CIPS L4M7 Exam Dumps

Dependent demand is the requirement for stock item which is directly related to and therefore de-pendent upon the rate of production (examples are: raw materials, components, energy). The com-ponents in the scenario are dependent demand items.

Independent demand is the requirement for stock item which is not directly related to, and is therefore independent of rate of production.

LO 2, AC 2.1

If the planning and mitigation measures fail and redundant or obsolete stock is identified, it needs to be removed from the current inventory location as quickly as possible. There are some methods to deal with these types of stock. The worst case scenario is disposal to landfill, which is inadvisable if it can be avoided, both from environment point of view and the financial costs of such disposal.

For example, the problem of obsolete pesticides remains extremely serious and urgent. Many of the stocks identified continue to deteriorate thereby giving rise to an ever escalating source of severe pollution and posing a threat to human health, the environment and development in particular. To reduce the impact of obsolete pesticides on environment, FAO initiated a project in Yemen in which a total of 262 tonnes of obsolete pesticides were removed from 20 different sites and successfully disposed of between March and June 1996. The major field operation was completed in six weeks during which period almost all obsolete pesticides were brought to a central location and subsequently shipped to the United Kingdom for incineration.

LO 2, AC 2.1

With consignment stocking, the supplier retains ownership until the item is used by the customer. This approach minimizes the customer's holding costs and improves cash flow, as payment is deferred until the item is consumed. It's particularly beneficial in whole-life asset management for inventory flexibility and reduced capital commitment.

Holding costs include expenses associated with storing inventory. These typically comprise:

Damaged goods: Losses due to items being stored improperly or deteriorating over time.

Storage space: Costs of renting or maintaining warehouse space.

Insurance: Fees for insuring stored items against potential risks.

These costs are integral to whole-life asset management, as they impact overall inventory and storage expenses.