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Greg is the manager at a car wash and is trying to work out the break-even point of his business. Which of the following pieces of information will he need to consider to understand his break-even point? Select ALL that apply.
Greg needs to know his fixed costs, variable costs, and price per car wash to determine his break-even point.
For example, if:
Fixed costs (rent, bills) = 100/day
Variable cost per car wash (soap, sponges) = 5
Price per car wash = 10
The break-even point is when revenue = costs, which means washing 20 cars per day (10 20 = 200 revenue, covering fixed and variable costs).
Number of customers (C) is incorrect, as this is calculated from the break-even formula, not an input.
Number of employees (E) is incorrect, as it is not a direct factor in the break-even calculation (only their wages as part of fixed costs).
(LO 1.3)
Zelda is the Head Consultant at Pirate Architects Ltd, which provides services to clients in the construction industry. She has a team of 20 consultants and is considering how many projects each team member should handle. In terms of capacity loading, which factors should Zelda consider when assigning projects? Select ALL that apply.
Capacity loading determines how much work each employee can handle. Key factors include experience, efficiency, time availability, and effectiveness. Salary is not relevant to determining workload capacity---though managers might mistakenly believe higher-paid employees should take on more. (See p.181)
What does a forcefield diagram show?
A forcefield diagram identifies forces (e.g., people or factors) that support or oppose change. This model, developed by Kurt Lewin, helps organisations assess and manage resistance to change. (See p.196)
Which of the following examples of a supplier would be suitable for Strategic Supplier Business Reviews? Select ALL that apply.
Strategic Supplier Business Reviews are used for long-term and important suppliers. The study guide states that this type of review is more commonly seen where an organisation has significant sole sourcing, tiering, or partnership relationships, particularly those spanning a long time scale. Sharing future plans and incorporating developments in each organisation is important for maintaining strategic integrity.
Option D (short-term bottleneck supplier) is incorrect because strategic reviews are for long-term supplier relationships.
Option E (supplier of direct components) is incorrect because it does not specify that the supplier is of strategic importance. (See p.190)
In a bottom-up process for planning and control, who would make the strategic plan?
Operational staff would make the plan and pass this up to senior managers for approval. This is the opposite of a top-down approach, where senior managers make the plan and tell the operational staff what to do. (See p.187)
Strategic stocking decisions are likely to change under what circumstances? Select ALL that apply.
Strategic stocking decisions change when external factors shift, such as a competitor going out of business (leading to increased demand) or a vulnerability in raw material supply (e.g., a bad harvest). Short lead times and low demand do not necessarily change stocking decisions but rather influence how stock is currently managed. (See p. 159)
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 the trade-off in the modification of product X?
The modification of product X is aimed at making it more environmentally friendly but results in a longer production time. This means that the trade-off is speed---production takes longer. (LO 1.2)
Exam domains verified against: Official CIPS L6M9 exam guide, last checked October 2026.
Assess the meaning of supply network design and its influence on the organization, including what constitutes a supply network, how its terminology and structures differ from supply chains, and where operations sit within the broader network. Evaluate how strategic supply chain networks should be configured by examining decisions around make or buy, insourcing versus outsourcing, and vertical integration. Assess the influence of capacity on strategic supply chain design, including optimum capacity levels, timing of capacity changes, and capacity-leading and lagging strategies.
Assess the meaning of operations strategy and whether an organization has one that aligns with both business strategy and market requirements. Evaluate key elements of operations strategy including vision and objectives, the four stages model, and the five performance objectives of quality, speed, dependability, flexibility and cost. Assess the role of continuous improvement in operations strategy, understanding trade-offs between performance objectives and how to move toward the efficient frontier.
Evaluate the concept of strategic resource planning and control by understanding how customer needs translate into operational delivery, and the role of forecasting, capacity, resources, priorities, scheduling, monitoring and control. Assess key elements including loading, prioritisation, sequencing, scheduling, monitoring and control, and the decision mechanisms that drive the process. Contrast methods of monitoring and controlling operations including push and pull approaches, theory of constraints, MRP and MRP II, and web-integrated ERP systems.
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