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| Vendor: | CIPS |
|---|---|
| Exam Code: | L6M9 |
| Exam Name: | Supply Network Design |
| Exam Questions: | 84 |
| Last Updated: | October 5, 2026 |
| Related Certifications: | Level 6 Professional Diploma in Procurement and Supply |
| Exam Tags: | Advanced Level Supply Chain ManagersBusiness Operations Directors |
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Maxi Ltd is a medium-sized manufacturing organisation in the automotive industry that creates engines for cars. It has traditionally worked well with its suppliers, with strong relationships and regular meetings. There are currently around 15 suppliers who provide parts to Maxi Ltd.
Due to changing customer demands, Maxi Ltd will, from next month, modify the manufacturing of some of its products. Product X is being made more environmentally friendly, with output of CO2 being reduced by 32%. The product will take longer to produce, but there will be no additional cost to customers for this.
Maxi ltd are considering outsourcing the manufacturing of Product Y as it is not a product which is routinely ordered by customers. This will allow Maxi Ltd to focus on other products which generate higher revenues for the company. The concern within the Board of Directors is that if demand increases for this product, an outsourced company may not be able to cope with higher numbers of orders.
Product Z is an extremely popular item and oftentimes Maxi Ltd does not have the capacity to fulfil all orders. Consideration has been given to increasing the size of the factory, but this has been discarded as risky as demand is not guaranteed. The product has been available on the marketplace for a short amount of time and sales are continuing to increase, but the company believes this will soon plateau. To deal with current demand, the marketing team is working on campaigns to invite customers to make orders for this product at certain times of the year when product X is not being created in the factory. This means resources can be reallocated to the creation of product Z.
Which of the following is the trade-off in the modification of product X?
The modification of product X is aimed at making it more environmentally friendly but results in a longer production time. This means that the trade-off is speed---production takes longer. (LO 1.2)
XYZ Ltd is a perfume manufacturer based in France. They have created a new perfume and research has shown that demand for the perfume will outstrip supply. The Chief Operating Officer (COO) and the Chief Financial Officer (CFO) are meeting to discuss this. The COO believes that the organisation needs to reallocate resources in order to meet demand. Are there any exceptions to when this may be the case?
While organisations generally try to fulfil customer demand, there are times when they strategically choose not to. A common reason is maintaining a premium image---limiting supply can increase desirability and justify a higher price. For example, luxury brands often limit product availability. (See p.169)
In a manufacturing organisation that produces cupcakes, which of the following categories of capacity takes into account staff absences and unplanned losses such as a late delivery of raw materials?
Actual capacity accounts for real-life factors, including staff absences, supply chain delays, and other disruptions.
Design capacity (A) is the maximum production level in an ideal scenario (no disruptions).
Effective capacity (B) and available capacity (C) are the same, accounting for planned stoppages, but not unplanned losses.
(LO 2.2, See p.115)
Maxi Ltd is a medium-sized manufacturing organisation in the automotive industry that creates engines for cars. It has traditionally worked well with its suppliers, with strong relationships and regular meetings. There are currently around 15 suppliers who provide parts to Maxi Ltd.
Due to changing customer demands, Maxi Ltd will, from next month, modify the manufacturing of some of its products. Product X is being made more environmentally friendly, with output of CO2 being reduced by 32%. The product will take longer to produce, but there will be no additional cost to customers for this.
Maxi ltd are considering outsourcing the manufacturing of Product Y as it is not a product which is routinely ordered by customers. This will allow Maxi Ltd to focus on other products which generate higher revenues for the company. The concern within the Board of Directors is that if demand increases for this product, an outsourced company may not be able to cope with higher numbers of orders.
Product Z is an extremely popular item and oftentimes Maxi Ltd does not have the capacity to fulfil all orders. Consideration has been given to increasing the size of the factory, but this has been discarded as risky as demand is not guaranteed. The product has been available on the marketplace for a short amount of time and sales are continuing to increase, but the company believes this will soon plateau. To deal with current demand, the marketing team is working on campaigns to invite customers to make orders for this product at certain times of the year when product X is not being created in the factory. This means resources can be reallocated to the creation of product Z.
What is the main concern regarding the option to outsource the manufacturing of product Y?
The main concern with outsourcing product Y is whether the outsourced company can handle a potential increase in demand. This issue is related to scalability, as an external supplier may struggle to ramp up production if demand rises. (LO 1.2)
Alexandra is the new Chief Procurement Officer at Wet Lettuce Incorporated, a manufacturing organisation that uses a tiered supply structure. She has asked to see the contracts with all the suppliers and has been told that it is not common practice to have contracts with the full range of suppliers. What should Alexandra do?
Since Wet Lettuce Incorporated operates a tiered supply structure, it is common for contracts to be in place only with tier-one suppliers, while sub-contractors in lower tiers are managed by those suppliers. Instead of changing the entire structure, Alexandra should ensure that contracts and relationships with tier-one suppliers are well managed. (See p.195)
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