Pass the CIPS CIPS Level 4 Diploma in Procurement and Supply L4M7 Questions and answers with CertsForce

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).

Explanation

Available inventory (or Inventory position - IP) is equal to inventory on-hand plus quantity on order minus backorder (if any)

Holding costs include expenses associated with storing inventory. These typically comprise:

Damaged goods: Losses due to items being stored improperly or deteriorating over time.

Storage space: Costs of renting or maintaining warehouse space.

Insurance: Fees for insuring stored items against potential risks.

These costs are integral to whole-life asset management, as they impact overall inventory and storage expenses.

Asset disposal decisions should consider:

Location and accessibility: Equipment located in hard-to-reach areas may have higher disposal costs.

Type of equipment and components: Some equipment has specific disposal requirements, especially if it contains hazardous materials or valuable components that can be recycled.

These assessments align with whole-life asset management by identifying factors that impact disposal costs and potential environmental effects, ensuring the responsible removal of assets.

Leasing offers several advantages in procurement, particularly in high-value asset management:

No initial investment: Leasing eliminates the need for a significant upfront capital outlay, preserving working capital for other purposes.

Protection against obsolescence: Leasing agreements often allow organizations to upgrade equipment, thus mitigating risks related to technology becoming outdated.

While capital allowances (option 1) may be relevant in purchases, they do not apply to the leasing advantage. Option 4, highlighting the total cost, is typically a disadvantage of leasing, not an advantage, as leasing can be more costly over time compared to an outright purchase.

Explanation

Along with Jidoka, Just-in-time (JIT) production is one of the pillars of the two Toyota Production System. It is a production method that fundamentally changed the way large-scale production oc-curred in the 20th century, and is the basis for Lean Manufacturing (Lean for short), which is the school of thought many modern companies have modeled themselves after.

JIT production is often called a pull system because instead of using traditional push production where scheduling is done based on historical data and demand forecasting, production is scheduled based on actual customer orders. Rather than predicting demands from customers, the JIT method requires that actual customer demand exists. Production doesn't begin before an order triggers it. This system not only reduces the amount of extra inventory, but also reduces the amount of work in progress at one time.

Explanation

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