New 2022 L4M7 Dumps for Level 4 Diploma in Procurement and Supply Certified Exam Questions & Answer [Q70-Q84]

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November 23, 2022

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New 2022 L4M7 Dumps for Level 4 Diploma in Procurement and Supply Certified Exam Questions and Answer

Realistic Verified L4M7 exam dumps Q&As – L4M7 Free Update

NO.70 A hospital is purchasing a new software product that will advise nurses when to give medications to hospitalised patients. This is a mobile application that will be used on tablets carried by the nurses. The software is being developed and tested by a company that specialises in mobile medical applications. This software will interface with existing hospital software that orders the medications from the pharmacy. Which acceptance test activity will be required to check whether the new software integrates well with current IT system?

Health and safety testing

Dry running

Stress testing

Compatibility testing

In the scenario, one of the requirements for the new software is that the new one will interface with current system. Compatibility testing would be the most appropriate test here.
There are also other acceptance tests that are mentioned in L4M7 study guide:
– Health and safety test aims at establishing new health and safety routines, providing guidance notices and documentation and ensuring designed-in safety in operation.
– Stress testing (sometimes called torture testing) is a form of deliberately intense or thorough testing used to determine the stability of a given system, critical infrastructure or entity. It involves testing beyond normal operational capacity, often to a breaking point, in order to observe the results.
– A dry run (or a practice run) is a testing process where the effects of a possible failure are inten-tionally mitigated. For example, an aerospace company may conduct a “dry run” test of a jet’s new pilot ejection seat while the jet is parked on the ground, rather than while it is in flight.
The usage of “dry run” in acceptance procedures (for example in the so-called FAT = factory ac-ceptance testing) is meant as following: the factory – which is a subcontractor – must perform a complete test of the system it has to deliver before the actual acceptance by customer.
Reference:
LO 3, AC 3.1

NO.71 Which of the following best describes category ‘A’ in ABC analysis in inventory management?

Items that represent approximately 15% of total value

Items with low uncertainty

Items with high values

Items with high uncertainty

ABC classifications are applied to stock and its management is based loosely on the Pareto princi-ple, better known as the 80/20 rule.
The likely outcome of analysis of inventory (value importance):
– Category A – about 20% of the stock items account for about 80% of the total inventory value. Items in category A have the highest value.
– Category B – about 30% of items account for about 15% of total inventory value
– Category C – the remaining 50% of items account for 5% of the total inventory value Reference:
LO 2, AC 2.1

NO.72 Which of the following statements is true of just-in-time (JIT) purchasing?

In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales

Only disadvantage of JIT purchasing is the higher level carrying and inspection costs

JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs

In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs

Just-in-time (JIT) purchasing is a systems approach for developing and operating the purchasing function. JIT purchasing along with the total quality management in many industries has been suc-cessful in reducing inventory and increasing the overall effectiveness of purchasing function and hence the productivity of manufacturing.
The just-in-time objectives of eliminating waste can be summarised in the ‘five zeros: zero defects, zero set-up times, zero inventories, zero handling and zero lead times.
The correct answer should be ‘In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales’ because it expresses that upstream activity (purchasing) only occurs as the downstream activity (production or sales) triggers.
Reference:
LO 2, AC 2.3

NO.73 XYZ Ltd is a retailer in the US. Their customers’ demand for Thanksgiving and Christmas decora-tions usually rises in the end of the year. This irregular demand results in more required storage space for finished goods during peak seasons. Which of the following are possible solutions for dealing with required additional space?
1. Maximising aisle width
2. Keeping high buffer stock throughout the year
3. Maximising flexibility in warehouse layout
4. Installing mezzanine floor

1 and 3 only

2 and 4 only

1 and 2 only

3 and 4 only

Possible solutions to the high irregular or seasonal demand problems are listed below:
* Take advantage of the height of the warehouse
– Mezzanine floor
– High racking system (increase storage capacity but require high-reach material handling equip-ment)
* Eliminate dead stock or inventory
* Improve material flow
* Improve storage location method
* Consider using aisle space during demand peak
* Narrow aisles between racks (require narrow handling equipment)
* Carousel-type storage system
* Auto-storage and retrievals system (ASRS)
Reference:
LO 1, AC 1.1

NO.74 An electricity company charges its customers monthly fee for access and a usage fee for consump-tion of electricity. Which pricing structure is the company using?

Fixed pricing

Multi-part pricing

Dynamic pricing

Freemium Pricing

Multi-part pricing. The transaction price is calculated from using two or more metrics rather than just one. The most common economic example of a price structure beyond unit pricing is called a two-part tariff. Basically it can be described such that the “entrance fee” provides the privilege of purchasing the metered component. A common multi-part tariff is the two-part tariff in electricity, under which the customer pays a monthly fee for access and a usage fee for consumption of electricity. With this two-part tariff, the operator is able to charge a price equal to marginal cost for electricity, which is profit maximizing, and deviate from marginal cost pricing in the fee for access.
Freemium is an internet-based pricing strategy where a service is offered for free in the beginning, but the price is charged on the premium package with some additional features. However, freemium pricing strategy is different from the premium pricing strategy because freemium offers free sample which you can use without paying anything, you’ll only be charged when you want additional features.
Demand pricing is also synonymously used for dynamic pricing; it is a relative term used in the online platform. Dynamic pricing means different pricing is charged from the different customers depending upon the urgency, customer’s ability and demand of the customers.
Reference:
LO 3, AC 3.1

NO.75 Which of the following statements holds true about inventory holding costs?

They decline as the cost of the inventory item rises

They always exceed total ordering costs

They depend upon the opportunity cost of tying up funds and the average value of the stock holding

They are independent of the average stock level

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

NO.76 The following are examples of scheduled maintenance except…

Oil changes and regular servicing

Overhauling of machine

Repair signage damage from a recent storm

Cleaning of tank

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:
LO 3, AC 3.1

NO.77 A manufacturer is making a plan for strategic safety stock. To do so, they must analyse the proba-bility of a stock out occurring and the cost impacts if it does. Which of the following are typical costs the manufacturer may incur in ‘out of stock’ event? Select TWO that apply.

Extra costs for urgent transportation

Cost of equipment downtime

Costs for qualifying suppliers

Costs of handling inventory

Costs of approving the requisition
Explanation:
The costs of stockouts – the costs of being out of inventory – include:
– Loss of production output
– Costs of idle time and of fixed overheads spread over a reduced level of output
– Costs of any action taken to deal with the stockout, such as buying from another stockist at an enhanced price, switching production, obtaining substitute materials
– Loss of customer goodwill due to the inability to supply or late delivery.
(Procurement and Supply Chain management – 9th Edition, K.
Lysons and B. Farrington, 2016) LO 2, AC 2.2

NO.78 Sidel Corp is a major food processor. It invested heavily on manufacturing facilities and processing machineries. Sidel’s expenses on maintenance are exceptionally high. To minimise the total cost of maintenance, what should Sidel Corp do?

Replace every machineries at breakdowns

Only conduct preventative maintenance

Outsource corrective maintenance but in-source preventative maintenance.

Balance between proactive maintenance and reactive maintenance

Maintenance can represent a significant portion of the cost in asset intensive organisations (such as Sidel – a food processor), as breakdowns have an impact on the capacity, quality and cost of operation. However, the formulation of a maintenance strategy depends on a number of factors, including the cost of down time, reliability characteristics and redundancy of assets. Consequently, the balance between preventive maintenance (PM) and corrective maintenance (CM) for minimising costs varies between organisations and assets. Nevertheless, there are some rules of thumb on the balance between PM and CM, such as the 80/20 rule.
Preventive maintenance is a type of proactive maintenance, while corrective maintenance is an example of reactive maintenance. Therefore, the answer should be “Balance between proactive maintenance and reactive maintenance”.
Reference:
– Preventive and corrective maintenance – cost comparison and cost-benefit analysis
– CIPS study guide page 158-163
LO 3, AC 3.1

NO.79 Which of the following is a forecasting technique?

LIFO

Moving average

Time-weighted series

ABC analysis

Last in, first out (LIFO) is a method used to account for inventory that records the most recently produced items as sold first. Under LIFO, the cost of the most recent products purchased (or pro-duced) are the first to be expensed as cost of goods sold (COGS)-which means the lower cost of older products will be reported as inventory.
Moving average: a calculation to analyse data by creating series of averages of different subset of full data set. It is commonly used with time series data to smooth out short-term fluctuation and highlight long-term trends or cycle ABC analysis is a method of analysis that divides the subject up into three categories: A, B and C.
There is no technique called time-weighted series.
LO 2, AC 2.3

NO.80 Which of the following best describe the function of MRP?

Planning and controlling of production and finance

Planning and monitoring of inventory resources

Planning and monitoring of production resources only

Planning and controlling of production and inventory

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.
MRP process is described in the graph below:

Reference:
LO 2, AC 2.3

NO.81 Which of the following is NOT an improvement available in ERP II in compare with ERP?

ERP II systems are closed and silo-working

ERP II enables the organisation to collaborate with trading partners across the supply chain

ERP II crosses all sectors and segments of business, including service, government and asset-based industries

ERP II offers better integration with other proprietary software

The main improvements from ERP to ERP II are the following:
– ERP II is web enabled as compared to Conventional ERP Which is not.
– ERP is restricted to provide selected exhaustive or rigorous or wide-spread coverage in its mod-ules. But as compared to ERP, ERP II provides the true and accurate blend of the macro and the micro and affords customers with curative actions/measures after identifying the slip-up/error or fault;
– ERP was embattled more headed for manufacturing or industrialization and the dilemma or difficulty is conquer in ERP II by endowing clarification for all kind of industries and sectors.
– ERP is not in the position or could not possibly integrate/incorporate diverse functions from di-verse departments/divisions but ERP II could possibly do so as well as from different industries as compared to conventional ERP.
– For WEB and WAP connectivity ERP II grip CRM and SCM Functionalities.
– ERP II be obliged the function and purpose to an external/outdoor one and smooth the progress of better networks than remaining as internal/interior application.
Reference:
– Next Generation Enterprise Resource Planning: ERP II
– CIPS study guide page 119-122
LO 2, AC 2.3

NO.82 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

2 and 4 only

1 and 4 only

2 and 3 only

1 and 3 only

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

NO.83 Which of the following is an assumption of economic-order-quantity model?

The quantity ordered can vary at each reorder point

Demand, ordering costs, and carrying costs are uncertain

No inventory stockouts occur

The purchasing cost per unit is affected by the order quantity

Economic order quantity (EOQ) model is the method that provides the company with an order quantity. This order quantity figure is where the record holding costs and ordering costs are mini-mized. By using this model, the companies can minimize the costs associated with the ordering and inventory holding. In 1913, Ford W.
Harris developed this formula whereas R. H. Wilson is given credit for the application and in-depth analysis on this model.
If the economic order quantity model is applied, the following assumptions should be met:
– The rate of demand is constant, and total demand is known in advance.
– The ordering cost is constant.
– The unit price of inventory is constant, i.e., no discount is applied depending on order quantity.
– Delivery time is constant.
– Replacement of defective units is instantaneous.
– There is no safety stock level, i.e., the minimum stock level is zero.
– Restocking is made by the whole batch.
Because the demand and lead time are constant, no stockout events can occur.
Reference:
LO 2, AC 2.3

NO.84 Which one of the following statements is true about radio frequency identification (RFID)?

RFID tags require laser scanning.

A passive RFID tag does not use an antenna

An active RFID tag does not require a power source

Normally passive RFID tags store ID numbers

Radio frequency identification (RFID) are items which use radio technology to identify itself and its location subject to having appropriate hardware and software.
RFID tags are made of three different components: an RFID chip, which is an integrated circuit (IC), an antenna, and a substrate.
A RFID Reader is a device that uses radio-frequency waves to wirelessly transfer data between itself and a RFID tag/label in order to identify, categorize and track assets. When combined with the right RFID software, a RFID reader can identify objects quicker, more accurately, at a reduced overall cost, and at various points of the object’s lifecycle.
Passive RFID systems use tags with no internal power source and instead are powered by the electromagnetic energy transmitted from an RFID reader. Passive RFID tags are used for applica-tions such as access control, file tracking, race timing, supply chain management, smart labels, and more.
Active RFID systems have three essential parts – a reader or interrogator, antenna, and a tag. Ac-tive RFID tags possess their own power source – an internal battery that enables them to have ex-tremely long read ranges as well as large memory banks.
Reference:
LO 1, AC 1.2

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