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CIPS Supply Network Design Sample Questions (Q77-Q82):
NEW QUESTION # 77
Maxi Ltd is a medium-sized manufacturing organisation in the automotive industry that creates engines for cars. It has traditionally worked well with its suppliers, with strong relationships and regular meetings. There are currently around 15 suppliers who provide parts to Maxi Ltd.
Due to changing customer demands, Maxi Ltd will, from next month, modify the manufacturing of some of its products. Product X is being made more environmentally friendly, with output of CO2 being reduced by 32%. The product will take longer to produce, but there will be no additional cost to customers for this.
Maxi ltd are considering outsourcing the manufacturing of Product Y as it is not a product which is routinely ordered by customers. This will allow Maxi Ltd to focus on other products which generate higher revenues for the company. The concern within the Board of Directors is that if demand increases for this product, an outsourced company may not be able to cope with higher numbers of orders.
Product Z is an extremely popular item and oftentimes Maxi Ltd does not have the capacity to fulfil all orders. Consideration has been given to increasing the size of the factory, but this has been discarded as risky as demand is not guaranteed. The product has been available on the marketplace for a short amount of time and sales are continuing to increase, but the company believes this will soon plateau. To deal with current demand, the marketing team is working on campaigns to invite customers to make orders for this product at certain times of the year when product X is not being created in the factory.
This means resources can be reallocated to the creation of product Z.
What type of supply chain does Maxi Ltd currently have?
Answer: C
Explanation:
Maxi Ltd hasstrong relationships with its suppliersand holdsregular meetings, indicating asymmetric supply chain. In a symmetric supply chain, both buyers and suppliers collaborate effectively and share a balanced relationship. (LO 1.1)
NEW QUESTION # 78
Salgo Ltd is an oil refinery organisation that has been in operation for 30 years. It has made increasing profits each year, with the most recent year's takings in excess of £20m. Salgo Ltd uses an Emergent Strategy principle when it comes to resource planning. What are the characteristics of this approach?Select ALL that apply.
Answer: A,E
Explanation:
An emergent strategy is one that has developed over time based on historical patterns of behaviour. It is not planned; it has evolved based on how things have always been done. As a result, there isn't forward planning, and it is not an effective way of creating change. Instead, the organisation must be reactive to market changes.
(See p.153)
NEW QUESTION # 79
Rayan is the new CFO of an international banking organisation operating in London. He has been invited to a meeting of the top executives regarding corporate strategies and strategic resource planning. He believes that the organisation must be led by the strategy first, with resources then created to meet the requirement. Is this always the case?
Answer: D
Explanation:
The question asks if strategy mustalwayscome first. The correct answer isnobecause strategies can also be developed based on available resources. Corporate strategy often influences resource planning, but sometimes an organisation will assess its resources and build a strategy accordingly. (See p. 150)
NEW QUESTION # 80
The operations department of ABC Ltd has recently launched a new product. The product is manufactured within a large factory and then sent to retailers for sale. The department has a system in place which details the components required for the product and the quantities required to fulfil customer demand. The system works online and links to other areas of the business including HR and finance.
So far, several large orders have been placed for the product from different retailers. The Chief Operations Officer (COO) has decided to programme the completion of the orders based on when the orders were placed.
The benefit of this strategy is that it will give each customer a similar lead time. Thus far no buffer stock has been created as products are only created when orders are received.
Three teams are required to make the product and the product flows from team one to team two toteam three, each team adding a component to the product. Unfortunately, team two are short staffed and are completing their work at a slower rate than the other two teams. This is a huge consideration for the COO as it will impact upon the capacity of the organisation.
The retailers have all signed contracts with ABC Ltd and the COO is extremely happy that they are long term contracts. Contract 1 is with retailer X and the price is set for three years. Contract 2 is with retailer Y and is a five year contract where the price will be reviewed annually in line with CPI. Contract 3 has a variable pricing mechanism based on the volume of products ordered.
What is the nature of the COO's consideration?
Answer: D
Explanation:
This is an issue related to theTheory of Constraints, as Team 2 is thebottleneckaffecting overall production efficiency. TheTheory of Constraintsfocuses on identifying and managing the most critical limitation in a system. (See LO 3.3)
NEW QUESTION # 81
Jed is theOperations Managerat acake manufacturerand is trying to determine theoptimumcapacityof the factory.
Which of the following would be true if the factoryachieves optimum capacity? SelectALLthat apply.
Answer: B,C
Explanation:
Optimum capacityis achieved when:
* Customer demand is met (B)
* Production costs are minimized (C)
#Incorrect options:
* (A)is false because optimum capacityisn't necessarily the physical limit
* (D)is false because the factory should beoperating at a profit, not breakeven
* (E)is false because the lowest cost per unit is achieved, not the highest
* (F)is false becauseinventory levels should be minimized, not maximized (to reduce storage costs) (See LO 1.3, p.46)
NEW QUESTION # 82
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