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Free CIPS L6M9 Exam Questions (page: 3)

Page 3 of 22
PDF with 84 Questions

Strategic stocking decisions are likely to change under what circumstances? Select ALL that apply.

  1. Changes in competitor activity
  2. Raw materials are vulnerable
  3. There is a short lead time for the product
  4. Customer demand is low

Answer(s): A,B

Explanation:

Strategic stocking decisions change when external factors shift, such as a competitor going out of business (leading to increased demand) or a vulnerability in raw material supply (e.g., a bad harvest). Short lead times and low demand do not necessarily change stocking decisions but rather influence how stock is currently managed. (See p. 159)



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)



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