[2025] New L4M7 exam dumps Use Updated CIPS Exam
Verified L4M7 Dumps Q&As - L4M7 Test Engine with Correct Answers
CIPS L4M7 Certification Exam is open to professionals from all industries, including finance, healthcare, manufacturing, and transportation. Candidates who successfully pass the exam will receive the CIPS L4M7 certification, which is recognized globally as a mark of excellence in asset management.
NEW QUESTION # 46
Which ONE of the following correctly differentiates between obsolescent and redundant stock?
- A. Obsolescent stock has been updated by another item but can still be used, redundant stock is no longer used by an organization
- B. Obsolescent stock is in short supply, redundant stock has no current supplier with stock available
- C. Obsolescent stock has been supplied by a failed supplier, redundant stock requires quality testing before use
- D. Obsolescent stock is damaged goods that need returning to suppliers, redundant stock is no longer stocked by the organization
Answer: A
Explanation:
Obsolescent stock refers to items that are outdated but may still have some use. Redundant stock, on the other hand, is no longer useful or required by the organization. Effective whole-life asset management requires identifying and managing both types of stock to minimize waste and optimize storage.
NEW QUESTION # 47
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 U-shape layout allows S-line routing more efficient
- C. No, because aisles between racks in U-shape flow are too small for any handling equipment
- D. Yes, because this layout places receiving docks and despatch docks close to one another
Answer: D
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 # 48
Bulk loose coal that requires massive handling system should be stored in which area?
- A. Stockyard
- B. Heating warehouse
- C. Store
- D. Chill hub
Answer: A
Explanation:
Materials that will not easily deteriorate, are generally stored in open or fairly covered areas (stockyard). The materials are usually in bulk, like steel plates or coils casting, timber coal, steel barrels, cable drums, piping, lampposts, lorries, etc.
Stockyards are open or semi-covered areas that are used for the following:
- Bulk loose or packaged materials
- Bulky or oversized items that may be difficult to move inside
- Materials that may require specialised handling, loading or unloading Below image shows the example of a stockyard that stores loose coal and its handling system.
LO 1, AC 1.1
NEW QUESTION # 49
Staff at DIY Products Inc (DPI) have been experiencing issues with the identification of stock items. The current labelling system is outdated and unreliable. DPI has therefore invested in a machine-readable approach. Each item has a unique number that is attached visibly to the packaging. This number can be deciphered by a scanner to aid identification. This approach is known as which of the following?
- A. Standard certification
- B. Product tagging
- C. Bar coding
- D. Order tracking
Answer: C
NEW QUESTION # 50
XYZ Ltd is a major distributor of electrical equipment protection products in the United States. XYZ found that there was a lack of communication between the company and its key supplier, leading to the supplier trying to predict distributor needs and distributor attempting to estimate lead times. Essentially, both the supplier and the distributor have different sets of information, spending time and money trying to predict what the other will do. To deal with this problem, XYZ Ltd decides to implement new inventory management method in which the supplier manage the replenishment of items for sale.Both parties are obliged to share information on variations in demand and stock levels for goods used for or sale. Which inventory management method is XYZ Ltd implementing?
- A. Economic order quantity
- B. Floor-ready merchandise
- C. Vendor managed inventory
- D. Reverse logistics
Answer: C
Explanation:
Vendor Managed Inventory (VMI) is a business model where the buyer of a product provides in-formation to a vendor of that product and the vendor takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location.
Floor-Ready Merchandise can be defined as the merchandise that is pre-tagged, pre ticketed and pre-occupied with all the necessary details and information such as marked to their specifications for style, size, type, color and price, this information is required in the retail store and is done before it reaches the retail store.
Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has been refined over time. The formula assumes that demand, ordering, and holding costs all remain constant.
The full definition of reverse logistics, as according to The Council of Logistics Management, is the process of implementing, controlling, and planning the cost-effective flow of finished goods, raw materials, and in- process inventory. The flow is from the point of consumption (i.e. the customer) to the point of origin (i.e. the manufacturer), to properly dispose of these or to recapture value.
In the scenario, XYZ solves the current situation by letting the supplier to management the inventory and sharing stock level information with the supplier. Vendor managed inventory is the most suitable answer.
NEW QUESTION # 51
MRP software is a powerful tool for managing material requirements of manufacturing processes. To keep the software function well, an organisation must have appropriate input dat a. Which of the following are the inputs of MRP software? Select THREE that apply.
- A. Master production schedule
- B. Bill of materials
- C. Inventory records
- D. Payrolls information
- E. Facilities management
- F. Capacity requirement plan
Answer: A,B,C
Explanation:
A powerful benefit of MRP system is the capacity to produce exception reports, which show deviations from normal planning and performance. These enable anomalies to be investigated with a view to improve future forecasting.
Material requirement planning is an electronic system for combining the following:
- Known demand
- Forecast demand. Known demand and forecasted demand are shown in master production schedule.
- Bill of materials for the final product
- Inventory records
Reference:
LO 2, AC 2.3
NEW QUESTION # 52
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 U-shape layout allows S-line routing more efficient
- C. No, because aisles between racks in U-shape flow are too small for any handling equipment
- D. Yes, because this layout places receiving docks and despatch docks close to one another
Answer: D
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
NEW QUESTION # 53
Which type of codes can a barcode laser scanner (linear scanner) read?
- A. QR code
- B. 1D barcode
- C. Numerical code
- D. Aztec code
Answer: B
Explanation:
One-dimensional (or 1D) barcodes systematically represent data by varying the widths and spac-ings of parallel lines. These include some of the most traditional and well-recognized barcode types, such as the UPC and EAN codes. 1D barcodes are also commonly referred to as linear barcodes.
Two-dimensional (2D) barcodes look like squares or rectangles that contain many small, individual dots. QR codes, Data matrix and Aztec codes are examples of 2D barcodes Numerical code contains all numbers, no letters There are two different scan engine types (laser scanner versus imager) for interpreting the infor-mation provided in the barcode. Many companies producing the technology capable of reading the barcode data uses the term "scanning" regardless of the type of scan engine used. For the purposes of these FAQs, we are trying to draw a clearer distinction for you.
Linear (1D) codes can be scanned with a traditional laser scanner. A laser scan engine uses a laser and mirror to create the bar that scans the information. 1D barcode scanners will only interpret the linear barcode scanning technology. 1D barcode scanners are typically less expensive since the type of encryptions they can decode is limited.
Diagram Description automatically generated
LO 1, AC 1.2
NEW QUESTION # 54
In the periodic review system, the order quantity is the same for each order. Is this statement true?
- A. No, the next order quantity must be larger than the previous one
- B. Yes, the order quantity should be equal to economic order quantity
- C. Yes, in periodic review system items are reviewed when the Kanban is triggered
- D. No, the inventory position at each review point differs from each other
Answer: D
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 # 55
MRP system is the most suitable IT system to manage which type of items?
- A. Dependent demand
- B. Fast moving components
- C. Independent demand
- D. Construction projects
Answer: A
Explanation:
Material requirement planning (MRP) is a production planning and material (inventory) control system used in manufacturing. Objectives of MRP are to ensure materials are available for production while minimising inventory and to plan production and procurement activities.
Bill of materials (BOM) is an important component of MRP. BOM is also known as product struc-turer. This lists all the items that comprise each assembly and sub-assembly that make up the final product or end item. Therefore, MRP is commonly used to manage dependent demand stock.
Reference:
LO 2, AC 2.3
NEW QUESTION # 56
In inventory management, the cost of insurance and taxes are included in which group?
- A. Inventory carrying cost
- B. Costs of shortage
- C. Set up costs
- D. Acquisition costs
Answer: A
Explanation:
Direct and indirect costs of holding inventory include the following:
1. Acquisition costs
2. Holding costs (carrying costs) are the costs associated with the storage and handling of physical stock. There are two different types of holding costs:
a. Costs related to the value of the goods: financial costs (i.e. the interest on the working capital tied up in inventory, which may be the bank borrowing rate or the company's target for return on capital); cost of insurance; losses due to product deterioration; losses due to obsolescence and redundancy of inventory; losses due to theft, accidental damage etc.
b. Costs related to the physical characteristics of the inventory include the following: storage space; power, heat and lighting of the store; movement equipment; labour costs; administration costs.
3. Costs of stockouts
Reference:
LO 2, AC 2.2
NEW QUESTION # 57
Removal or disposal of assets should depend on an assessment of which of the following? SelectTWOthat apply.
- A. The total cost of the equipment
- B. Consumer demand for the product
- C. The current rate of interest for new equipment
- D. Location of the equipment and accessibility
- E. Type of equipment and incorporated components
Answer: D,E
NEW QUESTION # 58
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. Larger safety stock
- B. Just in case
- C. Vendor-owned stock
- D. Forrester effect
Answer: C
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 # 59
Do all types of warehouses require access to daylight to reduce the cost of electricity?
- A. No, because some types of stock are sensitive to sunlight
- B. Yes, because sunlight sterilises inventories in damp conditions
- C. No, because only ventilation can help to reduce the humidity in the warehouse
- D. Yes, because organisation's need for artificial lighting and heating will reduce
Answer: A
Explanation:
The design of a building should consider the advantages of natural light as this can reduce the cost of artificial lighting and improve the environmental performance of the building. Daylight entering the building can also help reduce heating costs. Unfortunately some stocks react badly to direct sunlight, and some stock reacts badly to extreme of temperature or may require a specific temperature for storage. Some stock may require a warmer temperature than the ambient temperature and other stocks may require cooler temperature. For example, fabric and garment are sensitive to direct sunlight as ultraviolet light catalyses a reaction between the water present in all fabrics and atmospheric oxygen to create hydrogen peroxide. This is a bleaching agent and breaks down the chemical bonds that give dyes their colour.
NEW QUESTION # 60
In just in time production system, when is an upstream production triggered?
- A. When downstream operations summon the upstream production
- B. When the production workers are idle
- C. When the inventory level reaches the reorder point
- D. After the management team forecasts the future demands
Answer: A
Explanation:
Along with Jidoka, Just-in-time (JIT) production is one of the pillars of the two Toyota Production System. It is a production method that fundamentally changed the way large-scale production oc-curred in the 20th century, and is the basis for Lean Manufacturing (Lean for short), which is the school of thought many modern companies have modeled themselves after.
JIT production is often called a pull system because instead of using traditional push production where scheduling is done based on historical data and demand forecasting, production is scheduled based on actual customer orders. Rather than predicting demands from customers, the JIT method requires that actual customer demand exists. Production doesn't begin before an order triggers it. This system not only reduces the amount of extra inventory, but also reduces the amount of work in progress at one time.
NEW QUESTION # 61
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