Key details for this exam, checked against the published exam outline
Each question shows the correct answer and an explanation of why it is right
Which of the following are critical factors that must be considered when evaluating warehouse or storage locations?
The cost of the proposed location
Who owns the storage location or warehouse
Access to transport networks
The number of windows in the building
When selecting a warehouse location, it's essential to consider:
Cost: The expense of the location directly impacts the budget.
Access to transport networks: Proximity to transportation infrastructure facilitates efficient shipping and receiving.
These factors align with whole-life asset management principles by ensuring cost-effective and accessible storage solutions, contributing to reduced transportation costs and improved logistics.
Which of the following statements is true of just-in-time (JIT) purchasing?
Just-in-time (JIT) purchasing is a systems approach for developing and operating the purchasing function. JIT purchasing along with the total quality management in many industries has been suc-cessful in reducing inventory and increasing the overall effectiveness of purchasing function and hence the productivity of manufacturing.
The just-in-time objectives of eliminating waste can be summarised in the 'five zeros: zero defects, zero set-up times, zero inventories, zero handling and zero lead times.
The correct answer should be 'In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales' because it expresses that upstream activity (purchasing) only occurs as the downstream activity (production or sales) triggers.
LO 2, AC 2.3
A cardiac department within a local hospital carries out a small number of specialist emergency care heart surgeries each year. The devices implanted in the patients can vary significantly depending on the condition of the patient. Therefore, the hospital requires a stock management technique that minimizes the cost of holding several different items of stock, without impacting the critical service levels, and allowing the supplier to retain the title of the stock until the hospital's cardiac team utilizes it. Which of the following stock management techniques would enable the hospital to achieve this?
A brewery sells its beer in aluminum cans. It recycles the cans by using contractors to collect and mold the used cans. This is an example of...?
There are two main processes of recycling -- open loop recycling and closed loop recycling.
Open Loop Recycling
Open loop recycling is a method that delays disposal by converting manufactured goods and spent materials into both new raw materials, which can be used for a manufacturing purpose, as a fuel source for a different manufacturing process and waste products.
Typically, materials recycled through open-loop recycling will be used for purposes different from their original purpose.
This means that the input into the recycling process is converted to a new raw material, which can be used as an input into another manufacturing process.
Materials in an open loop recycling process are treated using various forms of treatment including heat, chemical reactions, or physical crushing.
Closed Loop Recycling
Closed loop recycling is a process where waste is collected, recycled and then used again to make the same product it came from. This process is restorative and regenerative by design and aims to keep materials at their highest utility and value always.
Closed loop recycling is focused on resource sustainability, which means that recycling of a material can be done indefinitely without degradation of properties. In this case, conversion of the used product back to raw material allows repeated making of the same product, which helps hazardous waste generators reduce carbon footprint and achieve corporate sustainability initiatives.
Closed-loop recycling is common in specialized industries, such as the computer and battery industries, which use expensive or complex goods that cannot easily be broken down post-consumption into constituent materials.
A prime example of a closed-loop recycling process is the recycling of aluminum cans. Aluminum can be recycled to form new cans with little material degradation or waste creation.
- Open Loop Vs Closed Loop Recycling
- CIPS study guide page 203
LO 3, AC 3.3
GAP Ltd is a growing retail business. It spends a lot of money on buying stock for sale. However, the procurement process is still largely manual. This manual process contains a lot of tasks that are repeated for each procurement event and time consuming. The company management team decides to adopt procure-to-pay (P2P) software in order to eliminate duplicate activities and improve process efficiencies. Which type of cost is GAP targeting?
Costs of holding inventory include the following:
* Acquisition cost
* Inventory holding cost
* Costs of stock-outs
Acquisition costs follow the typical procure-to-pay model. Benefits of procure-to-Pay (P2P) software include:
- Vendor Management, which includes researching, selecting, engaging with, and evaluating the performance of suppliers who make up your supply chain.
- Purchase Requisition Workflows, or the formal process of creating and submitting a purchase requisition (PR) for approval to meet a specific business need.
- Purchase Order (PO) Workflows, covering the creation of a formal, detailed PO from the purchase requisition, including information on the quantity and quality of goods and services, as well as specific terms and conditions.
- Receiving, which includes the acceptance of physical goods (or review of quality and completion for services) and entering the accepted order into inventory, tracking, and accounting systems.
- Invoice Management, during which the invoice is compared to the original PO to verify pricing, quality, quantity, and terms have been met.
- Accounts Payable Workflows, wherein the accounts payable department processes the invoice for payment, submits the payment to the vendor, and reconciles any related financial entries in the accounting system.
The software is intended to help reduce the acquisition costs.
LO 2, AC 2.2
A hospital is purchasing a new software product that will advise nurses when to give medications to hospitalised patients. This is a mobile application that will be used on tablets carried by the nurses. The software is being developed and tested by a company that specialises in mobile medical applications. This software will interface with existing hospital software that orders the medications from the pharmacy. Which acceptance test activity will be required to check whether the new software integrates well with current IT system?
In the scenario, one of the requirements for the new software is that the new one will interface with current system. Compatibility testing would be the most appropriate test here.
There are also other acceptance tests that are mentioned in L4M7 study guide:
- Health and safety test aims at establishing new health and safety routines, providing guidance notices and documentation and ensuring designed-in safety in operation.
- Stress testing (sometimes called torture testing) is a form of deliberately intense or thorough testing used to determine the stability of a given system, critical infrastructure or entity. It involves testing beyond normal operational capacity, often to a breaking point, in order to observe the results.
- A dry run (or a practice run) is a testing process where the effects of a possible failure are inten-tionally mitigated. For example, an aerospace company may conduct a 'dry run' test of a jet's new pilot ejection seat while the jet is parked on the ground, rather than while it is in flight.
The usage of 'dry run' in acceptance procedures (for example in the so-called FAT = factory ac-ceptance testing) is meant as following: the factory -- which is a subcontractor -- must perform a complete test of the system it has to deliver before the actual acceptance by customer.
LO 3, AC 3.1
Exam domains verified against: Official CIPS L4M7 exam guide, last checked September 2026.
Master warehouse design principles and layout factors that affect storage efficiency and material flow. Learn product coding systems including bar coding and RFID technologies that enable inventory tracking and order management.
Sample question from this domain above: Q4
Apply inventory classification systems like ABC analysis and distinguish between dependent and independent demand items. Study forecasting methods, reorder calculations, and performance metrics such as stock turn rates and service levels.
3.1 Analyse the contributing factors when establishing whole-life costs; 3.1.1 Purchase price; 3.1.2 Hire or lease; 3.1.3 Acquisition costs; 3.1.4 Usage costs: maintenance, operation costs, utility costs and training costs; 3.1.5 Disposal and end-of-life options and associated costs; 3.2 Compare the factors to consider when building a whole-life cost model; 3.2.1 Purpose of whole-life asset management; 3.2.2 Costs and risks of whole-life asset management; 3.2.3 Stakeholder factors relating to whole-life asset management; 3.3 Identify the contributing factors supporting wholelife asset management; 3.3.1 Triple bottom line people, planet, profit; 3.3.2 Environmental factors; 3.3.3 Waste management; 3.3.4 Packing and packaging; 3.3.5 Decommissioning; 3.3.6 Removal or disposal including closed-loop
Common questions about the exam itself
