Free Practice Questions for CIPS L4M7 Exam

Explanation

Assets in their end of life need to be removed or disposed. Though an organisation can incur some costs in decommissioning or removal of the assets, it may recover costs by reselling the assets. Therefore, sometimes the organisation can gain positive cash flow from removal and disposal of assets. The answer should be "No, the organisation may recover the value of the assets by reselling it".

LO 3, AC 3.3

Automated Guided Vehicles (AGVs) are best suited for environments with repetitive tasks, such as fixed routes in production lines. In non-repetitive tasks, their efficiency and effectiveness decrease. Whole-life asset management prioritizes choosing automation that aligns with operational needs, ensuring cost-effectiveness and suitability for the given tasks.

Barcode technology has several limitations:

Requires line-of-sight scanning (LOS): Barcodes must be directly visible to scanners, reducing flexibility in scanning items in bulk.

No read/write capabilities: Barcodes can only store static data, limiting functionality in dynamic inventory environments.

Labour-intensive: Each barcode must be scanned individually, making it time-consuming in high-volume environments.

Despite these limitations, barcodes are widely used due to their low cost. Whole-life asset management often considers RFID as a more efficient alternative to barcodes, especially in high-value asset tracking.

The Economic Order Quantity (EOQ) is the ideal order size that minimizes total inventory costs, balancing the ordering cost (costs related to placing and receiving orders) and the holding cost (costs related to storing inventory). The EOQ model is a fundamental concept in inventory management and is derived from the following formula:

EOQ=2DSHEOQ = \sqrt{\frac{2DS}{H}}EOQ=H2DS​​

where:

DDD = demand rate (units per period),

SSS = cost per order,

HHH = holding cost per unit per period.

The EOQ model assumes constant demand and lead time, and it does not consider discounts for bulk purchases. By minimizing both ordering and holding costs, EOQ contributes to overall cost efficiency in inventory management, which is essential for whole-life asset management in balancing long-term expenses.

Last In, First Out (LIFO) is an inventory valuation method where the latest items added to inventory are considered sold first. This method is often used in situations where prices are rising, as it reflects the current cost of goods sold. In whole-life asset management, LIFO can affect the reported value of inventory and, consequently, tax implications, as newer, costlier items are sold off first.

Explanation

Master production schedule (MPS) plans items that have “direct” demand, or “independent de-mand.” With independent demand, the demand comes from sales orders, service orders, or fore-casts, and the demand comes directly from customer—or forecasted—requirements. It is the list that provides the timing of the production schedule and shows how much each machine can produce, how many shifts are used, etc.

A bill of materials (BOM) is a comprehensive inventory of the raw materials, assemblies, subas-semblies, parts and components, as well as the quantities of each, needed to manufacture a product.

Explanation

RFID tags are the small devices that can be embedded in labels or attached to tags which work with radio transmitters and/or receivers to identify themselves.

RFID tags can be used to do the following:

- Track individual items

- Track boxes of products, cages of products and pallets

- Track containers with multiple loads

- Locate equipment within a building

- Trigger alarms should equipment or stock be removed without authorisation.

RFID devices have a very small integrated circuit incorporating a small memory capability - many are smaller than 2mm square and 2mm thick. Despite its size, many can hold 2000 characters of data.

RFID operating rage depends on the radio frequency used, receiver capability and the environment. Some tags are only readable from under 1m, others can have a 100m range.

RFID tags and labels are very specific to the type of material and size of your assets. For example, metal will deactivate the RFID antenna and the tag will not transmit at all. Using RFID on metal requires a special type of tag with an RFID block to prevent interference with the antenna. Liquid products can also affect the reliability of the RFID signal. To use RFID tags in specific environ-ments, some technologies are needed to support them.