L4M7 Whole Life Asset Management Questions and Answers

Explanation

Available inventory (or Inventory position - IP) is equal to inventory on-hand plus quantity on order minus backorder (if any)

Explanation

The safety stock (or buffer stock) is the stock level that limits stock shortages due to unforeseen events (forecasts not in line with demand, longer than expected supply time, etc…)

Demand variance is the degree to which the demand in a fixed period deviates from the average demand of the same period.

A reorder point is the unit quantity on hand that triggers the purchase of a predetermined amount of replenishment inventory.

The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules.

Vendor-owned stock allows the hospital to keep essential items available without holding costs. The vendor retains ownership until the item is used, helping the hospital avoid large upfront costs for low-frequency items. This technique aligns with whole-life asset management principles by reducing inventory holding costs while ensuring critical items are readily accessible.

Explanation

Multi-part pricing. The transaction price is calculated from using two or more metrics rather than just one. The most common economic example of a price structure beyond unit pricing is called a two-part tariff. Basically it can be described such that the “entrance fee” provides the privilege of purchasing the metered component. A common multi-part tariff is the two-part tariff in electricity, under which the customer pays a monthly fee for access and a usage fee for consumption of electricity. With this two-part tariff, the operator is able to charge a price equal to marginal cost for electricity, which is profit maximizing, and deviate from marginal cost pricing in the fee for access.

Freemium is an internet-based pricing strategy where a service is offered for free in the beginning, but the price is charged on the premium package with some additional features. However, freemium pricing strategy is different from the premium pricing strategy because freemium offers free sample which you can use without paying anything, you’ll only be charged when you want additional features.

Demand pricing is also synonymously used for dynamic pricing; it is a relative term used in the online platform. Dynamic pricing means different pricing is charged from the different customers depending upon the urgency, customer’s ability and demand of the customers.

Explanation

Mounting or embedding RFID tags on metal can be tricky. Metal surfaces reflect energy emitted from RFID readers and create interference for RFID tag antennas, which means the tag isn't able to receive power and transmit information; however, specific RFID tags will work around metal sur-faces. RFID companies have patented technology that allows RFID to work when attached to metal surfaces and even embedded within metal products. As long as you choose the correct RFID equipment for your environment and application, you won't need to worry about interference from metal.

Maintenance and repair costs include:

Direct labor: Expenses for personnel performing maintenance tasks.

Warranty costs: Expenses associated with warranty obligations or repairs within the warranty period.

These costs are part of whole-life asset management, which aims to accurately budget for and manage ongoing equipment expenses.

Explanation

Direct and indirect costs of holding inventory include the following:

- Acquisition costs

- Holding costs: There are 2 different types of holding costs: costs related to the value of the goods (including opportunity costs, costs of insurance, losses due to product deterioration, etc) and costs related to the physical characteristics of this inventory.

- Costs of stockouts

Explanation

Costs of holding inventory include the following:

• Acquisition cost

• Inventory holding cost

• Costs of stock-outs

Acquisition costs follow the typical procure-to-pay model. Benefits of procure-to-Pay (P2P) software include:

- Vendor Management, which includes researching, selecting, engaging with, and evaluating the performance of suppliers who make up your supply chain.

- Purchase Requisition Workflows, or the formal process of creating and submitting a purchase requisition (PR) for approval to meet a specific business need.

- Purchase Order (PO) Workflows, covering the creation of a formal, detailed PO from the purchase requisition, including information on the quantity and quality of goods and services, as well as specific terms and conditions.

- Receiving, which includes the acceptance of physical goods (or review of quality and completion for services) and entering the accepted order into inventory, tracking, and accounting systems.

- Invoice Management, during which the invoice is compared to the original PO to verify pricing, quality, quantity, and terms have been met.

- Accounts Payable Workflows, wherein the accounts payable department processes the invoice for payment, submits the payment to the vendor, and reconciles any related financial entries in the accounting system.

The software is intended to help reduce the acquisition costs.

LO 2, AC 2.2

Explanation

A cost-benefit analysis is a process businesses use to analyze decisions (such as capital investment). The business or analyst sums the benefits of a situation or action and then subtracts the costs associated with taking that action.

A cost-benefit analysis (CBA) should begin with compiling a comprehensive list of all the costs and benefits associated with the project or decision.

The costs involved in a CBA might include the following:

- Direct costs would be direct labor involved in manufacturing, inventory, raw materials, manufacturing expenses.

- Indirect costs might include electricity, overhead costs from management, rent, utilities.

- Intangible costs of a decision, such as the impact on customers, employees, or delivery times.

- Opportunity costs such as alternative investments, or buying a plant versus building one.

- Cost of potential risks such as regulatory risks, competition, and environmental impacts.

Benefits might include the following:

- Revenue and sales increases from increased production or new product.

- Intangible benefits, such as improved employee safety and morale, as well as customer satisfaction due to enhanced product offerings or faster delivery.

- Competitive advantage or market share gained as a result of the decision.

An analyst or project manager should apply a monetary measurement to all of the items on the cost-benefit list, taking special care not to underestimate costs or overestimate benefits. A conservative approach with a conscious effort to avoid any subjective tendencies when calculating estimates is best suited when assigning a value to both costs and benefits for a cost-benefit analysis.

Finally, the results of the aggregate costs and benefits should be compared quantitatively to deter-mine if the benefits outweigh the costs. If so, then the rational decision is to go forward with the project. If not, the business should review the project to see if it can make adjustments to either increase benefits or decrease costs to make the project viable. Otherwise, the company should likely avoid the project.

Indirect stock refers to items that are necessary for the operation of the manufacturing process but are not incorporated into the finished product. Examples include maintenance supplies, office consumables, and tools. In whole-life asset management, indirect stock management ensures that essential operational items are available without tying up excessive capital in inventory that doesn’t contribute directly to production output.

Explanation

It is important to ensure safe working in storage facilities, and access to higher shelves or racking presents a challenge. Lifting at full reach becomes a problem at relative low weight. There can also be danger for other workers who are around someone working at height, from the movement of equipment or dropping stock from a height.

Scissor platforms are used in high-roof warehouses to gain access to lighting, high-racking units and sections of wall and roof.

ORDER PICKER is manual or powered device - some with ride-on capability and some without. This allow for low-level, medium-level and high-level picking of various items. Many are equipped with forks to allow transfer capability of larger picked boxes. Higher-level and narrow or very narrow -aisle versions have the ability to elevate operators on the front platform to higher racking to pick items.

Grabs are designed to hold stock either width-wise or from above. These are either specific devices designed for grabbing materials or are available as an accessory to forklift trucks.

Carousels are space-efficient, rotating devices which allow access to a large range of product from a single location. Designs are variable, with carousels rotating horizontally or vertically until the required items can be retrieved.

Stacker-cranes are designed for the automated storage and retrieval of unit loads, in high-bay warehouses. They travel in aisles equipped with guide rails, electrical supply, data transmission and control systems. To ensure the storage and retrieval functions, the stacker-crane carries out three types of movement : long-travel, lifting and picking.

Independent demand items refer to goods that are not directly tied to the production process. Examples include:

Office consumables: Supplies such as paper or printer ink used in general operations.

Completed finished goods: End products ready for sale, whose demand depends on the market rather than production schedules.

In whole-life asset management, managing independent demand items is important for optimizing storage and procurement, as these items impact operational costs differently than production-related items.

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.

Explanation

Along with Jidoka, Just-in-time (JIT) production is one of the pillars of the two Toyota Production System. It is a production method that fundamentally changed the way large-scale production oc-curred in the 20th century, and is the basis for Lean Manufacturing (Lean for short), which is the school of thought many modern companies have modeled themselves after.

JIT production is often called a pull system because instead of using traditional push production where scheduling is done based on historical data and demand forecasting, production is scheduled based on actual customer orders. Rather than predicting demands from customers, the JIT method requires that actual customer demand exists. Production doesn't begin before an order triggers it. This system not only reduces the amount of extra inventory, but also reduces the amount of work in progress at one time.

Explanation

The purposes of stores and warehouses are:

1. Maximum use of space.

2. Ready access to all items.

3. Efficient movement of goods.

4. Effective utilization of labour & equipment’s

5. Maximum protection of items

6. Good-house-keeping.

Explanation

It would be really convenient if we could just hand our products directly to the customers, but that’s not possible. Packaging needs to be done for several reasons. Here are some of the most prominent ones:

1. Safety: Packaging is used to keep your product safe from external factors. It also prevents human tampering. If you want to sell fruit juice, you just can’t hand it over to customers. It should be packaged in something, like a stand up pouch.

2. Brand visibility: You provide the best product in your category and you want your customers to remember that. How else will you do that without using the right kind of creative food packaging?

3. Bundling it together: If you want to sell an ounce of something, you need to create a packet so that the right amount is bundled together.

4. Theft prevention: If you sell your product loose, there are chances that the retailer doesn’t give the right amount to the customer and saves some part for himself. There are other cases too where theft can be done in the absence of packaging.

Apart from these four, there are many other reasons why you should package your products.

Explanation

JIT, often referred to as the Toyota production system (TPS), originated in Toyota’s manufacturing plants in Japan in the early 1970s. It was first introduced by the organisation's owner, Taiichi Ohno. The prime goal of JIT is the achievement of zero inventories.

The just-in-time objectives of eliminating waste can be summarised in the 'five zeros: zero defects, zero set-up times, zero inventories, zero handling and zero lead times.

Explanation

In a traditional warehouse, storage racks are arranged to create parallel picking aisles, perhaps with one or more cross aisles to allow workers to move quickly between picking aisles. This structure forces workers to travel rectilinear distances (north-south and east-west) to picking locations.

Kevin R. Gue and Russell D. Meller proposed alternative aisle designs:

- The 'Fan' shaped layout (or “Flying V”). This layout maintains parallel picking aisles, but al-lows the cross aisle to take on a different shape. If travel begins and ends at the bottom of the V, Gue and Meller expected distance to retrieve a single pallet is 10% less in this warehouse than in an equivalent traditional design.

- The Herringbone-shaped layout (or commonly referred as Fishbone layout) combines the verti-cal picking rows of a traditional warehouse with a second set of horizontal picking rows, divided by a V-shaped diagonal alley crossing the entire warehouse. This simple modification to the typical warehouse design allows employees (e.g. a forklift driver) to increase travel speed between picking locations. Efficiency gains achieved through a layout reconfiguration would reduce picking cost up to 23% compared to an equivalent warehouse using a traditional configuration.

Reference

Aisle Design - Kevin Gue

LO 1, AC 1.1

In a Hire Purchase Agreement, ownership of the asset transfers only after all installments are fully paid. This financing option allows organizations to use an asset immediately while spreading out payments. In whole-life asset management, hire purchase is suitable for assets with long service lives, allowing organizations to use them without a large initial investment.

Explanation

There are many different factors that must be considered when assessing warehouse and stock locations:

• Operating cost of the location or area

• Availability and suitability of warehouses

• Availability of manpower or labour

• Proximity to suppliers and customers

• Access to transport infrastructure (domestic and international)

• The political and security environment of the location

LO 1, AC 1.1

Explanation

Lean thinking aims to remove wastes from work processes. Before diving into the 8 wastes, it is important to understand what waste is. Waste is any action or step in a process that does not add value to the customer. In other words, waste is any process that the customer does not want to pay for.

The original seven wastes (Muda) was developed by Taiichi Ohno, the Chief Engineer at Toyota, as part of the Toyota Production System (TPS). The seven wastes are Transportation, Inventory, Motion, Waiting, Overproduction, Overprocessing and Defects. They are often referred to by the acronym ‘TIMWOOD’. The 8th waste of non-utilized talent or ‘Skills’ of workers was later introduced in the 1990s when the Toyota Production System was adopted in the Western world. As a result, the 8 wastes are commonly referred to as ‘TIMWOODS’.

Source: The lean way

Multiple approval levels for a small purchase request is an example of over-processing since this adds more unnecessary work to users and procurement professionals.

Explanation

The core idea of lean manufacturing is actually quite simple…relentlessly work on eliminating waste from the manufacturing process. Waste is defined as any activity that does not add value from the customer’s perspective. According to research conducted by the Lean Enterprise Research Centre (LERC), fully 60% of production activities in a typical manufacturing operation are waste – they add no value at all for the customer.

On the other hand, agile manufacturing places an extremely strong focus on rapid response to the customer – turning speed and agility into a key competitive advantage.

Explanation

The bullwhip effect (or Forrester effect) is a distribution channel phenomenon in which forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.

Seasonal demand: consumer interest in purchasing particular products only during a specific peri-od within the calendar year.

OPITZ is a coding system used to form Groups in Group Technology philosophy of Manufactur-ing.

The Pareto Curve is the shape created when the bars of a Pareto Chart are progressively summed and the points joined together. The final curve ends at 100% of items in the chart, which means that you can then draw a line across at 80% and 'bounce' it down to find the bar which, when combined with all bars to its left, will give 80% of all items.

RFID technology, while advanced, has several limitations:

Cost: RFID can be expensive, particularly for smaller operations.

Reading limitations with certain materials: Liquids and metals can interfere with RFID signals, limiting their effectiveness.

Interference: Devices such as radios can disrupt RFID systems, reducing reliability.

In whole-life asset management, these disadvantages may affect the decision to implement RFID, especially in cost-sensitive or materials-sensitive applications.

The turning circle of the forklift truck and the size of the pallet it carries are primary factors in determining aisle width. The aisle width must accommodate forklift maneuvers for safe and efficient access to stored items. Whole-life asset management emphasizes warehouse layout planning to optimize space usage, reduce handling time, and enhance safety.

Explanation

The Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of tariff nomenclature is an internationally standardized system of names and numbers to classify traded products. It came into effect in 1988 and has since been developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization based in Brussels, Belgium, with over 200 member countries.

The Global Trade Item Number (GTIN) is an identifier for trade items, developed by GS1. Such identifiers are used to look up product information in a database (often by entering the number through a barcode scanner pointed at an actual product) which may belong to a retailer, manufacturer, collector, researcher, or other entity.

The Global Location Number can be used by companies to identify their locations, giving them complete flexibility to identify any type or level of location required.

The International Mobile Equipment Identity (IMEI) is a number, usually unique, to identify 3GPP and iDEN mobile phones, as well as some satellite phones.

Demand forecasting accuracy relies on the validity and reliability of available data. Forecasting is strengthened when information sources are credible, accurate, and consistently updated. In whole-life asset management, precise forecasting minimizes excess inventory and aligns inventory levels with demand, reducing holding costs and improving supply chain efficiency.

Explanation

Material requirement planning (MRP) is a production planning and material (inventory) control system used in manufacturing. Objectives of MRP are to ensure materials are available for production while minimising inventory and to plan production and procurement activities.

MRP software combines the master production schedule, the bill of materials and the inventory information to work out the net requirements (net MRP) of what to purchase or produce and when.

These net requirements are worked out using the following equation:

Net requirements = Total requirements - Available inventory

Where:

Total requirement = Gross requirements (gross MRP)

Available inventory = Inventory on hand + Units on order

In the other words, Gross MRP = Net MRP + Available inventory, so the answer should be "The gross MRP includes consideration of available inventory, whereas the net MRP does not"

LO 2, AC 2.3

Explanation

The purposes of a warehouse are to keep the inventories in good condition and to ensure that the operations is smooth. In the scenario, the warehouse has 2 stories, with goods-in and goods-out areas located on the ground floor and a lift connecting the stories. The lift could become a bottleneck if the goods inside the warehouse are not well-arranged.

Since the lift is often small with limited load capacity, putting heavy bulk items on the first floor will cause bottleneck and increase the chance of accidents. Therefore, palletised items (even they have low-usage) should be placed on the ground floor. Smaller and lighter items should be stored on the first floor.

This QUESTION NO: does appear in the real exam. To answer the question, students should imagine the situation.

Leasing offers several advantages in procurement, particularly in high-value asset management:

No initial investment: Leasing eliminates the need for a significant upfront capital outlay, preserving working capital for other purposes.

Protection against obsolescence: Leasing agreements often allow organizations to upgrade equipment, thus mitigating risks related to technology becoming outdated.

While capital allowances (option 1) may be relevant in purchases, they do not apply to the leasing advantage. Option 4, highlighting the total cost, is typically a disadvantage of leasing, not an advantage, as leasing can be more costly over time compared to an outright purchase.

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.

Explanation

The costs of stockouts - the costs of being out of inventory - include:

- Loss of production output

- Costs of idle time and of fixed overheads spread over a reduced level of output

- Costs of any action taken to deal with the stockout, such as buying from another stockist at an enhanced price, switching production, obtaining substitute materials

- Loss of customer goodwill due to the inability to supply or late delivery.

(Procurement and Supply Chain management - 9th Edition, K. Lysons and B. Farrington, 2016)

LO 2, AC 2.2

Explanation

Organisations often create their own stock keeping unit (SKU) numbering system, which may or may not have a meaningful structure. Stock keeping unit is a number that is assigned to a product for the purpose of inventory management and is of tracking. In other words, a stock keeping unit is a unique identifier assigned to each product for easier and more efficient record keeping.

An FDA (US Food and Drug Administration) product code describes a specific product and contains a combination of five to seven numbers and letters. The product code submitted with each FDA line item should match the actual product name and/or invoice description of the product.

The International Standard Book Number is a numeric commercial book identifier which is in-tended to be unique. Publishers purchase ISBNs from an affiliate of the International ISBN Agency.

The Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of tariff nomenclature is an internationally standardized system of names and numbers to classify traded products.

Explanation

In the scenario, the buying organisation (investment bank) must conduct various types of testing before the deployment of the software system. These tests can be functional testing, factory ac-ceptance testing and/or user acceptance testing. The costs for all these types of testing are classified as acquisition costs with regards of total cost of ownership.

Explanation

Opening stock is the starting amount of inventory that a business has at a fixed moment in time. This could be the start of a financial year, another reporting period or ad hoc stocktake. The concept of opening stock mush not be confused with raw materials

Closing stock is the inventory held at the end of the period under consideration. Thus, the closing stock of one period is automatically the opening stock for the next.

Work in progress is the stock part-way through a manufacturing process; in the service sectors the term is also used for anything between order and delivery.

Buffer stock (safety stock) is the stock held as a contingency or insurance against disruption or unexpected demand.

LO 2, AC 2.1

Explanation

Minimum open aisle width for standard counterbalance forklift is 10.5-13.1 ft. You can look at the minimum aisle width for different equipment here, or calculate yourself with an instruction here.

LO 1, AC 1.3

Explanation

Fixed-Time Period System (or Periodic Review system) is the inventory management system in which inventory is checked in fixed time periods, T, and the quantity ordered varies.

The imprest system is a form of financial accounting system. The most common imprest system is the petty cash system. The base characteristic of an imprest system is that a fixed amount is re-served, which after a certain period of time or when circumstances require, because money was spent, it will be replenished.

So the correct answer should be "Items are reviewed as part of an imprest system"

LO 2, AC 2.3

Explanation

Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP provides an integrated and con-tinuously updated view of core business processes using common databases maintained by a data-base management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information flow between all business functions and manages connections to outside stakeholders.

Manufacturing resource planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning, and has a simulation capability to answer "what-if" questions and extension of closed-loop MRP. This is not exclusively a software function, but the management of people skills, requiring a dedication to database accuracy, and sufficient computer resources. It is a total company management concept for using human and company resources more productively.

A master production schedule (MPS) is a plan for individual commodities to be produced in each time period such as production, staffing, inventory, etc. It is usually linked to manufacturing where the plan indicates when and how much of each product will be demanded. This plan quantifies significant processes, parts, and other resources in order to optimize production, to identify bottlenecks, and to anticipate needs and completed goods. Since a MPS drives much factory activity, its accuracy and viability dramatically affect profitability.

Procure-to-pay (P2P) is a term used in the software industry to designate a specific subdivision of the procurement process. The procure-to-pay systems enable the integration of the purchasing department with the accounts payable (AP) department. Some of the largest players of the software industry agree on a common definition of procure-to-pay, linking the procurement process and financial department.

LO 2, AC 2.3

Common coding faults include:

Long code words: Codes that are too lengthy are challenging to use and may lead to errors.

Lack of room for expansion: If codes cannot accommodate new items, future adjustments become difficult.

Efficient coding is essential for inventory tracking and asset management, enabling clear, scalable, and user-friendly identification systems.

Explanation

Safety stock is also known as buffer stock. As this name suggests, this type of stock provides some kind of 'buffer', which means safety stock will help the business to reduce the shocks induced by volatile demand or disruption on the supply chain. In other words, safety stock will reduces the probability of stockouts. The following graph would explain the reason why an organisation should have safety stock:

Chart, histogram Description automatically generated

Figure 1: Safety stock graph

As it is only the buffer against uncertainty, safety stock level should be equal to the deviation of demand or replenishment time. Safety stock should be able to accommodate variance of demand and variance of lead time.

Explanation

Work in progress is the stock part-way through a manufacturing process; in the service sectors the term is also used for anything between order and delivery.

Explanation

In principle, use of any materials involves an environmental cost. Some packaging materials use a lot of natural resources and energy to produce. The journey taken by packaging from raw material to manufacturing and then to the initial user also incurs a 'carbon footprint'. The weight of packag-ing contributes to the fuel usage of vehicles while the volume used can add up to additional jour-neys or the use of larger vehicles. Finally, the reuse, return, disposal or recycling will also involve additional to the environmental cost.

In this question:

- 'Purchase the packaging materials in bulk' may incur additional fuel and carbon footprint in delivering these materials

- 'Try to reduce the costs of packaging' may prompt the organisation to use less eco-friendly and cheap materials like polystyrene chips

- 'Not use the packaging materials at all' can increase the environmental performance of packag-ing activities, but it also harms the products to be delivered and may cause other environmental problems (i.e. spillage of toxic chemicals into the environment)

So the correct answer should be: 'Adopt international environmental packaging standards'. The International Standards Organisation (ISO) has published several standards regarding packaging and environment, namely ISO 18601, ISO 18602, ISO 18603, ISO 18604, ISO 18605, ISO 18606.

Explanation

According to Hines and Rich, value stream refers to specific parts of the firms that actually add value to the specific product or service under consideration. XYZ Ltd is mapping the value stream by analysing the value-adding activities that contribute to their most important product.

Postponement is a business strategy which maximizes possible benefit and minimizes risk by delaying further investment into a product or service until the last possible moment. An example of this strategy is Dell Computers' build-to-order online store. One of the earliest references to the concept was in a paper by Zinn and Bowersox in the Journal of Business Logistics. They highlighted five types: Labelling, Packaging, Assembly, Manufacturing and Time postponements.

Kanban (看板) (signboard or billboard in Japanese) is a scheduling system for lean manufacturing and just-in-time manufacturing (JIT). Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. Kanban is one method to achieve JIT. The system takes its name from the cards that track production within a factory. For many in the automotive sector, kanban is known as the "Toyota nameplate system".

Put simply, silo working occurs when several departments or groups within that organisation do not want to share information or knowledge with other individuals they work with.

Decommissioning is the process of safely retiring equipment from use. It involves steps such as cleaning, dismantling, and responsibly disposing of the asset, especially if it contains hazardous materials. Whole-life asset management includes decommissioning as a key phase, ensuring that assets are disposed of cost-effectively and in compliance with environmental standards.

Including a currency fluctuation clause protects against exchange rate volatility, which can increase the final cost if the currency depreciates. Whole-life asset management often incorporates such risk management measures to ensure cost predictability and avoid unanticipated financial impact on long-term projects.

Explanation

Raw materials are basic input materials - they are only processed limitedly or have not been pro-cessed at all. Their values are equal to acquisition cost and are the lowest value of stock held.

Secondary components are the products that are combined with others to produce the finished goods. They are acquired in the processed state. Their value is higher than raw materials, but still at acquisition cost.

Work in progress is the stock part-way through manufacture that has not been finished. It is typically not completed yet, so it doesn't have full value. But the costs of processing already carried out makes it more valuable than materials and components.

Finished goods are completed and ready to be used or sold. Finished goods are the most expensive and need to be stored in good conditions.

Explanation

Total productive maintenance (TPM) is an innovative concept in the manufacturing industry that evolved from the idea of preventive maintenance to adopt practices of productive maintenance, maintenance prevention, and reliability Engineering. What we now refer to as TPM, has become an ingenious approach to achieve overall equipment effectiveness by involving the workforce behind the machines (i.e. the operators).

8 pillars of TPM

1) 5S - Sort, straighten, shine, standardize, and sustain

Just like a physical structure starts with a grounded framework, building a strong TPM process requires a strong foundation in the form of the principles of 5S. This is a workplace organization method that is simplified into 5 basic steps:

Sort tools, equipment, and materials to identify which of these can be discarded

Straighten and set things in proper order to reduce unnecessary motion and efficiently travel be-tween working groups and locations

Shine refers to performing necessary housekeeping to clean up the work area

Standardize and schedule activities to systematically form the habits to keep the workplace orga-nized

Sustain the process and principles for long-term applications

The 5S approach provides a systematic approach to cleaning the workplace, thereby uncovering underlying problems and challenges.

2) Autonomous maintenance

Maintenance tasks and caring for equipment should start with the people using the equipment. The empowerment of operators to work on small maintenance tasks effectively allows the maintenance teams to focus on more specialized assignments.

3) Continuous improvement

Also known as the Japanese term Kaizen, Continuous Improvement promotes the attitude of pro-gressing towards zero losses and zero defects. Through small but continual tweaks to processes, the overall effectiveness and efficiency of the organization is developed.

4) Planned maintenance

Planned maintenance activities are essential to the prevention of equipment breakdown. Planned maintenance is performed by periodically evaluating the condition of equipment to proactively prevent deterioration and mechanical failures.

5) Quality maintenance

To ensure the satisfaction of the customer, manufacturing processes aim for zero-defect production. Standards for superior quality, and checks on whether the standards are being met, should be in place. The goal of quality maintenance is to identify any possible causes of deviations from zero-defect production.

6) Training

The idea of TPM is that everyone does their part to contribute to the overall productivity of the production process. In order to achieve optimum performance, and to build each member’s competence, proper training is required to equip each one with the theoretical and practical know-how of working with machines and equipment.

7) Office TPM

A key role that is often overlooked is the administrative department that works behind the scenes. Like the rest of the production teams and processes, the management and administrative functions are also subject to productivity improvement. Tins includes identifying and eliminating losses, and contributing to the overall performance of the plant.

8) Safety, health, and environment

The last of the eight pillars focuses on creating a safe workplace. The essence of this pillar is real-ized when actively applied to each of the other pillars. The successful implementation of this pillar will contribute to a secure and hazard-free workplace.

Subjective forecasting methods, like market research and expert opinion, rely on qualitative judgment rather than numerical data. These methods are valuable when historical data is limited, or when anticipating market changes. Whole-life asset management may use subjective forecasts for long-term planning and to account for factors not captured in quantitative data.

Explanation

Assets in their end of life need to be removed or disposed. Though an organisation can incur some costs in decommissioning or removal of the assets, it may recover costs by reselling the assets. Therefore, sometimes the organisation can gain positive cash flow from removal and disposal of assets. The answer should be "No, the organisation may recover the value of the assets by reselling it".

LO 3, AC 3.3

Explanation

Two-dimensional (2D) barcodes look like squares or rectangles that contain many small, individual dots. This has many different types (i.e. Data matrix, QR codes, Aztec code,...) and several different standards in use (i.e. GS1 standards, ISO/IEC 18004:2015). It can be substituted for 1D barcode, but it has the capability to hold a larger amount of data. For examples, GS1 Data Matrix can contain 3116 Numeric characters or 2335 Alphanumeric characters while GS1-128 barcode has maximum capacity of 48 characters.

Like 1D barcodes, 2D barcodes are also machine-readable with dots/squares and spaces. They have symbology like this:

Since the code is two dimensional, conventional laser scanner can't read it. 2D barcodes require imaging scanner to read.

2D barcodes can be also used for different purposes throughout the supply chain: identifying prod-ucts/SKU (single unit, packaged or pallet), identifying content of a purchase order or delivery, identifying the batch number from which the item originates, identifying the manufacturer, country of origin etc, tracking status of an order, shipment or delivery

Subjective demand forecasting relies on qualitative methods that draw on expert experience and intuition rather than quantitative data. This includes techniques like the Delphi method, where experts provide insights based on their judgment. In whole-life asset management, subjective forecasting may complement data-driven forecasts when historical data is limited or demand patterns are unpredictable.

Explanation

The ISO 14000 family of standards are developed by ISO Technical Committee ISO/TC 207 and its various subcommittees. For a full list of published standards in the series see their standards catalogue. ISO 14001 provides requirements with guidance for use that relate to environmental systems. Other standards in the family focus on specific approaches such as audits, communications, labelling and life cycle analysis, as well as environmental challenges such as climate change.

ISO 27000 family of standards concerns information technology, with the goal of improving security and protecting company assets. Started in 2005, the two most popular standards are ISO 27001:2013 and 27002:2013. 27001 is management-based system, whereas 27002 is a technical document, focused on the individual and putting a code of conduct in place. Organizations can choose either standard; ISO 27001 has over 22,000 certifications worldwide. It is a broad standard, and for this reason the certification can be customized to fit the needs of the organization, and is not mandatory.

ISO 22000 sets out the requirements for a food safety management system and can be certified to it. It maps out what an organization needs to do to demonstrate its ability to control food safety hazards in order to ensure that food is safe. It can be used by any organization regardless of its size or position in the food chain.

ISO 9001 is a family of quality management standards, there are fourteen in total. Of these, ISO 9001:2015 is the only one that can be certified to. It was first published in 1987, and has since been updated about every 7 years. The standard details how to put a Quality Management System (QMS) in place to better prepare your organization to produce quality products and services. It is customer focused, and places an emphasis on continuous improvement and top management processes that extended throughout the organization.

Explanation

Void filling is the general term giving to the challenge of filling the space left in a box after the products have been packed. This means that if there is no void filling material, the product inside can move around and could be damaged. Materials to fill voids to secure contents

• Polystyrene (PS) is a synthetic aromatic hydrocarbon polymer made from the monomer known as styrene.[5] Polystyrene can be solid or foamed. General-purpose polystyrene is clear, hard, and rather brittle. It is an inexpensive resin per unit weight. It is a rather poor barrier to oxygen and water vapour and has a relatively low melting point.[6] Polystyrene is one of the most widely used plastics, the scale of its production being several million tonnes per year.[7] Polystyrene can be naturally transparent, but can be coloured with colourants. Uses include protective packaging (such as packing peanuts and CD and DVD cases), containers, lids, bottles, trays, tum-blers, disposable cutlery[6] and in the making of models. Polystyrene is generally considered to be non-biodegradable. However, certain organisms are able to degrade it, albeit very slowly.

• Chips made of bio-degradable materials

• Absorbent and fire-resistant material

• Shredded paper, cardboard or wood-Based material

• Paper or cardboard rolls

• Bubble wrap

• Air-filled cushions

• Self expanding foam

Straps are used to group items into unit load. Polypropylene or polyester are the materials most often used. The wider the strap, the stronger it will be. Using more than one strap and straps for length and width will create a strong place for stock.

Explanation

The system of slip sheet load handling involves the use of a thin sheet of material, the slip sheet, as a base on which items are assembled as a unit load for handling, storage, and transport. The slip sheet is used in conjunction with a pallet, if desired, at certain stages in the distribution cycle. If all lift trucks in the cycle are equipped with the proper attachment, an appropriate slip sheet is the only material handling base required. Slip sheet requires special push pull accessories and usually use thin and wide forks.

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Skids are generally described as single-deck pallets and do not have bottom flatted layer which makes them less bulky and cheaper than conventional pallets but also less universal in their use.

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Shrink wrap, also referred to as shrink film or shrink wrap, is a versatile polymer material used for the packaging of finished goods. Heat is applied to the film – by either a conveyor heat tunnel or an electric or gas heat gun – which catalyzes the film to shrink tightly around the item placed within. This process results in a clear, durable barrier of protection around the product.

Post pallets have a simple metal structure with four uprights and substantial feat to take the load. These may be free standing, but many are designed for the feet to interlock with the posts of another post pallet so that the stack can be created.

Variable periodic reviews enable ATT to manage seasonal goods effectively by adjusting ordering based on:

Lead times and sales volume: Classifying products by these factors helps in planning, aligning with varying supplier delivery times and unpredictable sales demand.

Implementing a JIT or MRP system would require more sophisticated management tools, making option C the most feasible. This method aligns with whole-life asset management by supporting efficient inventory planning while minimizing stockouts or overstock situations.