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CIPS Whole Life Asset Management Sample Questions (Q204-Q209):
NEW QUESTION # 204
Which of the following is the formula for calculating the re-order level?
- A. Average usage in a lead-time + Required level of safety stock
- B. Required level of safety stock - Average usage in a lead-time
- C. Required level of safety stock x Average usage in a lead-time.
- D. Average usage in a lead-time / Required level of safety stock
Answer: A
Explanation:
In management accounting, reorder level (or reorder point) is the inventory level at which a com-pany would place a new order or start a new manufacturing run.
Reorder level depends on a company's work-order lead time and its demand during that time and whether the company maintain a safety stock.
If a company maintains a safety stock, reorder level calculation changes are follows:
Reorder Level = Average Demand x Lead Time + Safety Stock
NEW QUESTION # 205
Which of the following is the correct statement about total ordering cost?
- A. Fall with the per period usage rate
- B. Equal the number of orders placed times the cost of placing an order
- C. Rise as the average stock level rises
- D. Rise as the order quantity rises
Answer: B
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 # 206
A barcode is a series of vertical bars of varying widths in which each of the digits 0 to 9 are represented by a different pattern of bars that can be read by a laser scanner. Which of the following are disadvantages of using barcodes? Select THREE that apply.
* It requires optical line of sight (LOS) scanning to be effective
* It does not allow real-time data to be collected accurately
* Barcodes do not have read/write capabilities
* Data entry is a slow operation and prone to errors
* It is a new and unproven technology
* It is labour-intensive as it requires individual scanning
- A. 4, 5, and 6
- B. 2, 4, and 5
- C. 1, 2, and 3
- D. 1, 3, and 6
Answer: D
Explanation:
Barcode technology has several limitations:
* Requires line-of-sight scanning (LOS): Barcodes must be directly visible to scanners, reducing flexibility in scanning items in bulk.
* No read/write capabilities: Barcodes can only store static data, limiting functionality in dynamic inventory environments.
* Labour-intensive: Each barcode must be scanned individually, making it time-consuming in high- volume environments.
Despite these limitations, barcodes are widely used due to their low cost. Whole-life asset management often considers RFID as a more efficient alternative to barcodes, especially in high-value asset tracking.
NEW QUESTION # 207
RFID, or Radio Frequency Identification, is fast emerging as a major commercial technology. Like every new technology, it has advantages and disadvantages. An advantage of using RFID is that ...
- A. tags only store limited data, whereas a barcode can hold unlimited data
- B. it is better than barcodes as it cannot be easily replicated, and therefore, increases the security on a product
- C. it is cheaper for many applications, compared to other tracking and identification methods
- D. it is easy to implement and requires little investment in information technology
Answer: B
Explanation:
RFID technology offers higher security compared to barcodes, as tags are harder to replicate. RFID also enables wireless scanning, without line-of-sight, and can store more information than barcodes. This enhances asset tracking and security, essential in whole-life asset management for tracking valuable assets and reducing losses due to theft or misplacement.
NEW QUESTION # 208
Which of the following is the core idea of Lean manufacturing?
- A. Waste elimination
- B. Business Continuity Planning
- C. Improving response to erratic demand
- D. New product development
Answer: A
Explanation:
The core idea of lean manufacturing is actually quite simple...relentlessly work on eliminating waste from the manufacturing process. Waste is defined as any activity that does not add value from the customer's perspective. According to research conducted by the Lean Enterprise Research Centre (LERC), fully 60% of production activities in a typical manufacturing operation are waste - they add no value at all for the customer.
On the other hand, agile manufacturing places an extremely strong focus on rapid response to the customer - turning speed and agility into a key competitive advantage.
Reference:
LO 2, AC 2.3
NEW QUESTION # 209
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