1.

Which of the following provides procurement professionals with macro environmental

information? Choose THREE correct answers
A. Stock exchange
B. Current media reports
C. Company handbook
D. Codes of ethics
E. Suppliers financial reports
F. Trade publications

2. The main purpose of benchmarking is __________. Choose one correct answer to complete the
sentence
A. To discover the best prices and services available
B. To force a supplier to reduce their prices
C. To disclose another suppliers information
D. To know what price suppliers has to beat

3. Choose the correct word to complete the formula below

Actual results – budgeted results =

A. Loss
B. Profit
C. Variance
D. Difference

4. Select the correct answers into the blank spaces to complete the sentences

The manager of a sweets factory is analysing the company’s expenditure. She makes a list of all costs
involved in production.

Sugar is a __________________cost so are the flavouring agents.

Packaging of sweets is____________________ cost

The rental of the factory and the salaries of staff are ____________________costs

i. An indirect
ii. A direct
iii. Variable
iv. Fixed

5. Which of the following describes a purchase of something that an organisation has brought
before and for which there is an existing and agreed specification?
A. Modified re-buy
B. Framework agreement
C. Straight re-buy
D. Invitation to tender
6. Rita was proud of the business plan that she had created in preparation for a meeting with her
procurement director. In the plan she had created a budget based on last year’s usage with the
sales departments predicted annual increases. What type of a budget has Rita created?
A. Zero based
B. Incremental budget
C. Activity based budget
D. Rolling Budget

7. Price analysis is a process of comparing the price paid against a price comparator. Which of the
following is a source of price comparators?
A. Rates of inflation
B. Pricing formula
C. Suppliers
D. Competitors

8. Hybrid strategies can be developed by comparing features of existing strategies and combining
them to form new ones. Which of the following interventions can be considered when creating a
procurement business case? Select TWO that apply.
A. Internal interventions
B. Technical interventions
C. Supplier relationships interventions
D. External interventions
E. Performance interventions

9. Which of the following costs may be considered when calculating cost benefit analysis
A. Direct costs
B. Variable costs
C. Switching costs
D. Fixed costs

10. Suppliers and potential suppliers can be a good source of information to use in assessing costs
and prices. Which of the following documents may be used the test supplier’s capability
A. Request for information
B. Request for proposal
C. Request for quotation
D. Invitation to tender

11. Which of the following is not a stage in the cash flow cycle?
A. Sell products
B. Receiving funds from customers
C. Receive raw materials and components
D. Supplier selection
12. Items may have different value in the profit and loss account from that in a cash flow statement.
Select TWO that have such a difference
A. Overheads
B. Expenses
C. Dividends
D. Revenue
E. Depreciation

13. A procurement manager has identified a number of 'bottleneck' suppliers on which the
organisation has a high level of critical dependency. They plan to identify alternative sources of
supply as a contingency. Is this the right course of action?
A. No, these must be retained as single source only
B. No, these contracts should be regularly put to e-auction
C. Yes, because of their high-value savings can be exploited
D. Yes, there must always be a back-up for high-risk supplies

14. Which of the following is not an advantage of budgeting?

A. It provides yardstick against which actual performance is measured
B. It promotes coordination and communication
C. It provides a deeper understanding of your own processes
D. In can motivate employees

15. An output specification focuses mostly on …

A. Design
B. Innovation
C. Performance
D. Technicalities

16. Which of the following are commonly used in conjunction with an output-focused specification?
A. Key performance indicators
B. Clear conformance standards
C. Detailed technical requirements
D. Product brand names

17. When analysing the market, the relative of buyers and suppliers determines
who gets the biggest share of the available profit

A. Threat of new entrants

B. Bargaining power
C. Availability of substitute products
D. Competitive rivalry

18. A procurement organisation is keen to maximise innovation available within the supply market
in the execution of an upcoming significant contract opportunity. Which of the following will
enable the organisation to achieve this goal?
 A. Using an outcome focused specification
B. Applying a precise performance framework
C. Establishing transparent selection criteria
D. Allowing variations to occur

19. A procurement manager is inputting into a specification for a new product. They have already
assessed the availability of suppliers and their relative market influence, and have determined
that the sources of supply are plentiful. What other factor will be important to consider in
respect of competitive market forces?

A. Competitive rivalry
B. Power of buyers
C. Strength of suppliers
D. Supply chain impact

20. When costing takes into account only the variable cost and not the full production cost, which
method of costing will be used?
A. Activity based costing
B. Marginal costing
C. Full costing
D. Absorption costing

21. Which of the following are common barriers to entry that could affect competition in a market?

1) Set-up costs
2) Direct labour costs
3) Customer switching costs
4) Inventory holding costs

A. 1 and 2 only
B. 3 and 4 only
C. 2 and 3 only
D. 1 and 3 only

22. Understanding markets and managing them is clearly most important for items that an
organisation acquires. Which of the following can be used to segment critical and strategic items
A. Risk assessment grid
B. Supplier positioning matrix
C. Porters five forces model
D. Procurement cycle

23. An organisation has a very clear idea of the service it wants and has described the process
precisely in terms of how the supplier must deliver it. It is intending to produce an ‘outcome-
focused specification’. Is this the right specification approach for the organisation to use?

A. No - with an outcome-focussed specification approach, the supplier will decide how to

deliver the service
B. No - the best approach would be an open specification
C. Yes - this specification approach allows for maximum innovation from the supplier
D. Yes -this specification approach states expressly how the service should be delivered
24. A catering services company operates in the high street. Which of the following can be regarded
as primary activities?
A. Managing staff
B. Preparing ingredients
C. Acquiring cooking utensils
D. Managing organisational funds

25. A new manager has been appointed with responsibility for an organisation's highest spend
category. They have a target to achieve savings and are keen to understand how best to do this
without jeopardising product and service quality. Which of the following should they carry out
first?
A. Purchase price cost analysis
B. Macro environmental analysis
C. Micro market analysis
D. Open book costing

26. Which of the following are typical environmental considerations throughout the contract life
cycle? Select the TWO that apply.
A. Energy usage in manufacturing
B. Recyclable packaging
C. Customer demand
D. Employee welfare
E. Standards of ethical behaviour

27. Which of the following factors does not determine the intensity of rivalry?
A. Slow industry growth
B. Lack of differentiation
C. Threat of integration
D. High fixed cost

28. With reference to Porter’s five forces model which factor determines a new product similar to
an existing brand being released into the market

A. Bargaining power of buyers

B. Threat of new entrants
C. Threat of substitutes
D. Bargaining power of suppliers

29. If a buyer saves money against a budget this is known as __________________________

A. Positive variance
B. Negative variance
C. Positive budget
D. Negative budget

30. An organisation decided to go to market for a cleaning contract to service a number of offices. It
knows that it will get a price which may or may not better than that it is currently paying to get
 leverage. The organisation decides to add other related services to the scope such as gardening,
security and maintenance. Which of the following is the applicable buying context?

A. Modified re-buy
B. New buy
C. Straight re-buy
D. Supplier relationship management

31. Cost down approach is often used in problem solving process. Which of the following statements
explains the cost down approach

A. The elimination of a cost in the manufacturing of a product or delivery of a service by

means of removing an item from the specification
B. The measure of profitability that indicates whether a gain or loss has been generated
compared with the initial cost
C. The reduction of cost in the manufacture of a product or the service by changing an item
in the specification
D. Repeating the current contract and expecting market competition to achieve the
outcome

32. Which of the following are commonly used in conjunction with an output- focused specification
A. Key performance indicators
B. Clear performance standards
C. Detailed technical requirements
D. Product brand names

33. Which of the following are examples of sources of information that might be useful when
developing specifications? Select Two that apply
A. Government reports
B. Directories
C. Suppliers
D. Competitors
E. Focus groups

34. Costs are classified as fixed or variable on the basis of ________________

A. Specific activity
B. Given time period
C. Common activity
D. Both A &B

35. ______________________is a typical element in an implementation plan

A. Change management strategy
B. Benchmarking
C. Relationship management costs
D. Risk assessment

36. If a supplier is a monopoly which party in the negotiation has the most strength
A. The buyer
B. No consistent rule
C. Both are equal
D. The supplier
37. Which of the following are useful when preparing a purchasing budget? Choose FIVE correct
answers
A. Past purchase price
B. Market information
C. Supplier information
D. Previous sales figures
E. Competitors costs
F. Predicted values

38. Which of the following are typically found within conformance specifications? Select TWO that
apply.
A. Functions
B. Drawings
C. Outcomes
D. Samples
E. Outputs

39. A ______________ specification describes the outcome or what the item needs to do but not
how that should be achieved
A. Brand
B. Conformance
C. Performance
D. Output

40. Specifications must be:

A. Clear, comprehensive and unambiguous

B. Comprehensive, concurrent and approved
C. Conformance or performance
D. Relevant, referenced and concise

41. Which of the following are recognised categories of expenditure within procurement? Chose
FOUR correct answers
A. Drawings
B. Samples
C. Outdated descriptions
D. Recipes
E. Engineering tolerances
F. Similar products
G. Samples from competitors

42. Which of the following explains the category of supply term ‘indirect supplies’?
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
43. A procurement manager is working as part of a team to oversee the construction of a new
airport. In total there are around thirty people within the team. Currently the team is focused on
pulling together the definition, scope and purpose together with an outline of key roles and
responsibilities for the staff involved. The team’s current activity is to create which of the
following?
A. Project plan
B. Project Gantt chart
C. Project initiation document
D. Project critical path

44. The board of Educational Equipment Group (EEG) is concerned about the organisation's lack of
adoption of innovative products. In the future, the board is keen that it considers substitute
products and products from new market entrants wherever possible. Considering which of the
following would directly help EEG in this respect?
A. Contract management
B. Performance measures
C. Pareto analysis
D. The specification

45. To ensure conformance when placing purchase orders, specifications should

be________________
A. Regenerated
B. Revamped
C. Retained
D. Referenced

46. Excess costs occurs if products or services are;

A. Over simplified
B. Underspecified
C. Understood
D. Over specified

47. In procurement, a cost which is related to specific cost object and economically traceable will be
classified as_______________
A. Direct cost
B. Indirect cost
C. Line cost
D. Specific cost

48. Which of the following takes place during the development phase and generally involves
contractor employees?
A. Contractor acceptance testing
B. Regulation acceptance testing
C. Alpha and beta testing
D. Operational acceptance testing
49. Which of the following is a feature of a monopoly market
A. Many substitutes
B. High barriers to entry
C. Flexible pricing
D. Low profits

50. A market structure is determined by which of the following?

A. Scale of demand
B. Length of supply chain
C. Nature of product
D. Level of competition

51. Which of the following is a characteristic of a manufacturing industry

A. Profitability tends to be relatively high
B. Immediate substitutes are available
C. Switching costs can low in the short term
D. Requires high investments and skilled workforce

52. A ____________________ is based on a particular estimate of activity where the sales revenue is
estimated to drive the organisations expenditure for a defined period of time.
A. Flexible budget
B. Budget cycle
C. Fixed budget
D. Rolling budget

53. Which of the following is the term used to describe the optimum combination of whole life cost
and required quality
A. Value for money
B. Total acquisition cost
C. Benchmarking
D. Through life contract

54. Select a statement which describes how a purchaser can use value analysis to obtain value for
money
A. Assessing inventory usage by volume
B. Reducing inventory to avoid obsolescence
C. Aggregating supplies to gain bulk discounts
D. Eliminating non essential features of a product

55. Choose a statement which is true about a technical specification

A. It gives the supplier enough room for innovation when producing products
B. The purchaser can use the specification to verify that what is supplied meets all the
requirements
 C. Can be useful where it is difficult to specify the product as it gives a comparative basis on
which to assess the performance or suitability of the supplied product
D. A procurement manager working as part of a team to oversee

56. Which of the following plays a fundamental role in establishing categories when developing a
business case?
A. Macro environmental audit
B. Portfolio analysis
C. Relationship spectrum
D. Stakeholder mapping

57. Industry rivalry is likely to be more intense when:

A. The market is dominated by one seller
B. The market is growing very slowly
C. Fixed costs are low relative to total costs.
D. Firms are selling highly differentiated products.

58. According to Porter, suppliers are more able to exercise bargaining power over buyers when:
A. The supply industry is dominated by a few large firms.
B. The supply industry is populated by a large number of small firms.
C. When buyers have the ability to take over suppliers.
D. There are few buyers in the market.

59. Potential rivals will not find it difficult to enter a market where:

A. Existing firms have long-term contracts with the biggest customers.
B. Product differentiation is very strong.
C. Existing firms have the ability to retaliate strongly.
D. Economies of scale are insignificant.

60. What does URD stands for in defining specifications?

A. Using Required Documents
B. Unique Reasonable Data
C. User Requirements Documents
D. Unique Requirements Documents