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CIPS Supply Network Design Sample Questions (Q43-Q48):
NEW QUESTION # 43
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 to team 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 capacity strategy is being used?
- A. Demand-lag
- B. Capacity-lag
- C. Demand-led
- D. Capacity-led
Answer: C
Explanation:
The company follows ademand-ledstrategy since production capacity is adjustedbased on actual customer orders. No stock is produced without confirmed demand. (See LO 2.2)
NEW QUESTION # 44
Sandeep is the Chief Financial Officer at Brass Knuckles Ltd. He has attended a meeting with the Head of Operations who has shown him several options of potential changes that can be made to the operations department of the business. These options have been plotted on the Efficiency Frontier. What is the purpose of using the Efficiency Frontier to evaluate these options?
- A. This will identify the option that has a better return on investment with the same level of risk
- B. This will list the options in order of return on investment
- C. This will estimate the success rate of each option
- D. This will identify the options which have potential for market growth
Answer: A
Explanation:
The Efficiency Curve plots options (or trade-offs) on a graph based on the level of risk and ROI. The options that are closest to the curve are the best-these ones represent the best ROI with the same level of risk. (See p.
133)
NEW QUESTION # 45
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.
Which of the following is thetrade-offin the modification of product X?
- A. Quality
- B. Flexibility
- C. Environment
- D. Speed
Answer: D
Explanation:
The modification ofproduct Xis aimed at making itmore environmentally friendlybut results ina longer production time. This means that thetrade-offisspeed-production takes longer. (LO 1.2)
NEW QUESTION # 46
For which activity would a Gantt chart be used?
- A. Capacity planning
- B. Scheduling
- C. Customer expectation management
- D. Resource loading
Answer: B
Explanation:
A Gantt chart is used for scheduling. It's a visual way of showing what activities are completed and when.
(See p.175)
NEW QUESTION # 47
Which of the following is atechnique for continuous improvementthat employs afull-time specialist improvement team?
- A. Employee suggestion scheme
- B. Value stream mapping
- C. Kaizen
- D. Six Sigma
Answer: D
Explanation:
* Six Sigmaemploysdedicated full-time teamsfocused oncontinuous improvement.
* Kaizen (A)is anongoing improvement philosophybut does not require aspecialist team.
* Employee suggestion schemes (B)are informal.
* Value stream mapping (D)is a tool, not a full-time methodology.
(LO 2.3, See p.121)
NEW QUESTION # 48
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