Get CIPS L6M9 Exam Dumps

Answer : B, C

Optimum capacity is achieved when:

Customer demand is met (B)

Production costs are minimized (C)

Incorrect options:

(A) is false because optimum capacity isn't necessarily the physical limit

(D) is false because the factory should be operating at a profit, not breakeven

(E) is false because the lowest cost per unit is achieved, not the highest

(F) is false because inventory levels should be minimized, not maximized (to reduce storage costs)

(See LO 1.3, p.46)

Answer : D

Backward vertical integration occurs when a company acquires a supplier or producer that is further upstream in the supply chain. In contrast, forward vertical integration happens when a company buys a retailer or distributor further downstream.

Note: Forward horizontal and backward horizontal integration do not exist---these are trick options. (See LO 1.2, p.42)

Answer : A, C, E, F

The Value Net consists of suppliers, customers, competitors, and complementors. Unlike a supply chain, which focuses on material and information flow, the Value Net is about creating business value.

Supplier: Provides goods/services

Customer: Purchases goods/services

Competitor: Competes in the same market

Complementor: A business that enhances your product/service offering

Buyer and distributor are not primary players in the Value Net. (See LO 1.2, p.31)

Answer : C

Start to start means two different organisations at different levels of the supply chain begin their work simultaneously rather than sequentially. This is the opposite of a start to finish system, where the next process starts only when the previous one is completed. (See LO 1.2, p.19)

Answer : B

The Bullwhip Effect describes how small changes in demand at the consumer level create larger variances in supply chain orders upstream. It leads to inefficiencies, overstocking, or shortages.

Note: This is also known as the Forrester Effect (not 'Forrest Effect'---that was a trick!). A famous real-world example occurred during COVID-19, when panic-buying caused toilet paper shortages.

For more insights, read: The Bullwhip Effect & Toilet Paper Shortages (See LO 1.1, p.12)

For more insights, read: The Bullwhip Effect & Toilet Paper Shortages (See LO 1.1, p.12)