CIPS L4M2 Defining Business Needs Exam Practice Test

Answer : D

Target costing is an activity aimed at reducing the life-cycle costs of new products, while ensuring quality, reliability, and other consumer requirements by examining all possible ideas for cost reduction at the product planning, research and development and prototyping phases of production. But it is not just a cost reduction technique; it is part of a comprehensive strategic profit management system.

LO 3, AC 3.4

Answer : A

Lean design is about maximising the value that a customer receives and at the same time minimis-ing waste in delivering that value.

For an organisation to be 'lean' it must have had all non-essential resources removed (ie. anything that does not add value, see below). This is efficient and cost effective, in that the value/supply chain can theoretically do exactly what is needed of it and no more, but requires sound forecasting and planning of demand and supply. It is most suitable for industries with stable product specifications, long lead times and few impulse purchases.

Organisations which are 'agile' react as quickly as is practicable to provide a cost effective response to customer demand. This is based on flexibility in design, supply, production and distribution. It is most appropriate for products such as fast fashion and foodstuffs which must be on display and available when wanted by the customer.

- CIPS study guide page 153-156

- Agile Supply (cips.org)

LO 3, AC 3.3

Answer : A

Answer : A, B

Direct costs are directly associated with the production of a good or service. In this question, 'An employee is hired to work on a project, either exclusively or for an assigned number of hours' and 'Raw materials' are directly related to producing the product.

Indirect costs are the general costs of the organisation - these costs cannot easily be attributed to specific products or services (also known as overheads). 'The materials and supplies needed for the company's day-to-day operations' or 'Clerical assistants who maintain the office' or 'Advertising and marketing communication' is example of indirect cost.

LO 1, AC 1.2

Answer : C

Technical standards are often produced by a national or international body such as British Standard Institute (BSI)

LO 3, AC 3.1

Answer : C

Marketing plays a critical role in sales. The marketing department introduces products to the con-sumer, and creates strategic messaging that elevates appeal and ultimately drives sales. The feed-back and response from consumers is measured by the marketing team on a variety of levels. Ad-vertising is one means of seeing what performs and what does not perform. Marketers will note trends and demand in their specific markets. This plays into new product development, because the marketing team can work with product developers to create products based on that demand.

In development of specification, the role of marketing is largely the same. They provide the market insight so that right specification is developed and it matches the demands from customers.

- CIPS study guide page 173-175

- Role of Marketing Management in New Product Development (chron.com)

LO 3, AC 3.4

Answer : A

There are two major types of specification: conformance and performance specifications. They have the following characteristics:

Since performance specification is often a list of outputs or outcomes, it usually takes less time to develop than conformance specification.