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CIPS Procurement and Supply in Practice Sample Questions (Q81-Q86):

NEW QUESTION # 81
What advantages could there be to holding excessive inventory? Answer: ** Explanation:
Holding excessive inventory can reduce the impact of extended lead time. i.e. by saving the buying organization from downtime, reputation loss, and also it can generate revenue for the organization if there is a sudden increase in demand.
NEW QUESTION # 82**
Describe two ways in which an organization with which you are familiar could use continuous im-provement as part of whole life asset management. Answer: ** Explanation:
Continuous improvement relates to removing waste from the supply chain and improving processes to increase efficiency within whole life asset management in a full power project (a flour producing firm) can benefit from continuous improvement in the following ways;
1) Reduce cost of spears by recondition parts, instead of disposing them out rightly.
2) Can reduce down time by conducting routine maintenance after hours.
3) Can reducing accident by up skilling operators on safety
4) Can reduce waste oil by following owner's manual instead of relying on experience.
5) Create efficiencies by operating a 24/7 shift pattern.
NEW QUESTION # 83**
Use the balance sheet below to work out the correct ratio for coffee Time and explain whether the company appears to have enough assets to cover it liability.

Answer: ** Explanation:
The current ratio is one of the two was to determine organizations liquidity (how quickly its assets can be converted into cash)

A current ratio of 1 shows that the organization has enough assets to repay (cover) it liability Buyers can be encouraged to deal with these suppliers after if they considered proven and strong in other areas.
NEW QUESTION # 84**
KPI should be written to match which area of an organization? Answer: ** Explanation:
Key performance indicator (KPI) is another method of monitoring how a supplier is delivering on a contract.
When creating KPIs to manage suppliers and their contracts the areas monitored should be related to the organization's overall strategy that is where organization's success will be measured.
NEW QUESTION # 85**
What does the acronym SMART stand for? Answer: ** Explanation:
When the procurement professional is setting key performance indicator (KPI) where which the supplier performance will be monitored and managed. The KPI is expected to be SMART. SMART is an acronym that is used to set KPI and specification.
S - specific ,
M - measurable,
A - achievable,
R - relevant, and
T - timebound.
NEW QUESTION # 86
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