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CIPS L6M9 Exam Questions
Supply Network Design (Page 3 )

Updated On: 21-Feb-2026
Page 3 of 18
PDF with 84 Questions

Which of the following are examples of investment appraisal techniques? Select ALL that apply.

  1. Liquidity
  2. Gearing
  3. Return on investment
  4. Cash flow impact
  5. Payback period

Answer(s): C,D,E

Explanation:

Investment appraisal techniques help assess whether an investment, such as purchasing new machinery, is financially viable. Return on investment, cash flow impact, and payback period are all investment appraisal methods. Liquidity and gearing assess financial health but do not determine whether to make an investment. (See p.160)



XYZ Ltd is a perfume manufacturer based in France. They have created a new perfume and research has shown that demand for the perfume will outstrip supply. The Chief Operating Officer (COO) and the Chief Financial Officer (CFO) are meeting to discuss this. The COO believes that the organisation needs to reallocate resources in order to meet demand. Are there any exceptions to when this may be the case?

  1. No - organisations should always aim to meet customer demand or resources will be underutilised
  2. No - this would negatively affect the profit the organisation could make
  3. Yes - there are occasions when an organisation would choose not to fulfil customer demand
  4. Yes - there are exceptions, but these are always outside of the organisation's control

Answer(s): C

Explanation:

While organisations generally try to fulfil customer demand, there are times when they strategically choose 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)



Which of the following principles considers the volume of work undertaken by a given resource within an organisation?

  1. Process Control
  2. Prioritisation
  3. Sequencing
  4. Loading

Answer(s): D

Explanation:

Loading refers to allocating work to a person or machine--essentially "loading" them with tasks. It helps determine workload distribution for maximum efficiency. (See p.180)



Zelda is the Head Consultant at Pirate Architects Ltd, which provides services to clients in the construction industry. She has a team of 20 consultants and is considering how many projects each team member should handle. In terms of capacity loading, which factors should Zelda consider when assigning projects? Select ALL that apply.

  1. Staff member's experience
  2. Staff member's efficiency
  3. Staff member's salary
  4. Staff member's time availability
  5. Staff member's effectiveness

Answer(s): A,B,D,E

Explanation:

Capacity loading determines how much work each employee can handle. Key factors include experience, efficiency, time availability, and effectiveness. Salary is not relevant to determining workload capacity--though managers might mistakenly believe higher-paid employees should take on more. (See p.181)



LTL Ltd is a manufacturing organisation producing made-to-order equipment for the construction industry, such as bespoke windows and doors. The Head of Operations has received four large orders and is considering the sequencing of production.
Which of the following should the company do?

  1. Use a First Come, First Serve system to prioritise the orders that were made first, ensuring customer satisfaction
  2. Sequence the orders in the way that will be the cheapest to produce, creating the highest profit margin
  3. Create the orders in the most logical, economic, and fastest pattern. This may mean that the first order received is the last to be produced
  4. Start manufacturing the order that has the longest completion time first so all orders are ready at the same time

Answer(s): C

Explanation:

Sequencing involves balancing logic, cost, and speed to optimise production. Prioritising orders purely by arrival time (Option A) or cost efficiency (Option B) might not be practical. Similarly, making sure all orders finish at the same time (Option D) isn't always necessary. (See p.183)






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