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CIPS L4M7 Exam - Topic 10 Question 9 Discussion

The minimal total cost is always achieved when there is only one warehouse. Is this statement true?
A) No, fewer warehouse may lead to increasing transport costs
B) Yes, because the operation cost for warehouse reaches minimal level
C) Yes, because warehouse overheads are fully utilised
D) No, more warehouses will reduce the cost of storage

CIPS L4M7 Exam - Topic 10 Question 9 Discussion

Actual exam question for CIPS's L4M7 exam
Question #: 9
Topic #: 10
[All L4M7 Questions]

The minimal total cost is always achieved when there is only one warehouse. Is this statement true?

Show Suggested Answer Hide Answer
Suggested Answer: A

The total cost of storage consists of two different costs:

- The cost of warehouses: each one has a different cost, and each has the cost of stock-holding and stock management included

- The transport costs: the total transport cost reduces as further warehouses mean shorter final delivery to the customers.

Depending on each situation, the optimal number of warehouses varies. Generally, more facilities will increase the cost of warehouses while reduce the transport costs and vice versa.


LO 1, AC 1.1

by Ettie at Dec 06, 2022, 05:26 AM

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Ethan
10 months ago
No way, more warehouses can definitely lower storage costs.
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Rodolfo
10 months ago
Surprised to hear that, I always thought one warehouse was best!
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Buddy
10 months ago
I think it depends on the location and demand.
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Anisha
11 months ago
Totally agree, more warehouses can actually optimize costs!
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Edda
11 months ago
A single warehouse can lead to higher transport costs.
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Celestine
11 months ago
I thought the minimal cost scenario was about optimizing warehouse locations, so I lean towards B or C, but I'm not confident.
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Adelle
11 months ago
I feel like we practiced a question similar to this, and it was about balancing storage costs with transport costs. Maybe it's D?
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Laurel
11 months ago
I'm not entirely sure, but I think the idea was that having just one warehouse could lead to higher operational costs if demand is spread out.
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Tegan
11 months ago
I remember discussing how having multiple warehouses can actually increase transport costs, so I think the answer might be A.
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Edna
11 months ago
Okay, the explanation provides a clear example of a cross-function team - different departments like procurement, marketing, and HR working together. I think I can give a solid answer now.
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Sylvie
11 months ago
I've seen questions like this before. The trick is recognizing the order of importance, with the test policy being the overarching guidance, then the test strategy, and so on down to the specific test plans. I'm going with option A.
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Emeline
11 months ago
Hmm, I'm a bit unsure about the differences between the encryption options here. I'll need to think carefully about the security implications of each one.
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Lashawnda
11 months ago
I'm pretty sure 'premium' is most closely tied to options. The premium is what you pay for the right to buy or sell.
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Kristin
11 months ago
I'm leaning towards DMA because it seems to relate to data transfer, but wasn't there something about IRQs being used for interrupt requests?
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Ernie
11 months ago
I feel like it could also be psychographic because it seems to involve customer behavior and preferences.
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