CIPS L6M9 Exam Practice Test Instant Access

Question 1

When designing a supply network, which of the following stages should be completed first?

AAnalyse potential risks

BConfirm the network scope

CDetermine the approach for managing material flow

DTrack information flow

Answer : B

The correct sequence for designing a supply network is:

Determine strategic objectives

Confirm the network scope

Analyse potential risks

Determine the approach for managing material and information flow

Track material and information flow

Since network scope defines the boundaries, scale, and overall structure of the network, it must be confirmed first. (LO 1.1, See p.3)

Question 2

Gill runs the operations department of a manufacturing organisation in Wales. The department emulates best practices from competitors through benchmarking and has recently introduced Six Sigma to prevent operational problems. Which of the following best describes Gill's approach to operations function?

AInternally neutral

BExternally neutral

CInternally supportive

DExternally supportive

Answer : B

This aligns with externally neutral, which includes:

Benchmarking against competitors

Adopting best practices (Lean, Six Sigma, BPR, TQM)

Emulating successful industry models

(LO 2.1, See p.99)

Question 3

A cupcake manufacturing organisation uses a 'management by exception' technique when it comes to planning and control. What does this mean?

AAudits and other control activities are completed by an outsourced company to ensure there is no bias in the investigations

BReporting only takes place when non-compliance occurs

CPlans and control activities are created based on historical performance

DExceptional performance is rewarded, for example through staff bonus schemes

Answer : B

Management by exception means that reporting only occurs when non-compliance happens or when results are outside the norm. In the case of a cupcake factory, there might be no quality control measures in place, but if an issue arises (e.g., food poisoning complaint), an investigation would be conducted. This is a risky strategy for such an organisation. (See p. 189)

Question 4

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 5

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 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 production method is used by ABC?

AEarliest due date

BFirst in, first out

CSimilar process

DShortest processing time

Answer : B

The production method is First In, First Out (FIFO) because orders are processed based on when they were received. This method ensures fairness in lead times across different customers. (See LO 3.2)

Question 7

XYZ Ltd is a perfume manufacturer based in France. They have created a new perfume and research has shown that demand for the perfume will outstrip supply. The Chief Operating Officer (COO) and the Chief Financial Officer (CFO) are meeting to discuss this. The COO believes that the organisation needs to reallocate resources in order to meet demand. Are there any exceptions to when this may be the case?

ANo - organisations should always aim to meet customer demand or resources will be underutilised

BNo - this would negatively affect the profit the organisation could make

CYes - there are occasions when an organisation would choose not to fulfil customer demand

DYes - there are exceptions, but these are always outside of the organisation's control

Answer : C

While organisations generally try to fulfil customer demand, there are times when they strategically choose not to. A common reason is maintaining a premium image---limiting supply can increase desirability and justify a higher price. For example, luxury brands often limit product availability. (See p.169)

CIPS Supply Network Design L6M9 Exam Practice Test