Pass the CIPS Level 4 Diploma in Procurement and Supply L4M7 Questions and answers with Dumpstech

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.

Explanation

In principle, use of any materials involves an environmental cost. Some packaging materials use a lot of natural resources and energy to produce. The journey taken by packaging from raw material to manufacturing and then to the initial user also incurs a 'carbon footprint'. The weight of packag-ing contributes to the fuel usage of vehicles while the volume used can add up to additional jour-neys or the use of larger vehicles. Finally, the reuse, return, disposal or recycling will also involve additional to the environmental cost.

In this question:

- 'Purchase the packaging materials in bulk' may incur additional fuel and carbon footprint in delivering these materials

- 'Try to reduce the costs of packaging' may prompt the organisation to use less eco-friendly and cheap materials like polystyrene chips

- 'Not use the packaging materials at all' can increase the environmental performance of packag-ing activities, but it also harms the products to be delivered and may cause other environmental problems (i.e. spillage of toxic chemicals into the environment)

So the correct answer should be: 'Adopt international environmental packaging standards'. The International Standards Organisation (ISO) has published several standards regarding packaging and environment, namely ISO 18601, ISO 18602, ISO 18603, ISO 18604, ISO 18605, ISO 18606.

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.

Explanation

Master production schedule (MPS) plans items that have “direct” demand, or “independent de-mand.” With independent demand, the demand comes from sales orders, service orders, or fore-casts, and the demand comes directly from customer—or forecasted—requirements. It is the list that provides the timing of the production schedule and shows how much each machine can produce, how many shifts are used, etc.

A bill of materials (BOM) is a comprehensive inventory of the raw materials, assemblies, subas-semblies, parts and components, as well as the quantities of each, needed to manufacture a product.

The Economic Order Quantity (EOQ) is the ideal order size that minimizes total inventory costs, balancing the ordering cost (costs related to placing and receiving orders) and the holding cost (costs related to storing inventory). The EOQ model is a fundamental concept in inventory management and is derived from the following formula:

EOQ=2DSHEOQ = \sqrt{\frac{2DS}{H}}EOQ=H2DS​​

where:

DDD = demand rate (units per period),

SSS = cost per order,

HHH = holding cost per unit per period.

The EOQ model assumes constant demand and lead time, and it does not consider discounts for bulk purchases. By minimizing both ordering and holding costs, EOQ contributes to overall cost efficiency in inventory management, which is essential for whole-life asset management in balancing long-term expenses.