The CIPS Whole Life Asset Management (L4M7) exam is a good choice and if the candidate manages to pass CIPS Whole Life Asset Management exam, he/she will earn CIPS Level 4 Diploma in Procurement and Supply Certification. Below are some essential facts for CIPS L4M7 exam candidates:
What is meant by the term 'obsolete stock'?
Correct : A
Obsolescent stock is stock, usually finished goods, which is in good condition and satisfactory working but for which demand is irreversibly falling towards zero. Once this demand reaches zero the stock can be considered 'obsolete'. It cannot be used or sold in its current state. Food ingredients (like candy canes) which are out of date are another example.
LO 2, AC 2.1
Sidel Corp is a major food processor. It invested heavily on manufacturing facilities and processing machineries. Sidel's expenses on maintenance are exceptionally high. To minimise the total cost of maintenance, what should Sidel Corp do?
Correct : D
Maintenance can represent a significant portion of the cost in asset intensive organisations (such as Sidel - a food processor), as breakdowns have an impact on the capacity, quality and cost of operation. However, the formulation of a maintenance strategy depends on a number of factors, including the cost of down time, reliability characteristics and redundancy of assets. Consequently, the balance between preventive maintenance (PM) and corrective maintenance (CM) for minimising costs varies between organisations and assets. Nevertheless, there are some rules of thumb on the balance between PM and CM, such as the 80/20 rule.
Preventive maintenance is a type of proactive maintenance, while corrective maintenance is an example of reactive maintenance. Therefore, the answer should be 'Balance between proactive maintenance and reactive maintenance'.
- Preventive and corrective maintenance -- cost comparison and cost--benefit analysis
- CIPS study guide page 158-163
LO 3, AC 3.1
