Purchasing Management
Pre-Test Questions
Course Introduction
Purchasing Management explores the principles, strategies, and best practices involved in acquiring goods and services for organizations. The course examines the procurement process, supplier selection and evaluation, contract negotiation, quality assurance, cost management, and ethical considerations in purchasing. Students will develop an understanding of global sourcing, inventory management, and the role of technology in streamlining procurement operations. Emphasis is placed on strategic decision-making to optimize value, minimize risks, and build strong relationships with suppliers, ultimately supporting organizational goals and competitiveness in the marketplace.
Recommended Textbook
Purchasing and Supply Chain Management 7th Edition by van Weele
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15 Chapters
909 Verified Questions
909 Flashcards
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Page 2
Chapter 1: The Role of Purchasing in the Value Chain
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Sample Questions
Q1) Which of the following is a definition of 'components'?
A) Components are manufactured goods which will not undergo additional physical changes, but which will be incorporated into a system with which there is a functional relationship by joining it with other components.
B) Components are finished goods which will not undergo additional physical changes before being purchased by consumers
C) Components are manufactured goods which will undergo additional physical changes and which will be incorporated into a system.
D) Components are finished goods which will undergo additional physical changes and will be incorporated into a system with which there is a functional relationship by joining it with other components.
Answer: A
Q2) Which of the following are not forms of global sourcing?
A) Low-cost country sourcing
B) Products which are sold outside of the European Community
C) Regional sourcing
D) Offshoring
Answer: B
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Chapter 2: Industrial Buying Behavior: Decision-Making in Purchasing
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Sample Questions
Q1) Which of the following best explains a situation where a contractor agrees to work based on a fixed sum plus extra payments based upon superior performance?
A) Fixed sum contract.
B) Fixed price contract.
C) Contractor commitment.
D) Fixed price plus incentive fee contract.
Answer: D
Q2) Which of the following best explains a situation where price is linked to a price adjustment formula,which is based on external factors such as material costs or changes in labour costs?
A) Escalator clause.
B) Escalation clause.
C) Inflation clause.
D) Exchange rate clause.
Answer: C
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Chapter 3: The Purchasing Management Process
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Sample Questions
Q1) Which of the following explains 'Purchasing Market Research'?
A) The systematic gathering, classification and analysis of data.
B) The systematic gathering, classification and analysis of data considering all relevant factors that influence the procurement of goods and services for the purpose of meeting present and future company requirements.
C) The systematic gathering, classification and analysis of data considering all relevant factors that influence the procurement of goods and services.
D) The systematic gathering, classification and analysis of data considering all relevant factors that influence the procurement of goods and services for the purpose of meeting present.
Answer: B
Q2) Which of the following is the main reason for 'Single Sourcing'?
A) Contractual obligations.
B) The number of suppliers.
C) The technical specifications of the good or service to be purchased.
D) The price.
Answer: C
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Chapter 4: Buying Business Services
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Sample Questions
Q1) Which of the following could be a consequence of competence problems and friction between the buyer and other departments?
A) Outsourcing.
B) A lack of transparency in purchasing decisions.
C) Overspending on supplies.
D) Internal departments may prefer to deal directly with the supplier.
Q2) Which of the following is not an example of an input specification?
A) Materials.
B) Hours.
C) Quality.
D) Equipment hours.
Q3) Which of the following is a cause of 'agency problem'?
A) Sub-contractors failure to meet milestone deadlines.
B) Conflict of interest between buyer and seller due to engineering and planning problems.
C) Conflict of interest between buyer and seller due to risk allocation.
D) Conflict of interest between buyer and seller due to poor quality performance.
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Chapter 5: Contract Management for Complex Projects
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Sample Questions
Q1) Which of the following best explains 'co-operative system'?
A) Contractual relationship where parties pursue different objectives.
B) Contractual relationship where parties act rationally in the name of a common objective.
C) Contractual relationship where parties dispute the contract details.
D) Contractual relationship where one party fails to meet their contractual requirements.
Q2) Which of the following best explains 'design-build-finance-maintain (DBFM) contract'?
A) Contractor designs and provides in accordance with the client's requirements, plant and/or other works.
B) Contractor constructs the project in accordance with the design provided by the client.
C) Contractor delivers project or work turnkey.
D) Contractor completes work at own risk and gets paid long-term payments after delivery.
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Chapter 6: Public Procurement
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Sample Questions
Q1) Which of the following is a European Directives public procurement procedure?
A) Open procedure.
B) Innovation partnership.
C) Competitive tendering.
D) The prior information notice.
Q2) Which of the following is a European Directives public procurement procedure?
A) Closed procedure.
B) The notification to unsuccessful bidders.
C) Competitive procedure with negotiation.
D) The prior information notice.
Q3) Which of the following best explains 'suitability criteria'?
A) Criteria relating to economic standing.
B) Criteria relating to financial standing.
C) Criteria relating to financial and economic standing and professional ability.
D) Criteria relating to financial and economic standing.
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8
Chapter 7: Purchasing and Business Strategy
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Sample Questions
Q1) Which of the following best describes 'strategic products'?
A) High-tech, low volume products which are often supplied at customer specification.
B) Low volume products not supplied at customer specification.
C) High-tech, high-volume products which are often supplied at customer specification.
D) Standard products not supplied at customer specification.
Q2) Which of the following best describes Kraljic's (1983) approach to commodity strategies?
A) Purchasing managers develop differentiated strategies towards their supply markets.
B) Purchasing managers develop undifferentiated strategies towards their supply markets.
C) Purchasing managers do not need to develop strategies towards their supply markets.
D) Purchasing managers need to develop differentiated strategies towards their customers.
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9
Chapter 8: Outsourcing and Risk Management
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Sample Questions
Q1) Who is responsible for the coordination of 'partial outsourcing'?
A) The organization contracted to provide the function (supplier).
B) The buyer.
C) Both parties (buyer and supplier).
D) A third (neutral) party.
Q2) Which of the following describes the action that should be taken in relation to core competences?
A) Core competences should be passes on to suppliers.
B) Core competences should be shared with competitors.
C) Core competences should be closely protected and are not to be outsourced.
D) Core competence should be outsourced.
Q3) Which of the following best explains a 'technical risk'?
A) The potential for machinery to breakdown.
B) The extent to which the supplier has a history of success.
C) Workplace hazards.
D) The extent to which the provider is able to provide the desired functionality and performance.
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Chapter 9: Category Sourcing: Developing Effective
Sourcing
Strategies
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Sample Questions
Q1) Which of the following would not be an item in the 'Planning of activities' contents of a category sourcing plan?
A) Bid comparisons and negotiations.
B) Customer requirements and purchasing process.
C) Communication and contract reviews.
D) Spend and supply market analysis.
Q2) Which of the following is not an activity required when conducting a feasibility study?
A) Analysis of current suppliers and how they perform.
B) Carry out an overview of value chain.
C) Definition of future company requirements and needs.
D) Functional and technical specification of purchased products and future needs.
Q3) Which of the following is not a potential benefit of partnerships in product and supply chain costs?
A) Time-to-market reduction.
B) Reduction in materials costs.
C) Reduction in labour costs.
D) Reduction in process costs.
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Chapter 10: Purchasing Innovation and Quality Management
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Sample Questions
Q1) Which of the following best explains 'pilot production stage'?
A) Several pre-production series are manufactured and investigated and inspected.
B) The product design is translated into a number of prototypes or laboratory models.
C) The conceptual design is translated into a technical design.
D) The new product idea is translated into a first conceptual design.
Q2) Which of the following is not an element in a quality approach towards suppliers?
A) Preparation of the purchase order specification.
B) Sample inspection procedure.
C) Conclude a quality agreement and certification.
D) Periodic audits.
Q3) Which of the following terms is used to describe different stages in the new product development process?
A) Check points.
B) Barriers.
C) Turnstiles.
D) Toll gates.
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Chapter 11: Purchasing Logistics and Supply Chain Management
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Sample Questions
Q1) Which of the following is not a potential consequence of Just-in-time (JIT)?
A) Single sourcing.
B) Closing long-term contracts.
C) Engaging local suppliers.
D) Reduced purchase prices.
Q2) Which of the following is not a characteristic of 'Manufacturing Resources Planning (MRP-II)'?
A) Controls production capacity.
B) Releasing purchasing requisitions.
C) Taking into account the relationship between materials flows and the required capacity.
D) Controls relevant materials flows.
Q3) What is the driver for all activities upstream from the order penetration point?
A) Customer orders.
B) Forecast-based.
C) Internal audit.
D) Quality control.
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Page 13
Chapter 12: Purchasing Organization
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Sample Questions
Q1) Which of the following best explains 'decentralized purchasing structure'?
A) All managers can make purchasing decisions.
B) All business unit managers can request purchasing orders.
C) All business unit managers can authorise invoices to be paid for purchases.
D) All business unit managers are responsible for their own financial results and therefore are responsible for all of its purchasing activities.
Q2) Which of the following is an activity of a chief procurement officer (CPO)?
A) Developing corporate sourcing strategies.
B) Strategic commodities.
C) Investment goods and maintenance good and services.
D) General goods and services.
Q3) Which of the following is not a feature of a 'hybrid purchasing structure'?
A) Voluntary coordination.
B) Lead buyership.
C) There is a central purchasing department where corporate contracting specialists operate at the strategic level.
D) Lead design concept.
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Page 14
Chapter 13: Performance Measurement and Governance in Purchasing
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Sample Questions
Q1) Which of the following is not a key performance indicator (KPI) for assessing purchasing logistics performance in relation to ordering?
A) The number of quality claims to suppliers and amounts involved.
B) Purchasing administrative lead time.
C) Purchasing order backlog per month.
D) Number of rush orders per month.
Q2) Which of the following best explains 'contract compliance rate'?
A) This is the percentage of rejected supplies.
B) This is the percentage of supplies invoiced.
C) This is the percentage of the volume that has been ordered from contracted suppliers versus the total contract spend.
D) This is the percentage of 'on-time' delivery by the supplier.
Q3) Which of the following best explains 'maverick buying'?
A) Managers not following corporate agreements with contracted suppliers.
B) Managers buying from any supplier.
C) Managers buying from local suppliers.
D) Manager buying from the cheapest suppliers.
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Page 15
Chapter 14: Cost Approaches and Techniques
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Sample Questions
Q1) Which of the following is not an example of market circumstances?
A) Demand.
B) Supply.
C) Political factors.
D) Cost price.
Q2) Which of the following best explains 'perceived value pricing'?
A) Price is based on what the market can bear.
B) Price is based on the amount of profit that should be realized.
C) Price is based on the importance of the customer to the supplier.
D) Price is based on expected supply of the product.
Q3) Which of the following best explains 'geographical discount'?
A) Discount is based on volume ordered and buyers can realize a lower price per unit.
B) Discount is based on orders placed out of season for delivery later in the year.
C) Discount is based on the how fast the customer pays their bills.
D) Discount is based on customers 'proximity to the supplier's factory or distribution centre.
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Chapter 15: Purchasing, Corporate Social Responsibility and Integrity
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Sample Questions
Q1) Which of the following is a reason why corporate social responsibility (CSR) has increased in importance in recent times?
A) Raw materials have become scarcer.
B) Social media.
C) Outsourcing.
D) Legislation.
Q2) Which of the following is not an example of a Shell business principle?
A) Economic Principle.
B) Competition Principle.
C) Business Integrity Principle
D) Profitability Principle.
Q3) Which of the following is not an element in Philips supplier sustainability audit in relation to 'Labour'?
A) Freely chosen employment.
B) Child labour avoidance.
C) Non-discrimination.
D) Level of unionisation.
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Page 17