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A company does not have enough space to hold inventory to satisfy an external foreign market. Therefore, the board of directors has decided that the company would buy stock in bulk and pay a fee for storage to a third-party warehouse provider local to the foreign market. This would allow the company to focus on other aspects of the business. The stock will be called off as and when required. Which of the following strategies is being pursued by this company?
Answer : C
Outsourcing involves contracting a third party to manage storage or logistics functions, which allows the company to concentrate on core business activities. In this case, outsourcing the warehousing needs aligns with whole-life asset management, as it optimizes resources and mitigates the challenges of limited storage capacity.
Buffer stock is a level of stock which ...
A. is when the physical ordering process should start to replenish used items B. is half of the actual stock that needs to be in the warehouse C. is the maximum stock in inventory D. is the minimum stock level below which actual stock should not fall
Answer :
Buffer stock serves as a safety net to prevent stockouts by ensuring that a minimum stock level is always maintained. This strategy is essential in whole-life asset management to manage demand fluctuations and minimize the risk of supply chain disruptions.
Staff at DIY Products Inc. (DPI) have been experiencing issues with the identification of stock items. The current labeling system is outdated and unreliable. DPI has therefore invested in a machine-readable approach. Each item has a unique number that is attached visibly to the packaging. This number can be deciphered by a scanner to aid identification. This approach is known as which of the following?
A. Standard certification B. Order tracking C. Bar coding D. Product tagging
Answer :
Barcoding allows DPI to label each item uniquely, making it scannable and easy to track. This method increases efficiency, accuracy, and traceability, key aspects of whole-life asset management that improve inventory control and reduce errors in item identification.
One of the classifications of inventory is referred to as 'indirect supplies.' Which of the following items are examples of indirect supplies in a water bottling plant?
Lubricants for maintenance of production machines
Computer cartridges for the procurement office
Reams of printed labels to stick on water bottles
Blue-colored plastic caps to seal the water bottles
A. 1 and 2 only B. 1 and 3 only C. 2 and 3 only D. 3 and 4 only
Answer :
Indirect supplies support operations but are not part of the finished product. For a bottling plant, items like lubricants for machine maintenance and office supplies are indirect supplies, as they aid in operation but do not enter the final product. Managing these supplies in whole-life asset management is critical for cost efficiency and operational support.
An organization might find it more beneficial to lease and use an asset over a predetermined period. After this period, the lessee has the right to secure outright ownership of the asset by paying an agreed amount; otherwise, the asset would be repossessed by the lessor. Which of the following is an advantage of leasing?
A. Long-term commitment to pay installments even if not using the asset B. Costs are known and agreed in advance C. The usage of the asset is usually capped D. The total cost of ownership is not applicable as the asset is leased
Answer :
Leasing allows an organization to predict costs accurately, as installment payments are pre-agreed. This makes financial planning simpler, which is especially beneficial in whole-life asset management where minimizing upfront capital expenditure is often a priority. Leasing also reduces the risk associated with asset obsolescence.
