CIPS M4L7 (Whole Life Assessment
Management) LO2 QUESTIONS AND ANSWERS
What are preliminary costs?
Correct Answer -costs associated with actions before raising the purchase
order
What are placement costs?
Correct Answer -the cost of raising the purchase order and ensuring the
supplier receives it
What are post-placement costs?
Correct Answer -the costs after the purchase order has been raised,
necessary to get the goods to the requestor and payment to the supplier
What are holding costs?
Correct Answer -costs associated with the storage and handling of
physical stock
What are the two types of holding costs?
Correct Answer -- costs related to the value of the goods
- costs related to the physical characteristics of this inventory
what are the costs associated with a stockout?
Correct Answer -- loss of production output - there will be no production
until the stockout is resolved
-costs of machine downtime and of overheads spread out over a reduced
level of output
- costs of any action required to deal with the stockout