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L4M7 Whole Life Asset Management Question and Answers

Question # 4

SpeedyCar GmbH is a vehicle manufacturer that is launching a new electric vehicle onto the market, replacing a previous diesel vehicle. There is a lot of equipment in the manufacturing site to be changed, some new machinery to replace older machinery, and some production equipment to decommission. The costs of decommissioning would include which of the following?

A.

Costs to upgrade electric vehicle charging facilities

B.

Decontamination and cleaning costs for site areas

C.

Sales and marketing costs of the new electric vehicle

D.

Engineering drawing fees for the new electric vehicle designs

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Question # 5

Which of the following is a description of a distribution centre?

A.

A building which is rented to tenants, usually on a short-term month-by-month basis

B.

A large building for storing things before they are sold, used, or sent out to shops

C.

A large metal box of a standard design and size used for the transport of goods by road, rail, sea, or air

D.

A building that offers value-added services like product mixing, order fulfilment, cross-docking, and packaging

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Question # 6

Which of the following is an assumption of economic-order-quantity model?

A.

The quantity ordered can vary at each reorder point

B.

Demand, ordering costs, and carrying costs are uncertain

C.

No inventory stockouts occur

D.

The purchasing cost per unit is affected by the order quantity

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Question # 7

Nuclear Energy Group Limited (NEG) has a number of investment options currently under appraisal. As these are all long-term investments (more than 30 years), NEG is adopting a total cost of ownership approach. It has gathered data on all associated costs over the life of the investment. Which of the following will be regarded as end-of-life costs?

A.

Insurance costs

B.

Servicing costs

C.

Installation costs

D.

Decommissioning costs

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Question # 8

The amount of inventory available at the start of an accounting period is known as...?

A.

Buffer stock

B.

Work-in-progress

C.

Opening stock

D.

Closing stock

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Question # 9

MRP software is applied to schedule which of the following?

A.

Tax accounting

B.

Production processes

C.

Human resource management

D.

Executive meetings

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Question # 10

XYZ Ltd is a highly profitable leading industrial distributor with over 60,000 products and an enviable record for customer service. After undertaking preliminary discussions it was decided to analyse the value-adding activities that contribute to XYZ's flagship products. The company is conducting which of the following activities?

A.

Postponement

B.

Value stream mapping

C.

Silo-working

D.

Kanban

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Question # 11

Practice of unloading goods from inbound delivery vehicles and loading them directly onto out-bound vehicles is known as ...?

A.

Tracing and tracking

B.

Automation

C.

Cross-docking

D.

Decommissioning

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Question # 12

XYZ Inc opens a tender to purchase new forklift trucks for their new established warehouse. In the final round, there are two suppliers remain who offer two different bids. Supplier A's bid has high initial investment. After calculating the net present value, the NPV in year five is positive. On the other hand, supplier B's bid has low purchase price, with the NPV in year five is negative. If the NPV is the sole selection criterion, XYZ Inc should select the bid which has...?

A.

Positive NPV

B.

The lowest NPV

C.

Zero NPV

D.

Negative NPV

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Question # 13

A logistics company has a 2-story warehouse in the suburban area. 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?

A.

Small items in tote boxes will be stored on the ground floor with forklifts and other equipment, high-usage palletised items will be stored on the first floor

B.

Medium- to low-usage palletised items will be stored on the ground floor, high-usage items will be stored on the first floor where the building administrative office is located

C.

Forklifts and other warehouse equipment will park on the ground floor, all inventories will be stored on the first floor

D.

Pallets, roller cages and other bulky items will be stored on the ground floor, smaller items in plastic tote boxes will be stored on the first floor

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Question # 14

Long-term forecasting of demand using a subjective method is based on a...

A.

Predicted cash flow forecast levels used by the organisation

B.

Method of calculating the price in detail within the supply chain

C.

Qualitative, informal, experience-based, or intuitive method

D.

Quantitative, explicit, statistical, or formal method

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Question # 15

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

A.

Dependent demand

B.

Construction projects

C.

Independent demand

D.

Fast moving components

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Question # 16

Which of the following represents the end-of-life cost of an asset?

A.

Payment of the suppliers' final invoice after the asset is commissioned

B.

The cost of replacing the asset if it is damaged in an accident

C.

The cost of decommissioning and scrapping the asset

D.

Disposal of waste generated from use

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Question # 17

"Open stock plus purchases minus closing stock" is the formula of which of the following?

A.

Inventory

B.

Revenue

C.

Cost of goods sold

D.

Liability

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Question # 18

Which of the following are main objectives of warehouse operations? Select TWO that apply.

A.

To ensure stock available when customers demand

B.

To create sufficient space for redundant stock

C.

To minimise stock loss and deterioration

D.

To generate check digits for a product code

E.

To maintain the highest level of buffer stock

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Question # 19

Which of the following is NOT an improvement available in ERP II in compare with ERP?

A.

ERP II systems are closed and silo-working

B.

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

C.

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

D.

ERP II offers better integration with other proprietary software

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Question # 20

With D is the annual demand (units), S is cost per order, H is annual carrying cost per unit; the formula for Economic Order Quantity is....?

A.

√(D*S/2H)

B.

√(2D*S/H)

C.

√(D*S*H)

D.

√(D*S/3H)

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Question # 21

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

A.

Steeper slope will reduce the chance of errors and accidents

B.

'Dual-use' docks are always the most efficient

C.

Vehicle docks only require a small area to ensure faster goods flow

D.

The dock platform is almost at the same level as the height of the trailer's rear platform

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Question # 22

Which of the following is often created by each business and commonly used for the purpose of inventory management?

A.

SKU

B.

ISBN

C.

Harmonised system

D.

FDA product code

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Question # 23

Which among the following are the tools for reducing acquisition costs in purchasing?

1. Procurement card

2. Automated Storage & Retrieval System

3. Porter's value chain

4. P2P system

A.

2 and 3 only

B.

1 and 3 only

C.

2 and 4 only

D.

1 and 4 only

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Question # 24

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

A.

Master schedule

B.

Engineering change notice

C.

Purchase order

D.

Bill of materials

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Question # 25

U-shape flow layout can utilise handling equipment if the high demands items locate adjacent to shipping docks. Is this statement true?

A.

No, because aisles between racks in U-shape flow are too small for any handling equipment

B.

Yes, because U-shape layout allows S-line routing more efficient

C.

No, because cross-docking is impossible in U-shape flow warehouse

D.

Yes, because this layout places receiving docks and despatch docks close to one another

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Question # 26

Can RFID tags work when they are attached to metal surfaces or embedded within metal products?

A.

Yes, some technologies allow RFID tags to work on metal or within metal products

B.

No, metal surface reflects the radio wave and thus interferes the operations of RFID tags

C.

No, RFID tags only work with plastic products

D.

Yes, all RFID tags can be used in every environmental conditions

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Question # 27

Extra units that are held in inventory to reduce the risks of stock-out are called...?

A.

Just-in-time

B.

Reorder point

C.

Safety stock

D.

Demand variance

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Question # 28

Which of the following best defines ‘exponential moving average’?

A.

A forecasting technique where the average is calculated by dividing the sum of the val-ues by the number of values

B.

A process by which the reorder of an item is triggered by the inventory level dropping to a predetermined level

C.

A process by which a decision is taken at a period end or review point to determine how much to reorder

D.

A forecasting technique where each demand is multiplied by a weighting factor

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Question # 29

A local hospital has a highly complex piece of medical equipment delivering proton beam therapy that only one supplier in the world manufactures. Owing to the specialist nature of the equipment, the patient waiting list is extremely long. It is therefore essential that the equipment failure downtime is kept to an absolute minimum, as it would have a negative impact on patient treatment delays. Due to the complex nature and essential need of the equipment to be in continual use, which of the followingpackages will offer the most protection in ensuring reliability and reduced downtime arising from equipment failures throughout its lifetime?

A.

A corrective maintenance package

B.

A service and maintenance included package

C.

A parts-only maintenance package

D.

A 12-month from purchase warranty package

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Question # 30

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?

A.

Objective forecasting technique

B.

Delphi method

C.

Holt-Winters seasonal method

D.

Time series analysis

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Question # 31

Among different types of costs associated with inventory, the costs of obtaining purchase approvals are...?

A.

Purchasing price

B.

Costs of stockouts

C.

Acquisition costs

D.

Holding costs

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Question # 32

A manager who is concerned about the environmental impact of packaging should do which of the following?

A.

Adopt international environmental packaging standards

B.

Try to reduce the costs of packaging

C.

Purchase the packaging materials in bulk

D.

Not use the packaging materials at all

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Question # 33

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

A.

1 and 3 only

B.

2 and 3 only

C.

2 and 4 only

D.

1 and 4 only

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Question # 34

In the Appendix A of a long-term supply contract of Bulk Drug Substance, both parties agree that "The reference price for Bulk Product at the specification, per gram, shall be US$10. The unit price for Bulk Product for a specific Purchase Order shall be computed by multiplying the above- specified reference price by two corrective factors, namely inflation correction factor and exchange rate correction factor". This pricing appendix is an example of...?

A.

Discounted pricing

B.

Fixed pricing

C.

Volume-based pricing

D.

Adjustable pricing

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Question # 35

What is meant by the economic life of an asset?

A.

It is the age beyond which it is not worth keeping an asset from a cost point of view

B.

It is the point beyond which it is not possible to find anyone who has the skills to operate the asset

C.

It is when the asset's effective performance is below the standard required by the organisation

D.

It is the point beyond which it is not possible to obtain any spare parts for the asset

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Question # 36

Which of the following costs can be classified as 'acquisition costs'?

    Invitation to tender and order processing costs

    Invoice processing and supplier selection costs

    Goods inspection and total ownership cost

    Total input costs and invoice processing cost

A.

1 and 2 only

B.

2 and 5 only

C.

1 and 4 only

D.

2 and 4 only

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Question # 37

The minimal total cost is always achieved when there is only one warehouse. Is this statement true?

A.

No, fewer warehouse may lead to increasing transport costs

B.

Yes, because the operation cost for warehouse reaches minimal level

C.

Yes, because warehouse overheads are fully utilised

D.

No, more warehouses will reduce the cost of storage

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Question # 38

Which of the following purchases are most likely to have low acquisition costs? Select TWO that apply.

A.

Purchase of ERP system

B.

Purchase of standard catalogued products

C.

Straight re-buy from a current supplier

D.

Spot purchase of a technically complexed machinery

E.

Procurement of construction projects

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Question # 39

Which of the following best describe the function of MRP?

A.

Planning and controlling of production and finance

B.

Planning and monitoring of inventory resources

C.

Planning and monitoring of production resources only

D.

Planning and controlling of production and inventory

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Question # 40

Which is the best definition of reorder point?

A.

The point at which stock will fall to zero minus lead-time

B.

The point when one unit of stock remains in stock

C.

The point when stock reaches zero

D.

The level inventory at which an order must be made

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Question # 41

Which type of codes can a barcode laser scanner (linear scanner) read?

A.

Numerical code

B.

QR code

C.

Aztec code

D.

1D barcode

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Question # 42

In inventory management, the cost of insurance and taxes are included in which group?

A.

Costs of shortage

B.

Inventory carrying cost

C.

Set up costs

D.

Acquisition costs

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Question # 43

Toll Group has thousands of end-of-life IT assets that need to be disposed of. The senior manage-ment of Toll Group is largely concerned about sustainability in waste management, especially electronicwaste. Before selecting a supplier to manage the process, the procurement team is required to assess the environmental risks regarding disposal of the assets. Risk assessment is basically based on the measurement of which factors?

1. Impact

2. Reward

3. Surveillance

4. Likelihood

A.

1 and 4 only

B.

2 and 4 only

C.

2 and 3 only

D.

1 and 3 only

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Question # 44

Holding inventory is key to ensure that an organisation can maintain production and meet customer demands. Which of the following are classes of inventory? SelectTHREEthat apply.

A.

Raw material

B.

Machines

C.

Finished products

D.

Sub-assemblies

E.

Scrap components

F.

Forklift trucks

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Question # 45

Staff at DIY Products Inc (DPI) have been experiencing issues with the identification of stock items. The current labelling system is outdated and unreliable. DPI has therefore invested in a machine-readable approach. Each item has a unique number that is attached visibly to the packaging. This number can be deciphered by a scanner to aid identification. This approach is known as which of the following?

A.

Standard certification

B.

Bar coding

C.

Order tracking

D.

Product tagging

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Question # 46

The Four Counties hospital in Norway is experiencing financial pressures. The procurement team is looking for the best approach to procure patient equipment that is critical and is often required at very short notice. Which of the following techniques would allow the hospital to access the stock at short notice, but without paying for it until it is used?

A.

Discounted stocking

B.

Volume-based pricing

C.

Consignment stocking

D.

Reference indices pricing

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Question # 47

The purchase-order lead time is the...?

A.

Period between receiving a customer order and producing the products

B.

Time needed to correct errors in the defective products

C.

Period between placing an order and its delivery

D.

Period between receiving a customer order and delivering the items

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Question # 48

Which of the following is the material handling equipment which uses the suction force to lift an item?

A.

Vacuum lifter

B.

Sack truck

C.

Dolly

D.

Pallet stacker

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Question # 49

Warehouse automation involves the use of technology to perform as many warehousing tasks as possible. There are several benefits that can be gained by using automation in a warehouse. They are...

A.

Maintenance costs, downtime due to malfunction, investment costs, and reduced flexibility

B.

Decreased speed, increasing cost, improved efficiency, and maximising space

C.

Reduced customer service, reduced picking errors, reduced accidents, and minimised space utilisation

D.

Increased speed, decreasing cost, improved efficiency, and maximised space

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Question # 50

The size of order that minimises the total cost of acquiring and holding stock is known as...

A.

Order quantity

B.

Economic Order Quantity

C.

The correct quantity

D.

Average stock

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Question # 51

Which of the following factors should be considered when decommissioning and disposing of a machine at the end of its useful life? SelectTWOthat apply.

A.

The relevant country's legislation concerning the disposal of equipment

B.

The environmental impact that incorrect disposal may have

C.

Whether the organisation will make a profit from the disposal of the machine

D.

Whether the finances will be in position to replace the machine with another

E.

The effect that the disposal will have on the organisation's competitors

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Question # 52

What is meant by the term ‘obsolete stock’?

A.

Stock which has become outdated

B.

Low value/low risk stock

C.

Damaged stock

D.

Stock which has been stolen

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Question # 53

Lean principle focuses on eliminating eight types of waste. Waste in Lean manufacturing is defined as...?

A.

Non value-adding steps in a process

B.

Part of activity when operator is idle

C.

Part of any activity which is inevitable

D.

Rejection of material because of quality related problems

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Question # 54

Which of the following are recognised hidden costs associated with global sourcing?

    Quality control and nonconformance costs

    Increased lead times and inventory carrying costs

    Lower labour and wage costs

    Cost of tariffs and duties in supply chains

A.

1 and 2

B.

2 and 3

C.

3 and 4

D.

1 and 4

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Question # 55

Which of the following best describes the term ‘periodic review’?

A.

Items are reviewed and orders placed depending on requirements

B.

Items are reviewed when the Kanban is triggered

C.

Items are reviewed when the price is at its lowest

D.

Items are reviewed as part of an imprest system

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Question # 56

Which of the following is the correct statement about total ordering cost?

A.

Rise as the average stock level rises

B.

Equal the number of orders placed times the cost of placing an order

C.

Rise as the order quantity rises

D.

Fall with the per period usage rate

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Question # 57

When purchasing a capital asset, an organisation should analyse the costs and benefits that the asset may bring. Which of the following factors are considered in cost-benefit analysis? Select TWO that apply.

A.

The cost of the asset

B.

Current liabilities in the balance sheet

C.

Shareholders' equity

D.

The cumulative cash flows generated by the asset

E.

Dividends paid

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Question # 58

When deciding on the storage facilities and locations, an organisation needs to assess the current situation comprehensively and forecast the future demands. Quantitative analysis is the best method for these activities. Is this statement true?

A.

Yes, quantitative analysis provides a reality based on numerical values

B.

No, some intangible information is difficult to collect and measure

C.

Yes, quantitative analysis is easy to implement as it is based on 'hard' facts

D.

No, subjective judgements are the best as they compensate for weaknesses of quantita-tive analysis

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