L4M7 Whole Life Asset Management - Practice Questions

Question 7

XYZ Ltd is a retailer in the US. Their customers' demand for Thanksgiving and Christmas decora-tions usually rises in the end of the year. This irregular demand results in more required storage space for finished goods during peak seasons. Which of the following are possible solutions for dealing with required additional space?

1. Maximising aisle width

2. Keeping high buffer stock throughout the year

3. Maximising flexibility in warehouse layout

4. Installing mezzanine floor

Select an option, then click Submit answer.

○
1 and 3 only
○
2 and 4 only
○
1 and 2 only
○
3 and 4 only

Question 8

An electricity company charges its customers monthly fee for access and a usage fee for consump-tion of electricity. Which pricing structure is the company using?

Select an option, then click Submit answer.

○
Fixed pricing
○
Multi-part pricing
○
Dynamic pricing
○
Freemium Pricing

Reference / correct answer:

Multi-part pricing

Explanation

Multi-part pricing. The transaction price is calculated from using two or more metrics rather than just one. The most common economic example of a price structure beyond unit pricing is called a two-part tariff. Basically it can be described such that the “entrance fee” provides the privilege of purchasing the metered component. A common multi-part tariff is the two-part tariff in electricity, under which the customer pays a monthly fee for access and a usage fee for consumption of electricity. With this two-part tariff, the operator is able to charge a price equal to marginal cost for electricity, which is profit maximizing, and deviate from marginal cost pricing in the fee for access.

Freemium is an internet-based pricing strategy where a service is offered for free in the beginning, but the price is charged on the premium package with some additional features. However, freemium pricing strategy is different from the premium pricing strategy because freemium offers free sample which you can use without paying anything, you’ll only be charged when you want additional features.

Demand pricing is also synonymously used for dynamic pricing; it is a relative term used in the online platform. Dynamic pricing means different pricing is charged from the different customers depending upon the urgency, customer’s ability and demand of the customers.

Reference: CIPS study guide page 140-141

LO 3, AC 3.1

Question 9

Bulk loose coal that requires massive handling system should be stored in which area?

Select an option, then click Submit answer.

○
Chill hub
○
Stockyard
○
Heating warehouse
○
Store

L4M7 – Whole Life Asset Management