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CIPS Whole Life Asset Management Sample Questions (Q25-Q30):
NEW QUESTION # 25
A group of items which are stacked together for more convenient movement is called...?
- A. Unit price
- B. Unit load
- C. Stacker
- D. Load cell
Answer: B
Explanation:
Unit load is a term used to describe grouping of different items into a convenient stack or stacks which make them easy to handle and store. Typically this involves pallets and/or the plastic wrap-ping of a load.
Stacker is designed to lift and stack pallets. This one is fully mobile so can move easily around the warehouse.
An operator would typically sit or stand while driving like a counterbalanced, reach or straddle lift truck.
A load cell is a type of transducer, specifically a force transducer. It converts a force such as ten-sion, compression, pressure, or torque into an electrical signal that can be measured and standard-ized.
Unit price is the price of a single product or service, used for example when buying several things together to refer to the price of each one.
NEW QUESTION # 26
An organisation needs to determine whether to lease a piece of equipment or purchase it outright. From the following statements, which ones describe the advantages for a procurement organisation to lease rather than to purchase outright?
* Capital allowances may be set against tax, and grants may be available
* There is no initial investment which would tie up the organisation's working capital
* It would protect against technological obsolescence as equipment can be replaced as required
* The total cost may be higher than purchasing the equipment outright
- A. 2 and 5 only
- B. 3 and 4 only
- C. 2 and 4 only
- D. 1 and 2 only
Answer: D
NEW QUESTION # 27
ANTA Logistics is looking for a place to build a new, integrated cold chain facility, "Chill Hub", to its customers. Which of the following need to be considered when selecting the location of the new facility? Select TWO that apply.
- A. Availability of the building
- B. Accessibility to roads and highways
- C. Volume of obsolescent stock
- D. Ease of objective forecasting on inventory level
- E. Availability of product coding system
Answer: A,B
Explanation:
There are many different factors that must be considered when assessing warehouse and stock locations:
* Operating cost of the location or area
* Availability and suitability of warehouses
* Availability of manpower or labour
* Proximity to suppliers and customers
* Access to transport infrastructure (domestic and international)
* The political and security environment of the location
LO 1, AC 1.1
NEW QUESTION # 28
An organization might find it more beneficial to lease and use an asset over a predetermined period. After this period, the lessee has the right to secure outright ownership of the asset by paying an agreed amount; otherwise, the asset would be repossessed by the lessor. Which of the following is an advantage of leasing?
- A. The total cost of ownership is not applicable as the asset is leased
- B. Long-term commitment to pay installments even if not using the asset
- C. Costs are known and agreed in advance
- D. The usage of the asset is usually capped
Answer: C
Explanation:
Leasing allows an organization to predict costs accurately, as installment payments are pre-agreed. This makes financial planning simpler, which is especially beneficial in whole-life asset management where minimizing upfront capital expenditure is often a priority. Leasing also reduces the risk associated with asset obsolescence.
NEW QUESTION # 29
Which of the following statements holds true about inventory holding costs?
- A. They always exceed total ordering costs
- B. They decline as the cost of the inventory item rises
- C. They are independent of the average stock level
- D. They depend upon the opportunity cost of tying up funds and the average value of the stock holding
Answer: D
Explanation:
Holding costs (carrying costs) are the costs associated with the storage and handling of physical stock. There are two different types of holding costs:
- Costs related to the value of the goods: financial costs (i.e. the interest on the working capital tied up in inventory, which may be the bank borrowing rate or the company's target for return on capital); cost of insurance; losses due to product deterioration; losses due to obsolescence and redundancy of inventory; losses due to theft, accidental damage etc.
- Costs related to the physical characteristics of the inventory include the following: storage space; power, heat and lighting of the store; movement equipment; labour costs; administration costs.
Reference:
LO 2, AC 2.2
NEW QUESTION # 30
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