L4M7 Exam Questions and Answers | Exam-Dumps (Page: 4)

QUESTION: 16

What is the stock turn for a store holding products to the value of £250,000 with annual sales of these products amounting to £1,000,000?

10
4
0.25
0.4

Answer(s): B

Explanation:

Calculating Inventory Turnover (Stock Turn)
As with a typical turnover ratio, inventory turnover details how much inventory is sold over a period. To calculate the inventory turnover ratio, cost of goods (COGS) is divided by the average inventory for the same period.1
Cost of Goods Sold ÷ Average Inventory or Sales ÷ Inventory

In this exercise, the stock turn equal to sales divided by inventory, or 1,000,000:250,000 = 4.

Reference:

CIPS study guide page 131
LO 2, AC 2.3

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QUESTION: 17

Which of the following is essential to effective implementation of just-in-time?

Regular machine changeovers
Larger warehouse for larger amount of inventory
No need for smoothing production
Strong links between the suppliers and the buying organisation

Answer(s): D

Explanation:

For JIT manufacturing to succeed, companies must have steady production, high-quality workmanship, glitch-free plant machinery, and reliable suppliers. JIT production systems cut inventory costs because manufacturers do not have to pay storage costs. Manufacturers are also not left with unwanted inventory if an order is canceled or not fulfilled.

Reference:

- Just in Time (JIT)
- CIPS study guide page 122-124
LO 2, AC 2.3

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QUESTION: 18

The amount of inventory available at the start of an accounting period is known as...?

Buffer stock
Work-in-progress
Opening stock
Closing stock

Answer(s): C

Explanation:

Opening stock is the starting amount of inventory that a business has at a fixed moment in time. This could be the start of a financial year, another reporting period or ad hoc stocktake. The concept of opening stock mush not be confused with raw materials
Closing stock is the inventory held at the end of the period under consideration. Thus, the closing stock of one period is automatically the opening stock for the next. 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. Buffer stock (safety stock) is the stock held as a contingency or insurance against disruption or unexpected demand.
LO 2, AC 2.1

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QUESTION: 19

Which of the following are most likely to be the purposes of packing and packaging?
1. To bring the product cost down
2. To protect the product
3. To improve the product recognition
4. To test the product durability

1 and 2 only
3 and 4 only
2 and 3 only
1 and 4 only

Answer(s): C

Explanation:

It would be really convenient if we could just hand our products directly to the customers, but that's not possible. Packaging needs to be done for several reasons. Here are some of the most prominent ones:
1. Safety: Packaging is used to keep your product safe from external factors. It also prevents human tampering. If you want to sell fruit juice, you just can't hand it over to customers. It should be packaged in something, like a stand up pouch.
2. Brand visibility: You provide the best product in your category and you want your customers to remember that. How else will you do that without using the right kind of creative food packaging?
3. Bundling it together: If you want to sell an ounce of something, you need to create a packet so that the right amount is bundled together.
4. Theft prevention: If you sell your product loose, there are chances that the retailer doesn't give the right amount to the customer and saves some part for himself. There are other cases too where theft can be done in the absence of packaging.
Apart from these four, there are many other reasons why you should package your products.

Reference:

- What Is the Purpose of Packaging?
- CIPS study guide page 62
LO 1, AC 1.3

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QUESTION: 20

Which of the following are features of product codes?
1. Product codes link to products' characteristics
2. A product code must comply with international standards
3. Many internal processes use the product codes as facilitators
4. There are no duplicate product codes

2 and 4 only
3 and 4 only
1 and 3 only
1 and 2 only

Answer(s): C

Explanation:

The product code is often the key to obtaining documentation relating to products.

Product codes are often use to link to internal processes. Some computerised inventory systems trigger alerts when specific items or volume are ordered - this could be an out-of-stock warning or potential volume errors.
In many cases, an organisation will use its own product code system. The organisation constructs a code that is effective and fits with its software and the variety of items covered. So these codes may or may not comply with any international standards (such as GS1 specifications, ISO standards, etc.). As organisations make up the code themselves, the codes may look identical to others. For example, SKU414675 reveals that it is used for many items, including the following:

- A UK wholesaler's six-pack of branded cola
- An Australian snack food
- UK flower seeds
- An Italian desk sold in Japan
- A Brazilian light fitting

Reference:

CIPS study guide page 33-42
LO 1, AC 1.2

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CIPS L4M7 Exam (page: 4) CIPS Whole Life Asset Management Updated on: 25-Dec-2025

QUESTION: 16

Explanation:

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QUESTION: 17

Explanation:

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QUESTION: 18

Explanation:

QUESTION: 19

Explanation:

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QUESTION: 20

Explanation:

Reference:

CIPS L4M7 Exam (page: 4)
CIPS Whole Life Asset Management
Updated on: 25-Dec-2025