Question 1

A manufacturer aims at increasing the service levels to 99% from 97% through expanding the safety stock. Safety stock can be used to accommodate which of the following?

1. Variability of stock turn

2. Variability of holding costs

3. Variability of demand

4. Variability of lead time

Options :

A : 3 and 4 only

B : 1 and 2 only

C : 2 and 4 only

D : 1 and 3 only

Answer: A

Question 2

The amount of inventory available at the start of an accounting period is known as...?

Options :

A : Closing stock

B : Buffer stock

C : Opening stock

D : Work-in-progress

Answer: C

Question 3

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

Options :

A :

Yes, because the operation cost for warehouse reaches minimal level

B : No, more warehouses will reduce the cost of storage

C : Yes, because warehouse overheads are fully utilised

D : No, fewer warehouse may lead to increasing transport costs

Answer: D

Question 4

GAP Ltd is a retail business that wants to reduce its spending on stock. Its current procurement process is manual, repetitive and slow. The management team plans to use procure-to-pay (P2P) software to streamline the process and cut costs. What kind of cost is GAP aiming to lower?

Options :

A : Cost of stockouts

B : Acquisition costs

C : Holding costs

D : Disposal costs

Answer: B

Question 5

Which of the following are examples of subjective methods of forecasting? Select TWO that apply. Trend line analysis Moving averages Market research Expert opinion Seasonal variations

Options :

A : 1 and 2 only

B : 3 and 4 only

C : 2 and 5 only

D : 1 and 5 only

Answer: B

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