L4M7 Exam Preparation Material | Whole-life Assets Management

Explanation:
According to L4M7 study guide, acquisition costs in procurement are the costs associated with the activities involved in a purchase. A buying organisation incurs acquisition costs in low-value purchases as well as high-value purchases.
The following purchases tend to have lower acquisition costs:
- Straight re-buy from a current supplier
- Purchase of standard catalogued products
Otherwise, any purchases of high value, high-risk items generally require greater attention of buying organisation and thus, they are likely to have higher acquisition costs. Spot purchase of a technically complexed machinery, Purchase of ERP system and Procurement of construction projects are examples of high-value, high-risk purchases.
Reference: CIPS study guide page 148-149
LO 3, AC 3.1

Explanation:
The holding cost per day of the beer pallet is equal to 1.50/2=0.75
The beer pallet is stored for 5 days, the total holding cost is: 0.75*5=3.75.
LO 2, AC 2.2

Explanation:
Last in, first out (LIFO) is a method used to account for inventory that records the most recently produced items as sold first. Under LIFO, the cost of the most recent products purchased (or produced) are the first to be expensed as cost of goods sold (COGS)―which means the lower cost of older products will be reported as inventory.
Moving average: a calculation to analyse data by creating series of averages of different subset of full data set. It is commonly used with time series data to smooth out short-term fluctuation and highlight long-term trends or cycle
ABC analysis is a method of analysis that divides the subject up into three categories: A, B and C.
There is no technique called time-weighted series.
LO 2, AC 2.3

Explanation:
Possible solutions to the high irregular or seasonal demand problems are listed below:
• Take advantage of the height of the warehouse - Mezzanine floor
- High racking system (increase storage capacity but require high-reach material handling equipment)
• Eliminate dead stock or inventory
• Improve material flow
• Improve storage location method
• Consider using aisle space during demand peak
• Narrow aisles between racks (require narrow handling equipment)
• Carousel-type storage system
• Auto-storage and retrievals system (ASRS)
Reference: CIPS study guide page 22
LO 1, AC 1.1

Explanation:
Material Requirements Planning (MRP) software manages material requirements for manufacturing processes.
LO 2, AC 2.3