety stock should be able to accommodate variance of demand and variance of lead time.
Reference:
- Safety stock explained
- CIPS study guide page 84-86
LO 2, AC 2.1


NEW QUESTION # 247
......

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