CIPS L4M7 Exam Practice Test Instant Access

Question 1

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

A1 and 2 only

B1 and 3 only

C2 and 3 only

D3 and 4 only

Answer : D

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.

Question 2

Which of the following best describes the term 'periodic review'?

AItems are reviewed and orders placed depending on requirements

BItems are reviewed when the Kanban is triggered

CItems are reviewed when the price is at its lowest

DItems are reviewed as part of an imprest system

Answer : D

Fixed-Time Period System (or Periodic Review system) is the inventory management system in which inventory is checked in fixed time periods, T, and the quantity ordered varies.

The imprest system is a form of financial accounting system. The most common imprest system is the petty cash system. The base characteristic of an imprest system is that a fixed amount is re-served, which after a certain period of time or when circumstances require, because money was spent, it will be replenished.

So the correct answer should be 'Items are reviewed as part of an imprest system'

LO 2, AC 2.3

Question 3

ASI Ltd is known for its commitment to sustainability. ASI builds railroad ties and pilings using recycled plastic bottles and industrial waste instead of standard materials such as wood, steel, and cement. This practice helps the company save 15% in compare with traditional material purchases. Which pillar of sustainability would include the practice of ASI Ltd?

APeople and Planet

BProfit and Expense

CPlanet and Profit

DProfit and People

Answer : C

The triple bottom line is a sustainability framework that examines a company's social, environment, and economic impact (or People, Planet, Profit). ASI Ltd practice would reduce the waste into the environment as well as keep the business more profitable. So the correct answer should be Planet and Profit.

- 25 Years Ago I Coined the Phrase ''Triple Bottom Line.'' Here's Why It's Time to Rethink It.

- CIPS study guide page 202

LO 3, AC 3.3

Question 4

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

AAcquisition costs

BPurchase price

CHolding costs

DCosts of stockouts

Answer : C

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

LO 2, AC 2.2

Question 5

Which of the following are recognised as disadvantages of ERP systems? Select TWO that apply.

AHigh initial investment

BRequired intensive employee training

COnly applied to manufacturing

DLower factory efficiencies
Excluded inventory records

Answer : A, B

Implementing a full ERP system is not an easy option. They are complex systems and the disad-vantages include the following:

- The installation of the ERP system is costly. ERP consultants are very expensive take approxi-mately 60% of the budget.

- The success depends on the skills and experience of the workforce, including education and how to make the system work properly.

- Resistance in sharing internal information between departments can reduce the efficiency of the software.

- The systems can be difficult to use.

- Change of staff, companies can employ administrators who are not trained to manage the ERP system of the employing company, proposing changes in business practices that are not synchro-nized with the system.

- Having an ERP system has many advantages, but does not guarantee the total success of the company. Organizational culture, know how to involve staff and anticipate changes that will suffer the organization using this system of administration, are important elements for the completion of the implementation.

- The effectiveness of the ERP system may decrease if there is resistance to share information be-tween business units or departments. Due to strong changes that implementation of the ERP system brings in the culture of work, there may be poorly trained or disinterested in making use of the same staff...

- The benefits of having an ERP system are not presented immediately with the implementation of the software, they will be evident long after the system is running.

- The culmination of the implementation depends on the ability and skill of the workforce, also involves education and training, to make the system is correctly applied.

- What are the Advantages and Disadvantages of ERP System

- CIPS study guide page 119-122

LO 2, AC 2.3

Question 6

Which of the following would be considered independent demand items of stock for a supplier that is manufacturing laboratory imaging equipment? Select TWO that apply.

AOffice consumables for the organisation

BEnergy consumption for the organisation

CCompleted finished goods

DRaw materials required for production

EMachinery spares for the production lines

Answer : A, C

Question 7

XYZ Ltd organises a meeting in order to decide on the safety stock level of a strategic material which is used in XYZ latest product - DMD. To do this, they must forecast the future demand for this new product. In the meeting, external consultants are invited to join with cross-functional team. Each person of the group anonymously replies to questionnaires and subsequently receives feedback in the form of a statistical representation of the "group response," after which the process repeats itself. The goal is to reduce the range of responses and arrive at something closer to expert consensus. XYZ Ltd is using which forecasting method?

AObjective forecasting technique

BDelphi method

CHolt-Winters seasonal method

DTime series analysis

Answer : B

Delphi method was developed in the 1950s, originally to forecast the impact of technology on warfare. The method entails a group of experts who anonymously reply to questionnaires and subsequently receive feedback in the form of a statistical representation of the 'group response,' after which the process repeats itself. The goal is to reduce the range of responses and arrive at something closer to expert consensus. The Delphi Method has been widely adopted and is still in use today. Delphi method is a subjective forecasting technique

Holt-Winters forecasting is a way to model and predict the behavior of a sequence of values over time---a time series. Holt-Winters is one of the most popular forecasting techniques for time series. It's decades old, but it's still ubiquitous in many applications, including monitoring, where it's used for purposes such as anomaly detection and capacity planning.

Time series analysis is a statistical technique that deals with time series data, or trend analysis. Time series data means that data is in a series of particular time periods or intervals.

Objective forecasting approaches are quantitative in nature and lend themselves well to an abun-dance of data. There are three categories of objective forecasting methods: time series, caus-al/econometric, and artificial intelligence.

LO 2, AC 2.3

CIPS Whole Life Asset Management L4M7 Exam Practice Test