CIPS L6M9 Exam Questions Instant Access - No Installation Required

Question 1

Jed is the Operations Manager at a cake manufacturer and is trying to determine the optimum capacity of the factory.

Which of the following would be true if the factory achieves optimum capacity? Select ALL that apply.

AThe factory physically cannot produce more items

BThe factory fulfills customer demand for items

CThe lowest total cost for production is achieved

DThe factory breaks even

EThe highest cost per item is achieved

FInventory levels are maximized

Answer : B, C

Optimum capacity is achieved when:

Customer demand is met (B)

Production costs are minimized (C)

Incorrect options:

(A) is false because optimum capacity isn't necessarily the physical limit

(D) is false because the factory should be operating at a profit, not breakeven

(E) is false because the lowest cost per unit is achieved, not the highest

(F) is false because inventory levels should be minimized, not maximized (to reduce storage costs)

(See LO 1.3, p.46)

Question 2

Maxi Ltd is a medium-sized manufacturing organisation in the automotive industry that creates engines for cars. It has traditionally worked well with its suppliers, with strong relationships and regular meetings. There are currently around 15 suppliers who provide parts to Maxi Ltd.

Due to changing customer demands, Maxi Ltd will, from next month, modify the manufacturing of some of its products. Product X is being made more environmentally friendly, with output of CO2 being reduced by 32%. The product will take longer to produce, but there will be no additional cost to customers for this.

Maxi ltd are considering outsourcing the manufacturing of Product Y as it is not a product which is routinely ordered by customers. This will allow Maxi Ltd to focus on other products which generate higher revenues for the company. The concern within the Board of Directors is that if demand increases for this product, an outsourced company may not be able to cope with higher numbers of orders.

Product Z is an extremely popular item and oftentimes Maxi Ltd does not have the capacity to fulfil all orders. Consideration has been given to increasing the size of the factory, but this has been discarded as risky as demand is not guaranteed. The product has been available on the marketplace for a short amount of time and sales are continuing to increase, but the company believes this will soon plateau. To deal with current demand, the marketing team is working on campaigns to invite customers to make orders for this product at certain times of the year when product X is not being created in the factory. This means resources can be reallocated to the creation of product Z.

What capacity strategy is being used for product Z?

ALead

BLag

CIncremental

DDemand smoothing

Answer : D

The marketing team is encouraging customers to make orders at specific times of the year, when product X is not being produced, to better allocate resources. This is a classic example of demand smoothing, where businesses adjust demand patterns to match available capacity. (LO 1.3)

Question 3

Which of the following can be used to pre-assess the consequences of a network member not meeting the control requirements set by the organisation?

AEscalation strategy

BOperations strategy

CKPIs

DCorporate strategy

Answer : A

The key term in this question is 'pre-assess.' An escalation strategy identifies risks in the supply network and outlines how to manage disruptions before they escalate. It ensures control issues are handled efficiently by escalating them to senior management when necessary. (See p.194)

Question 4

Rayan is the new CFO of an international banking organisation operating in London. He has been invited to a meeting of the top executives regarding corporate strategies and strategic resource planning. He believes that the organisation must be led by the strategy first, with resources then created to meet the requirement. Is this always the case?

AYes - corporate strategy dictates operational strategy and thus resource allocation

BYes - resources can only be assembled once objectives have been set

CNo - corporate strategies will not assist in resource planning

DNo - strategies can be created to fit an organisation's resource capabilities

Answer : D

The question asks if strategy must always come first. The correct answer is no because strategies can also be developed based on available resources. Corporate strategy often influences resource planning, but sometimes an organisation will assess its resources and build a strategy accordingly. (See p. 150)

Question 5

Which of the following are benefits of optimising the supply chain? Select ALL that apply.

AIncrease of business flexibility to cater for demand

BHigher profit margins

CMore accurate prediction of demand from customers

DUse of AI and technology

EControl of waste

Answer : A, B, C, E

Optimising the supply chain brings benefits such as increased flexibility, higher profit margins, better demand forecasting, and waste reduction.

Use of AI and technology (D) is incorrect because it is a method to achieve supply chain optimisation, not a benefit itself.

(LO 1.1, See p.3)

Question 6

The operations department of ABC Ltd has recently launched a new product. The product is manufactured within a large factory and then sent to retailers for sale. The department has a system in place which details the components required for the product and the quantities required to fulfil customer demand. The system works online and links to other areas of the business including HR and finance.

So far, several large orders have been placed for the product from different retailers. The Chief Operations Officer (COO) has decided to programme the completion of the orders based on when the orders were placed. The benefit of this strategy is that it will give each customer a similar lead time. Thus far no buffer stock has been created as products are only created when orders are received.

Three teams are required to make the product and the product flows from team one to team two to team three, each team adding a component to the product. Unfortunately, team two are short staffed and are completing their work at a slower rate than the other two teams. This is a huge consideration for the COO as it will impact upon the capacity of the organisation.

The retailers have all signed contracts with ABC Ltd and the COO is extremely happy that they are long term contracts. Contract 1 is with retailer X and the price is set for three years. Contract 2 is with retailer Y and is a five year contract where the price will be reviewed annually in line with CPI. Contract 3 has a variable pricing mechanism based on the volume of products ordered.

What is the nature of the COO's consideration?

ATheory of Constraints

BPush technique

CVariance analysis

DCorporate strategy

Answer : A

This is an issue related to the Theory of Constraints, as Team 2 is the bottleneck affecting overall production efficiency. The Theory of Constraints focuses on identifying and managing the most critical limitation in a system. (See LO 3.3)

Question 7

Company A manufactures wheels for Company B, which manufactures cars. Traditionally, Company A would complete the wheels and conduct quality assessments before sending them to Company B, which would then begin assembling cars. However, a new CEO at Company B has introduced a technology system that enables simultaneous production, meaning Company B starts manufacturing cars at the same time Company A begins producing wheels.

What is this new system known as?

AStart to finish

BFinish to finish

CStart to start

DFinish to start

Answer : C

Start to start means two different organisations at different levels of the supply chain begin their work simultaneously rather than sequentially. This is the opposite of a start to finish system, where the next process starts only when the previous one is completed. (See LO 1.2, p.19)

CIPS Supply Network Design L6M9 Exam Questions