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CIPS L4M7 Exam Questions
- Topic 1: Explain the use of product coding in inventory operations/ Order tracking technologies
- Topic 2: Systems for product coding/ Bar coding/ The use of RFID technologies
- Topic 3: Environmental standards for packaging/ Materials handling equipment
- Topic 4: The use of automation in warehousing/ Palletisation and unit loads
- Topic 5: Opening stock, work in progress, safety stock and finished goods/ Obsolescent and redundant stock Dependent demand and independent demand itemsof stock/ ABC classifications of stock that may apply
- Topic 6: Understand the key elements of effective inventory control/ Factors that influence stores and warehouse layout
- Topic 7: Contrast the impact of the use of different warehousing equipment/ Understand methods for the storage and movement of inventory
- Topic 8: Discuss options to reduce costs whilst mitigating any negative impact on service levels/ Location of stores and warehouses
- Topic 9: Identify the principles, purpose and impact of stores and warehouse design/ Identify the direct and indirect costs of holding inventory
- Topic 10: Hidden costs – global sourcing, risks associated with extended supply chain/ Cross functional support – ensure access to data
- Topic 11: Ensure senior management support/ Use best estimates of values available/ Identify the contributing elements to end-of-life costs
- Topic 12: Differentiate between the different classifications of inventory/ Identify techniques associated with inventory control
Free CIPS L4M7 Exam Actual Questions
Note: Premium Questions for L4M7 were last updated On Apr. 05, 2025 (see below)
Which of the following are features of dependent demand items of stock?
They depend on the production levels of the user departments
They depend on the production capacity of the supplier
They can be managed using JIT (Just-in-Time) systems
They become obsolete within a short time
Dependent demand items rely on the internal production requirements of an organization. These items:
Depend on user department production levels: Demand is driven by the needs of the production line.
Can be managed using JIT systems: Just-in-Time inventory helps optimize stock levels based on immediate production needs, reducing holding costs and minimizing waste.
Dependent demand items differ from independent demand items, where demand is customer-driven rather than production-driven, emphasizing demand predictability and timely procurement.
A piece of machinery has reached the end of its manufacturing life cycle and is due to be disposed of. What is the process that must take place for this to occur?
Decommissioning is the process of safely retiring equipment from use. It involves steps such as cleaning, dismantling, and responsibly disposing of the asset, especially if it contains hazardous materials. Whole-life asset management includes decommissioning as a key phase, ensuring that assets are disposed of cost-effectively and in compliance with environmental standards.
Buffer stock is a level of stock which ...
Buffer stock serves as a safety net to prevent stockouts by ensuring that a minimum stock level is always maintained. This strategy is essential in whole-life asset management to manage demand fluctuations and minimize the risk of supply chain disruptions.
Which of the following would be an impact of low stock in the supply chain?
Warehouse space would all be full with excess stock
There may be delays and higher costs to fulfill supply
Stock may not be available at times of high demand
Lead times would reduce and purchase costs would fall
A. 2 and 3 only B. 1 and 3 only C. 2 and 4 only D. 1 and 4 only
Low stock levels can lead to:
Delays and higher fulfillment costs: When stock is insufficient, emergency orders and expedited shipping may be necessary, increasing costs.
Stockouts during high demand: Insufficient inventory can lead to missed sales opportunities, negatively impacting customer satisfaction.
Whole-life asset management seeks to balance inventory levels to avoid stockouts while minimizing holding costs.
A construction organization requires specialist equipment for digging deep foundations. Which of the following circumstances would result in the hire of equipment rather than leasing it?
A. The finance available and the potential profits available on the eventual sale of the leased equipment compared to hire costs B. The expected frequency of use, the storage available, and the lease cost of the equipment compared to hiring it C. The subjective assessment of multiple factors for both hire and lease by the directors D. The results of a discounted cost analysis using comparative weekly payments for both hire and lease options
Hiring is often preferred when:
Frequency of use is low: If equipment is only needed occasionally, hiring is more economical.
Storage is unavailable: Leased equipment needs storage, which incurs additional costs.
Lease costs exceed hiring costs for limited use.
Whole-life asset management emphasizes cost-efficient solutions, and hiring equipment for limited use reduces unnecessary expenses compared to leasing or purchasing.
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