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NEW QUESTION 33 The minimal total cost is always achieved when there is only one warehouse. Is this statement true?

• A. No, fewer warehouse may lead to increasing transport costs
• B. Yes, because the operation cost for warehouse reaches minimal level
• C. No, more warehouses will reduce the cost of storage
• D. Yes, because warehouse overheads are fully utilised

Answer: A Explanation: The total cost of storage consists of two different costs: - The cost of warehouses: each one has a different cost, and each has the cost of stock-holding and stock management included - The transport costs: the total transport cost reduces as further warehouses mean shorter final delivery to the customers. Depending on each situation, the optimal number of warehouses varies. Generally, more facilities will increase the cost of warehouses while reduce the transport costs and vice versa. Reference: LO 1, AC 1.1   NEW QUESTION 34 "Open stock plus purchases minus closing stock" is the formula of which of the following?

• A. Revenue
• B. Liability
• C. Inventory
• D. Cost of goods sold

Answer: D Explanation: The amount of closing stock (properly valued) is used to arrive at the cost of goods sold in a periodic inventory system with the following calculation: Opening stock + Purchases - Closing stock = Cost of goods sold Reference: - CIPS study guide page 130-131 - Closing stock definition LO 2, AC 2.3   NEW QUESTION 35 XYZ Ltd is a highly profitable leading industrial distributor with over 60,000 products and an enviable record for customer service. After undertaking preliminary discussions it was decided to analyse the value-adding activities that contribute to XYZ's flagship products. The company is conducting which of the following activities?

• A. Silo-working
• B. Value stream mapping
• C. Kanban
• D. Postponement

Answer: B Explanation: According to Hines and Rich, value stream refers to specific parts of the firms that actually add value to the specific product or service under consideration. XYZ Ltd is mapping the value stream by analysing the value-adding activities that contribute to their most important product. Postponement is a business strategy which maximizes possible benefit and minimizes risk by delaying further investment into a product or service until the last possible moment. An example of this strategy is Dell Computers' build-to-order online store. One of the earliest references to the concept was in a paper by Zinn and Bowersox in the Journal of Business Logistics. They highlighted five types: Labelling, Packaging, Assembly, Manufacturing and Time postponements. Kanban (signboard or billboard in Japanese) is a scheduling system for lean manufacturing and just-in-time manufacturing (JIT). Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. Kanban is one method to achieve JIT. The system takes its name from the cards that track production within a factory. For many in the automotive sector, kanban is known as the "Toyota nameplate system". Put simply, silo working occurs when several departments or groups within that organisation do not want to share information or knowledge with other individuals they work with. Reference: LO 2, AC 2.3   NEW QUESTION 36 Which of the following best describes category 'A' in ABC analysis in inventory management?

• A. Items with high uncertainty
• B. Items with low uncertainty
• C. Items with high values
• D. Items that represent approximately 15% of total value

Answer: C Explanation: ABC classifications are applied to stock and its management is based loosely on the Pareto princi-ple, better known as the 80/20 rule. The likely outcome of analysis of inventory (value importance): - Category A - about 20% of the stock items account for about 80% of the total inventory value. Items in category A have the highest value. - Category B - about 30% of items account for about 15% of total inventory value - Category C - the remaining 50% of items account for 5% of the total inventory value Reference: LO 2, AC 2.1   NEW QUESTION 37 ......