Pass the CIPS CIPS Level 6 Professional Diploma in Procurement and Supply L6M9 Questions and answers with CertsForce

Greg needs to know hisfixed costs, variable costs, and price per car washto determine his break-even point.

For example, if:

Fixed costs(rent, bills) = £100/day

Variable cost per car wash(soap, sponges) = £5

Price per car wash= £10

Thebreak-even pointis when revenue = costs, which means washing20 cars per day(£10 × 20 = £200 revenue, covering fixed and variable costs).

Number of customers (C) is incorrect, as this iscalculated from the break-even formula, not an input.

Number of employees (E) is incorrect, as it isnot a direct factorin the break-even calculation (only their wages as part of fixed costs).

(LO 1.3)

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Thekeyword here is "radical", which is a key feature ofbusiness process reengineering (BPR).

Total quality management (A) is incorrectbecause TQM focuses ongradualquality improvements.

Lean (C) is incorrectbecause it focuses onwaste reduction, which is not mentioned.

Six Sigma (D) is incorrectbecause it focuses onprocess improvement through data and system development, but it is not consideredradical.

(LO 2.1, See p.68)

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The system used isERP (Enterprise Resource Planning)since it links multiple business functions such as HR and finance.MRP and MRPIIare primarily used formanufacturing/operations, andKPIrefers to performance measurement rather than a system. (See LO 3.3)

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Demand smoothingattempts toinfluence customer behaviorto balancedemand fluctuations. Giant Gyms wants more customers inNovemberrather than inJanuary, preventingseasonal peaks and troughs.

????Note:

Lead Strategy= expanding capacitybefore demand increases

Capacity Expansion= increasing production ability

Optimal Capacity= achieving thebest cost-to-production ratio

(See LO 1.3, p.55)

TheValue Netconsists ofsuppliers, customers, competitors, and complementors. Unlike asupply chain, which focuses on material and information flow, theValue Netis about creatingbusiness value.

Supplier:Provides goods/services

Customer:Purchases goods/services

Competitor:Competes in the same market

Complementor:A business that enhances your product/service offering

Buyer and distributorare not primary players in the Value Net. (See LO 1.2, p.31)

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While organisations generally try to fulfil customer demand, there are times when theystrategicallychoose 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)

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Option B is correctbecause Operations Strategy helps build acompetitive advantagefor the organisation.

Option C is correctbecause Operations Strategy must align with theoverall organisational goals.

Option A is incorrect—it isSupply Chain Managementthat focuses onexternalprocesses.

Option D is incorrectbecauseOperations Strategy is long-term, not short-ranged.

(See LO 2.1, p.63)

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✅Externally SupportiveisStage 4, where an organisation’s operations function is astrategic asset, drivingcompetitive advantage.

????The four stages in order:1️⃣Internally Neutral– Focus on avoiding mistakes2️⃣Externally Neutral– Keeping up with industry standards3️⃣Internally Supportive– Aligning operations with business strategy4️⃣Externally Supportive– Operations function is acompetitive differentiator

This model isimportant for the exam, somemorise the stages!(See LO 2.2, p.99)

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A screenshot of a product list AI-generated content may be incorrect.

Overcapacitymeans the organisationhas more production than demand, leading towaste and inefficiency.

Customer orders will still be fulfilled(eliminating option B).

Under capacity (D) is incorrect, asovercapacity, not undercapacity, leads to excess stock.

(LO 2.2, See p.115)

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