Free CIPS L5M7 Practice Exam with Questions & Answers

Thefive Golden Metricsof supply chain performance are:safety,quality,delivery performance,total cost, andtotal cycle time. They represent universally accepted indicators of operational excellence.

Short cited extract: “Golden Metrics – safety, quality, delivery, total cost, total cycle time.” (L5M7 Study Guide, p.123)

TheBullwhip Effectdescribes amplified demand fluctuations up the supply chain;buffer stockmitigates shortages caused by sudden demand changes.

Short cited term: “buffer stock helps counter demand fluctuation” (L5M7 Study Guide, p. 4).

Fixed pricingmaintains aconstant pricefor a defined period regardless of market changes, providing stability for both buyer and supplier.

Short cited extract: “Fixed pricing – price remains constant for an agreed duration.” (L5M7 Study Guide, p.188)

In supplier preferencing,nuisancecustomers havelow value/attractivenesswithlimited growth potential. Short cited terms: “nuisance,” “low attractiveness/low value” (L5M7 Study Guide, p.86).

Variable Pricingchanges the unit price based onquantity purchased; larger volumes trigger discounts.

Short cited term: “price varies with quantity ordered.” (L5M7 Study Guide, pp. 188–191)

ThePareto Principlestates that approximately80% of outcomesarise from20% of causes, applied in supply chain analysis to identify key value contributors.

Short cited extract: “Pareto (80/20) – a small number of causes create the majority of effects.” (L5M7 Study Guide, p.141)

Defects discoveredbefore dispatchare classified asinternal failures, including rework, scrap, or re-inspection.

Short cited term: “internal failure = defects found before reaching customer.” (L5M7 Study Guide, p. 128)

Theautomotive industryusessupplier tiering, assigning responsibility to different supplier levels (Tier 1, Tier 2, etc.) for efficiency and control.

Short cited extract: “Automotive sector commonly applies supplier-tier structures.” (L5M7 Study Guide, p. 115)

JIT removes stockholding benefits, meaning firmslose economies of scalefrom bulk ordering. Each order is small and frequent.

Short cited term: “JIT limits bulk economies due to reduced inventory.” (L5M7 Study Guide, p. 159)

The Act defines quality as products beingfit for purpose,as described,safe, anddurable. It doesnot guarantee freedom from every defect.

Short cited term: “fit for purpose, safe, durable – but not free from all defects.” (L5M7 Study Guide, relevant section on statutory quality standards)