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CIPS L4M7 Certification Exam Questions
NEW QUESTION # 55
Which of the following code systems is commonly used by governments as a basis for their Cus-toms tariffs and for the collection of international trade statistics?
- A. The International Mobile Equipment Identity
- B. The Harmonized Commodity Description and Coding System
- C. Global Location Number
- D. Global Trade Item Number
Answer: B
Explanation:
The Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of tariff nomenclature is an internationally standardized system of names and numbers to classify traded products. It came into effect in 1988 and has since been developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization based in Brussels, Belgium, with over 200 member countries.
The Global Trade Item Number (GTIN) is an identifier for trade items, developed by GS1. Such identifiers are used to look up product information in a database (often by entering the number through a barcode scanner pointed at an actual product) which may belong to a retailer, manufacturer, collector, researcher, or other entity.
The Global Location Number can be used by companies to identify their locations, giving them complete flexibility to identify any type or level of location required.
The International Mobile Equipment Identity (IMEI) is a number, usually unique, to identify 3GPP and iDEN mobile phones, as well as some satellite phones.
Reference:
LO 1, AC 1.2
NEW QUESTION # 56
Which of the following are warehouse layouts that allow the cross aisle to meet picking aisle at angles different from 90 degrees?
1. 'Fan' shaped layout
2. Herringbone-shaped layout
3. U-shape layout
4. L-shape layout
- A. 3 and 4 only
- B. 2 and 3 only
- C. 1 and 2 only
- D. 1 and 3 only
Answer: C
Explanation:
In a traditional warehouse, storage racks are arranged to create parallel picking aisles, perhaps with one or more cross aisles to allow workers to move quickly between picking aisles. This structure forces workers to travel rectilinear distances (north-south and east-west) to picking locations.
Kevin R. Gue and Russell D. Meller proposed alternative aisle designs:
- The 'Fan' shaped layout (or "Flying V"). This layout maintains parallel picking aisles, but al-lows the cross aisle to take on a different shape. If travel begins and ends at the bottom of the V, Gue and Meller expected distance to retrieve a single pallet is 10% less in this warehouse than in an equivalent traditional design.
- The Herringbone-shaped layout (or commonly referred as Fishbone layout) combines the verti-cal picking rows of a traditional warehouse with a second set of horizontal picking rows, divided by a V-shaped diagonal alley crossing the entire warehouse. This simple modification to the typical warehouse design allows employees (e.g. a forklift driver) to increase travel speed between picking locations. Efficiency gains achieved through a layout reconfiguration would reduce picking cost up to 23% compared to an equivalent warehouse using a traditional configuration.
Reference
Aisle Design - Kevin Gue
LO 1, AC 1.1
NEW QUESTION # 57
In a manufacturing facility, which types of inventory have the lowest value?
1. Finished goods
2. Secondary components
3. Work in progress
4. Raw materials
- A. 3 and 4 only
- B. 1 and 2 only
- C. 2 and 4 only
- D. 1 and 3 only
Answer: C
Explanation:
Raw materials are basic input materials - they are only processed limitedly or have not been pro-cessed at all.
Their values are equal to acquisition cost and are the lowest value of stock held.
Secondary components are the products that are combined with others to produce the finished goods. They are acquired in the processed state. Their value is higher than raw materials, but still at acquisition cost.
Work in progress is the stock part-way through manufacture that has not been finished. It is typically not completed yet, so it doesn't have full value. But the costs of processing already carried out makes it more valuable than materials and components.
Finished goods are completed and ready to be used or sold. Finished goods are the most expensive and need to be stored in good conditions.
NEW QUESTION # 58
Which of the following is the formula for calculating the re-order level?
- A. Required level of safety stock - Average usage in a lead-time
- B. Required level of safety stock x Average usage in a lead-time.
- C. Average usage in a lead-time / Required level of safety stock
- D. Average usage in a lead-time + Required level of safety stock
Answer: D
Explanation:
In management accounting, reorder level (or reorder point) is the inventory level at which a com-pany would place a new order or start a new manufacturing run.
Reorder level depends on a company's work-order lead time and its demand during that time and whether the company maintain a safety stock.
If a company maintains a safety stock, reorder level calculation changes are follows:
Reorder Level = Average Demand × Lead Time + Safety Stock
Reference:
LO 2, AC 2.3
NEW QUESTION # 59
Which of the following are advantages of a multi-story warehouse compared to a single-story warehouse?
* Heavier, frequently moved items will always be stored on the upper floor of a multi-story warehouse
* Order tracking technology is more effective and efficient in a multi-story warehouse
* There are more options for the storage of inventory by volume, weight, and frequency of movement in a multi-story warehouse
* The cost of land is likely to be less for a multi-story warehouse compared to a single-story warehouse for a similar product volume
- A. 1 and 4 only
- B. 2 and 3 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: D
NEW QUESTION # 60
Manufacturing resources planning (MRP II) was developed from material requirement planning (MRP). Which of the following is the additional input that is available in MRP II but does not ap-pear in MRP?
- A. Master production schedule
- B. Inventory records
- C. Finance
- D. Bill of materials
Answer: C
Explanation:
MRP I was some of the first business software to be widely adopted during the 1970s. Manufacturers sought these systems in order to improve efficiency and accuracy when it came to basic processes such as production scheduling and inventory management.
By the 1980s, manufacturers realized they needed software that could also tie into their accounting systems and forecast inventory requirements. Enter MRP II, which included these integrations in addition to all the capabilities offered by MRP I. Enterprise resource planning (ERP) software features-which we'll cover later on-are included in the following table for comparison.
Reference:
- MRP vs. MRP II: What's the Difference?
- CIPS study guide page 118-119
LO 2, AC 2.3
NEW QUESTION # 61
Practice of unloading goods from inbound delivery vehicles and loading them directly onto out-bound vehicles is known as ...?
- A. Automation
- B. Tracing and tracking
- C. Cross-docking
- D. Decommissioning
Answer: C
Explanation:
Cross-docking is the practice of unloading goods from inbound delivery vehicles and loading them directly onto outbound vehicles. By eliminating or minimizing warehouse storage costs, space requirements and inventory handling, cross-docking can streamline supply chains and help them move goods to market faster and more efficiently.
Cross-docking usually takes place in a dedicated docking terminal in a warehouse, where inbound goods are first received at a dock and sorted according to their final destinations. They are then moved to the other side of the dock via forklift, conveyor belt or other equipment and loaded on outbound vehicles.
Cross-docking works best with products that need to be transported quickly, such as food, that have already been sorted and labeled for customers, do not need quality inspections or have steady demand.
NEW QUESTION # 62
Resevoir Inc runs several oil refineries across the country. These refineries require heavy invest-ment, particularly in maintenance, repair and operating (MRO) inventory. But the inventory turno-ver rate of these MRO items are low, while some items have expired date, which increases the risks of obsolescence. Which of the following methods can address the issues of these MRO items?
- A. Just in case
- B. Vendor-owned stock
- C. Forrester effect
- D. Larger safety stock
Answer: B
Explanation:
Where stock turn (inventory turnover) is low and there are potential risks of redundancy or obsolescence, the buying organisation may adopt vendor owned stock. In this system, a supplier (vendor) maintains a stock of items ready to be used at the point of customer consumption. The supplier owns the stock until it is used by the purchaser; only then is the purchaser invoiced for it.
Just in case and larger safety stock would significantly increase the stock level, which may cause redundancy or obsolescence.
Forrester effect (or Bullwhip effect) is a distribution channel phenomenon in which forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.
NEW QUESTION # 63
When designing the layout of a warehouse or stores area, one of the factors to consider is the width of the aisles between the racking. Which of the following is a main consideration when calculating the aisle width?
- A. Dimensional length and depth of the items on a pallet
- B. Dimensional depth and height of pallet racks
- C. Turning circle of the forklift truck and the size of the pallet being carried
- D. Overall height of driver's cage of the forklift truck
Answer: C
Explanation:
The turning circle of the forklift truck and the size of the pallet it carries are primary factors in determining aisle width. The aisle width must accommodate forklift maneuvers for safe and efficient access to stored items. Whole-life asset management emphasizes warehouse layout planning to optimize space usage, reduce handling time, and enhance safety.
NEW QUESTION # 64
To make loading/unloading more effective and efficient, which feature should be included in vehi-cle dock design?
- A. 'Dual-use' docks are always the most efficient
- B. Steeper slope will reduce the chance of errors and accidents
- C. The dock platform is almost at the same level as the height of the trailer's rear platform
- D. Vehicle docks only require a small area to ensure faster goods flow
Answer: C
Explanation:
Warehouse dock is a feature of warehouse design - used for unloading and loading vehicles. It is crucial to carefully design where they are externally located in a facility and choose the best type of dock depending on the available space.
In many cases efficient and effective loading and unloading is achieved by a dock design that places the loading and unloading vehicle' rear platform at the same height as the warehouse floor.
Slopes in docking areas must always be as small as possible: the gentler the slope, the less chance of errors and accidents. If a warehouse is going to be used by large volume vehicles, such as high cubes, it may be necessary to install special devices, such as hydraulically adjustable docks or ground level lift platforms.
Current trends indicate that vehicles that are longer and wider and have a greater volume will be increasingly common. Therefore, when planning the location of the docks, it would be useful to ensure that there is a large area for the approach, manoeuvring and build-up of large vehicles.
One option to increase the efficiency of the docks is to combine reception and dispatch into a single area (dual use). This solution drastically reduces costs and, above all, increases the use of handling equipment and personnel. However, if this is justified by the volume of material flows, there can also be separate access points for each function (some for reception and others for dispatch - 'sole use').
NEW QUESTION # 65
When using ABC analysis to classify inventory, which factors must be considered?
1. Demand uncertainty of each item
2. Cumulative percentage of items
3. Cumulative percentage usage value of items
4. Overall inventory turnover
- A. 2 and 3 only
- B. 1 and 4 only
- C. 2 and 4 only
- D. 1 and 3 only
Answer: A
Explanation:
ABC analysis is applied to stock and its management. It is based loosely on the Pareto principles, better known as 80/20 rule. Pareto principle is the theory that 80% of outcome results from 20% of inputs. For example, 80% of sales are to the top 20% of customers; 80% of spend on inventory is accounted for by the top
20% of stock items.
The ABC concept is based on Pareto's law. The following steps are carried out for the ABC analy-sis.
- Step 1: Compute the annual usage value for every item in the sample by multiplying the annual requirements by the cost per unit.
- Step 2: Arrange the items in descending order of the usage value calculated above.
- Step 3: Make a cumulative total of the number of items and the usage value.
- Step 4: Convert the cumulative total of the number of items and usage values into a percentage of their grand totals.
- Step 5: Draw a graph connecting cumulative % items and cumulative % usage value. The graph is divided approximately into three segments, where the curve sharply changes its shape. This indicates the three segments A, B and C.
LO 2, AC 2.1
NEW QUESTION # 66
Which component of an RFID device is responsible for sending and receiving radio waves?
- A. Network database
- B. Antenna
- C. Laser beam
- D. Integrated circuit
Answer: B
Explanation:
RFID tags are made of three different components: an RFID chip, which is an integrated circuit (IC), an antenna, and a substrate. RFID Antennas are necessary elements in an RFID system be-cause they convert the RFID reader's signal into RF waves that can be picked up by RFID tags. Without some type of RFID antenna, whether integrated or stand-alone, the RFID reader cannot properly send and receive signals to RFID tags.
Reference:
LO 1, AC 1.2
NEW QUESTION # 67
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
Answer: C
Explanation:
The safety stock (or buffer stock) is the stock level that limits stock shortages due to unforeseen events (forecasts not in line with demand, longer than expected supply time, etc...) Demand variance is the degree to which the demand in a fixed period deviates from the average demand of the same period.
A reorder point is the unit quantity on hand that triggers the purchase of a predetermined amount of replenishment inventory.
The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules.
NEW QUESTION # 68
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 level inventory at which an order must be made
- D. The point when stock reaches zero
Answer: C
Explanation:
Reorder point is the point either in time or in a process when the next order should be placed.
Reference:
LO 2, AC 2.3
NEW QUESTION # 69
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 cross-docking is impossible in U-shape flow warehouse
- B. Yes, because this layout places receiving docks and despatch docks close to one another
- C. No, because aisles between racks in U-shape flow are too small for any handling equipment
- D. Yes, because U-shape layout allows S-line routing more efficient
Answer: B
Explanation:
A 'U' flow occurs when the goods receipt and dispatch functions are located at the same end of a warehouse building.
Products flow in at receiving, move in to storage in the back of the warehouse, and then to shipping, which is located at the adjacent to receiving on the same side of the building.
Items with higher throughput level are located closer to the loading bays. An example of a 'U' flow design can be seen in the diagram below.
Advantages of 'U' Flow
- Excellent utilization of dock resources because the receiving and shipping processes can share dock doors
- Facilitating cross-docking because the receiving and shipping docks are adjacent to one another and may be co-mingled
- Excellent lift truck utilization because put away and retrieval trips are easily combined and be-cause the storage locations closest to the receiving and shipping docks are natural locations to house fast moving items
- Yields excellent security because there is a single side of the building used for entry and exit Reference:
LO 1, AC 1.1
NEW QUESTION # 70
Jones Warehouse Services Limited has been using a manual handling system to move items throughout its warehouse. This setup is slow, uses more labor resources than automated systems, and recently, several errors and inaccuracies were uncovered in an audit. The company wants to introduce a system that minimizes human errors, lowers workplace risks, and reduces labor costs. Which of the following is a fast and efficient mechanical handling system for transporting a variety of different materials within a warehouse?
- A. Trolley
- B. Reach truck
- C. Conveyor
- D. Dollies
Answer: C
Explanation:
A conveyor system is an efficient and reliable method for transporting items within a warehouse. It reduces reliance on manual labor, lowering error rates and enhancing safety by minimizing the physical handling of goods. Conveyors can also be customized to transport various materials, improving productivity and ensuring consistent movement of goods. This aligns with whole-life asset management principles, which focus on efficiency, cost reduction, and risk mitigation across the asset's lifecycle.
NEW QUESTION # 71
Objective forecasting techniques must be based on which of the following?
1. Opinions
2. Figures
3. Facts
4. Jugdement
- A. 2 and 3 only
- B. 1 and 4 only
- C. 3 and 4 only
- D. 1 and 2 only
Answer: A
Explanation:
Subjective forecasting uses qualitative methods (surveys, opinions) which relay on perception and opinion. Objective forecasting uses quantitative methods (facts and figures). Both methods have to make assumption about how closely (or not) the future will resemble the present and the past. Forecasting is never exact.
Reference:
LO 2, AC 2.3
NEW QUESTION # 72
MRP software is applied to schedule which of the following?
- A. Executive meetings
- B. Human resource management
- C. Tax accounting
- D. Production processes
Answer: D
Explanation:
Material Requirements Planning (MRP) software manages material requirements for manufacturing processes.
LO 2, AC 2.3
NEW QUESTION # 73
In the periodic review system, the order quantity is the same for each order. Is this statement true?
- A. Yes, in periodic review system items are reviewed when the Kanban is triggered
- B. Yes, the order quantity should be equal to economic order quantity
- C. No, the inventory position at each review point differs from each other
- D. No, the next order quantity must be larger than the previous one
Answer: C
Explanation:
Fixed-Time Period System (or Periodic Review system) is the inventory management system in which inventory is checked in fixed time periods, T, and the quantity ordered varies. The system also contains a target inventory level, R, which is restored when order received. The order quantity is calculated as:
Q = R - IP
where: Q = order quantity
R = target inventory level
IP = inventory position
Inventory position (IP) is equal to inventory on-hand plus quantity on order minus backorder (if any) The order quantity varies because the inventory position at each review point differs from each other.
Diagram Description automatically generated with medium confidence
LO 2, AC 2.3
NEW QUESTION # 74
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 cross-docking is impossible in U-shape flow warehouse
- B. Yes, because this layout places receiving docks and despatch docks close to one another
- C. No, because aisles between racks in U-shape flow are too small for any handling equipment
- D. Yes, because U-shape layout allows S-line routing more efficient
Answer: B
NEW QUESTION # 75
In a manufacturing organization, which of the following explains an 'indirect' stock classification of items?
- A. Where the stock does not have to be paid for until it has been used by the manufacturer
- B. Where the stock is currently held in a warehouse owned by another organization
- C. Where the stock is not used as part of manufacturing of the finished product
- D. Where the stock has been acquired from a distributor rather than another manufacturer
Answer: C
Explanation:
Indirect stock refers to items that are necessary for the operation of the manufacturing process but are not incorporated into the finished product. Examples include maintenance supplies, office consumables, and tools.
In whole-life asset management, indirect stock management ensures that essential operational items are available without tying up excessive capital in inventory that doesn't contribute directly to production output.
NEW QUESTION # 76
GAP Ltd is a growing retail business. It spends a lot of money on buying stock for sale. However, the procurement process is still largely manual. This manual process contains a lot of tasks that are repeated for each procurement event and time consuming. The company management team decides to adopt procure-to-pay (P2P) software in order to eliminate duplicate activities and improve process efficiencies. Which type of cost is GAP targeting?
- A. Disposal costs
- B. Acquisition costs
- C. Cost of stockouts
- D. Holding costs
Answer: B
Explanation:
Costs of holding inventory include the following:
* Acquisition cost
* Inventory holding cost
* Costs of stock-outs
Acquisition costs follow the typical procure-to-pay model. Benefits of procure-to-Pay (P2P) software include:
- Vendor Management, which includes researching, selecting, engaging with, and evaluating the performance of suppliers who make up your supply chain.
- Purchase Requisition Workflows, or the formal process of creating and submitting a purchase requisition (PR) for approval to meet a specific business need.
- Purchase Order (PO) Workflows, covering the creation of a formal, detailed PO from the purchase requisition, including information on the quantity and quality of goods and services, as well as specific terms and conditions.
- Receiving, which includes the acceptance of physical goods (or review of quality and completion for services) and entering the accepted order into inventory, tracking, and accounting systems.
- Invoice Management, during which the invoice is compared to the original PO to verify pricing, quality, quantity, and terms have been met.
- Accounts Payable Workflows, wherein the accounts payable department processes the invoice for payment, submits the payment to the vendor, and reconciles any related financial entries in the accounting system.
The software is intended to help reduce the acquisition costs.
LO 2, AC 2.2
NEW QUESTION # 77
Which of the following is the definition of work in progress inventory?
- A. Obsolete inventory
- B. Inventory introduced into production but not completed as of the stocktake date
- C. Inventory not yet introduced into the production process
- D. Inventory that has finished the production process
Answer: B
Explanation:
Work in progress is the stock part-way through a manufacturing process; in the service sectors the term is also used for anything between order and delivery.
NEW QUESTION # 78
Which of the following statements represent a definition for 'obsolescence' in inventory management? Select TWOthat apply.
- A. The users of the items no longer need them
- B. The previous supplier has been replaced
- C. The forecasts for the items have exceeded demand
- D. The usage of the items has decreased
- E. The previous technology has been replaced
Answer: A,E
NEW QUESTION # 79
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The CIPS Whole Life Asset Management certification exam is ideal for professionals who are looking to enhance their career prospects in the field of asset management. It is particularly useful for those who are seeking to improve their knowledge and skills in managing assets throughout their entire life cycle, from the initial planning stages to their eventual disposal.
CIPS L4M7 (CIPS Whole Life Asset Management) Certification Exam is a globally recognized certification program that is designed to equip professionals with the necessary knowledge and skills to manage assets effectively throughout their entire life cycle. CIPS Whole Life Asset Management certification is suitable for professionals who are involved in the acquisition, operation, maintenance, and disposal of assets.
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