Procurement and supply principles

Q1 Question

Which of the following is a definition of ‘the supply chain’?

Answers

(a) The way in which information passes from user to procurement to supplier

(b) The range of suppliers used by a purchasing organisation

(c) The types, frequency and organisation of deliveries to the end user

(d) The network of organisations and activities involved with the flow and transformation of goods.

Q2 Question

Which of the following tasks are required in the ‘pre-award phase’ of the purchasing cycle?

Answers

(a) Identification of needs and producing specifications if required

(b) Expediting, reviewing progress and processes

(c) Reviewing quotations, gaining authorisation and placing orders

(d) Assessing supplier performance and checking invoice details if required.

Q3 Question

Which of the following reflects the sustainability principle of the ‘triple bottom line’?

Answers

(a) Turnover, gross profit, net profit

(b) Decrease purchasing cost, increase value added, extend credit period

(c) Profitability, social accountability, environmental sensitivity

(d) Reduce stock, reduce staff, reduce overheads.

Q4 Question

A buyer is quoted a price of $20 by a supplier for each item purchased. The buyer negotiates a $2 reduction from the supplier. The buyer’s organisation sells the item to customers for $36. Which of the following statements is true?

Answers

(a) The buying organisation will achieve a 10% profit for each item sold

(b) The buying organisation will achieve a mark up of 100% on each item sold

(c) The buying organisation will achieve a mark up of 50% on each item sold

(d) The selling organisation has  made a loss of 10% on each item ordered by the buyer.

Q5 Question

Which of the following explains the category of supply term ‘indirect supplies’?

Answers

(a) Products used by a business which are bought through a tiered supplier

(b) Products used by a business which are not specified by a buyer

(c) Products used by a business that do not form part of the end product

(d) Products used by a business which are bought through a supply chain.

Q6 Question

Which of the following is an extra activity required when assessing quotations for capital goods purchases?

Answers

(a) Checking the supplier’s terms and conditions of contract

(b) Establishing the specification

(c) Calculating the total cost of ownership

(d) Obtaining a framework agreement.

Q7 Question

Which of the following explains the activities required prior to paying a supplier invoice for goods ordered?

Answers

(a) Check invoice against original documents, check for receipt of goods, check for problems with goods

(b) Check supplier financial capability, check all goods have been used or sold, ask for discount

(c) Check budget holder has authorised the purchase order, wait until the supplier chases for payment

(d) Find the goods, prepare a requisition form, send an order acknowledgement.

Q8 Question

Which of the following explains the actions involved as part of an efficient ‘expediting system’?

Answers

(a) Checking the requirements for export of goods from another country

(b) Maintaining contact with important suppliers to reduce the likelihood of problems with orders

(c) Updating users on progress and ensuring speedy release of the purchase order

(d) Ensuring invoices are checked and supplier payment is not delayed.

Q9 Question

Which of the following explains the specific characteristic of a ‘tiered supplier’?

Answers

(a) A supplier which has been graded as part of a benchmarked vendor rating system

(b) A supplier which manages a proportion of the organisation’s supplier base

(c) A supplier which is part of a much larger multi-national company

(d) A supplier which deals with pre-scheduled, phased deliveries as part of a long term contract.

Q10 Question

Which of the following describes the use of ‘incoterms’ when buying internationally?

Answers

(a) They allow the same import duty terms to apply to all goods imported from other countries

(b) They allow a uniform approach to payment terms and methods for import and export

(c) They allow for incorporation of the exchange rate to be used as part of the terms and conditions

(d) They allow an understanding and incorporation of buyer and seller responsibilities in a contract.