Question 1

A logistics company has a 2-story warehouse in the suburban are
a. The goods receiving area and dispatch area are located on the ground floor only. There is a lift
connecting the two floors. The daily operations of the warehouse are quite busy. Which of the
following would the best arrangement for this warehouse?

Accepted Answer

D

Explanation: The purposes of a warehouse are to keep the inventories in good condition and to ensure that the operations is smooth. In the scenario, the warehouse has 2 stories, with goods-in and goods-out areas located on the ground floor and a lift connecting the stories. The lift could become a bottleneck if the goods inside the warehouse are not well-arranged. Since the lift is often small with limited load capacity, putting heavy bulk items on the first floor will cause bottleneck and increase the chance of accidents. Therefore, palletised items (even they have low-usage) should be placed on the ground floor. Smaller and lighter items should be stored on the first floor. This QUESTIO N NO: does appear in the real exam. To answer the question, students should imagine the situation. Reference: CIPS study guide page 11-13 LO 1, AC 1.1

Question 2

Using consignment stocking with suppliers can assist with flexible warehousing when space is at a premium in the warehouse. Another advantage of using the consignment stocking approach is that …

Accepted Answer

A

Explanation: With consignment stocking, the supplier retains ownership until the item is used by the customer. This approach minimizes the customer’s holding costs and improves cash flow, as payment is deferred until the item is consumed. It’s particularly beneficial in whole-life asset management for inventory flexibility and reduced capital commitment.

Question 3

When using ABC analysis to classify inventory, which factors must be considered?
1. Demand uncertainty of each item
2. Cumulative percentage of items
3. Cumulative percentage usage value of items
4. Overall inventory turnover

Accepted Answer

C

Explanation: ABC analysis is applied to stock and its management. It is based loosely on the Pareto principles, better known as 80/20 rule. Pareto principle is the theory that 80% of outcome results from 20% of inputs. For example, 80% of sales are to the top 20% of customers; 80% of spend on inventory is accounted for by the top 20% of stock items. The ABC concept is based on Pareto's law. The following steps are carried out for the ABC analy-sis. - Step 1: Compute the annual usage value for every item in the sample by multiplying the annual requirements by the cost per unit. - Step 2: Arrange the items in descending order of the usage value calculated above. - Step 3: Make a cumulative total of the number of items and the usage value. - Step 4: Convert the cumulative total of the number of items and usage values into a percentage of their grand totals. - Step 5: Draw a graph connecting cumulative % items and cumulative % usage value. The graph is divided approximately into three segments, where the curve sharply changes its shape. This indicates the three segments A, B and C. LO 2, AC 2.1

Question 4

Which of the following are subjective forecasting techniques? Select TWO that apply.

Accepted Answer

A, B

Explanation: The most common subjective forecasting techniques include the following: - Market surveys - Employee surveys - Expert knowledge (Delphi method is a method using expert knowledge) - Test marketing Cycle counting is a periodic analysis of inventory in a storage location which is conducted through the counting of samples instead of physically counting the entire inventory available, so as to quickly have an accurate estimate of the inventory available without causing a stop to the day to day working as is the case with physically counting every unit. The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of fac-tor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. Weighted moving averages assign a heavier weighting to more current data points since they are more relevant than data points in the distant past. The sum of the weighting should add up to 1 (or 100 percent). Reference: CIPS study guide page 109-111 LO 2, AC 2.3

Question 5

What is meant by the economic life of an asset?

Accepted Answer

A

Explanation: :

Question 6

Which of the following lists all components, ingredients, and materials required to produce the final product?

Accepted Answer

D

Explanation: Master production schedule (MPS) plans items that have “direct” demand, or “independent de- mand.” With independent demand, the demand comes from sales orders, service orders, or fore- casts, and the demand comes directly from customer—or forecasted—requirements. It is the list that provides the timing of the production schedule and shows how much each machine can produce, how many shifts are used, etc. A bill of materials (BOM) is a comprehensive inventory of the raw materials, assemblies, subas- semblies, parts and components, as well as the quantities of each, needed to manufacture a product. Reference: CIPS study guide page 116-119 LO 2, AC 2.3

Question 7

To make loading/unloading more effective and efficient, which feature should be included in vehi-cle dock design?

Accepted Answer

D

Explanation: Warehouse dock is a feature of warehouse design - used for unloading and loading vehicles. It is crucial to carefully design where they are externally located in a facility and choose the best type of dock depending on the available space. In many cases efficient and effective loading and unloading is achieved by a dock design that places the loading and unloading vehicle' rear platform at the same height as the warehouse floor. Slopes in docking areas must always be as small as possible: the gentler the slope, the less chance of errors and accidents. If a warehouse is going to be used by large volume vehicles, such as high cubes, it may be necessary to install special devices, such as hydraulically adjustable docks or ground level lift platforms. Current trends indicate that vehicles that are longer and wider and have a greater volume will be increasingly common. Therefore, when planning the location of the docks, it would be useful to ensure that there is a large area for the approach, manoeuvring and build-up of large vehicles. One option to increase the efficiency of the docks is to combine reception and dispatch into a single area (dual use). This solution drastically reduces costs and, above all, increases the use of handling equipment and personnel. However, if this is justified by the volume of material flows, there can also be separate access points for each function (some for reception and others for dispatch - 'sole use'). Reference: - Warehouse docking areas - Interlake - CIPS study guide page 13 LO 1, AC 1.1

Question 8

The following are examples of scheduled maintenance except...

Accepted Answer

C

Explanation: Scheduled maintenance is any repair and upkeep work performed within a set timeframe. It details when given maintenance tasks are performed and by whom. Scheduled maintenance may occur at repeating intervals or in response to a work request. "Overhauling of machine" means that the machine is regularly checked and corrupted parts are replaced if needed. "Cleaning of tank" and "Oil changes" also occur at time intervals as scheduled So the correct answer is "Repair signage damage from a recent storm" Reference: CIPS study guide page 158-163 LO 3, AC 3.1

Question 9

A food processing manufacturer must be able to trace the ingredients they use and the food
manufactured from those ingredients. Which of the following systems provides the opportunity for
efficient traceability?

Accepted Answer

C

Explanation: :

Question 10

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?

Accepted Answer

B

Explanation: 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

Question 11

Which is the best definition of reorder point?

Accepted Answer

D

Explanation: Reorder point is the point either in time or in a process when the next order should be placed. Reference: CIPS study guide page 113 LO 2, AC 2.3

Question 12

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...

Accepted Answer

B

Explanation: :

Question 13

MRP system is the most suitable IT system to manage which type of items?

Accepted Answer

A

Explanation: Material requirement planning (MRP) is a production planning and material (inventory) control system used in manufacturing. Objectives of MRP are to ensure materials are available for production while minimising inventory and to plan production and procurement activities. Bill of materials (BOM) is an important component of MRP. BOM is also known as product struc-turer. This lists all the items that comprise each assembly and sub-assembly that make up the final product or end item. Therefore, MRP is commonly used to manage dependent demand stock. Reference: CIPS study guide page 116-119 LO 2, AC 2.3

Question 14

When designing the layout of a warehouse or stores area, one of the factors to consider is the width
of the aisles between the racking. Which of the following is a main consideration when calculating
the aisle width?

Accepted Answer

C

Explanation: The turning circle of the forklift truck and the size of the pallet it carries are primary factors in determining aisle width. The aisle width must accommodate forklift maneuvers for safe and efficient access to stored items. Whole-life asset management emphasizes warehouse layout planning to optimize space usage, reduce handling time, and enhance safety.

Question 15

Which of the following are critical factors that must be considered when evaluating warehouse or
storage locations?
The cost of the proposed location
Who owns the storage location or warehouse
Access to transport networks
The number of windows in the building

Accepted Answer

A

Explanation: When selecting a warehouse location, it’s essential to consider: Cost: The expense of the location directly impacts the budget. Access to transport networks: Proximity to transportation infrastructure facilitates efficient shipping and receiving. These factors align with whole-life asset management principles by ensuring cost-effective and accessible storage solutions, contributing to reduced transportation costs and improved logistics.

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