A hospital extensively spends on medical and implantable devices, medical, surgical and pharma-ceutical supplies, costs of supplies related to buildings and maintenance operations. Hospital’s procurement manager suggests that the hospital has an opportunity to reduce operational costs by reducing variation of medical devices and pharmaceutical supplies. Which of the following best describe the procurement manager's suggestion?

Ethan is the newly appointed CEO of ATT Group. He sees that the company is wasting financial resources on unnecessary spends. To solve this problem, Ethan requires all functional managers to prepare their department budget from scratch. Each spend must have justification or it will not be approved. Which budgeting method is Ethan using?

Andrew is responsible for procurement of capital assets at Lumber Ltd. He is devising new business case for the purchase of a new band saw. The purchase price of the saw is $50,000. Andrew estimates that the machine will generate $10,000 per year of net cash flow. What is the payback period of this band saw?

Which of the following are considered as direct costs in a construction company? Select TWO op-tions

Which of the following factors are likely to be direct barriers to a new entrant in a supply market?

A procurement manager is requested to source a major component. She needs information on sup-pliers’ direct and indirect cost, fixed and variable costs to prepare for negotiations. Therefore, she collects 17 annual reports from potential suppliers who are competing in the same industry. In order to estimate an approximate value of fixed and variable costs in that industry, which of the following technique should be adopted by the procurement manager?

Which of the following agencies can produce a technical standard?

When procuring a machinery, at which stage buyer must check whether it is working to the stand-ards set out in the design specification?

EV Inc is facing the following challenges:

1. The capital investment is enormous.

2. Most of company's working capital is in form of inventories, which include raw materials, work-in-progress and finished goods.

3. Competitors are increasingly deploying robotics and automation to boost productivity.

Which of the below business sectors does EV Inc belong to?

When should procurement professional tolerate a risk?

Daytona Ltd is developing a new product which is more environmental friendly. Though the objectives are set, the project team has no idea on which functions will be customers' favourites. Which of the following will help them decide the 'should-have' functions of the new product?

An organisation's procurement team is in the best position to make the following contribution to the specification development process, to ...

Buyers are more powerful than the supplier when they are purchasing from monopoly market. Is this statement true?

Honda of America Manufacturing is a well established automobile manufacturer. It purchases tens of thousands of materials and parts from suppliers, however, only few of them are strategic. To these suppliers, Honda's procurement manager requires them to send details of labour, materials, overhead cost and profit. However, the suppliers are reluctant to submit such confidential infor-mation. Is the procurement manager’s action appropriate?

Due to the growth of consumer electronics market, semiconductor industry develops exponentially. However, the industry is dominated by a dozens of manufacturer. Chipset need to be built in factories with highly controlled environments. New chip factories cost billions of dollars and can take two years to build. Right now, factories are running at full capacity, which produce almost perfect yields, meaning basic chipset can be made for less than a dollar and more advanced versions for not much more. What are the barriers to new entrants in the semiconductor industry?

1. Poor industry growth

2. High set-up costs

3. Economies of scale

4. Low switching costs

Which of the following indicates types of waste that procurement department concentrates on when adopting Lean methods?

Royal Navy is preparing a through-life contract. They put to the contract a term on rectification of operational defects and planning and delivery of Fleet Time Support Periods. Which part of through-life requirement does this term belong to?

As the lead procurement manager, you have been asked to compile a business case for a large project. Which of the following should you include in the business case?

Costs and risks

List of large suppliers

Business benefits

Informal recommendation

Which of the following would be considered to be direct costs? Select TWO that apply:

A buyer can use sources of information to review indirect costs associated with the manufacture of goods to support supplier negotiations. Is this statement true?

Which of the following is a social factor that a buyer should take into account when reviewing responses to a specification?

Procurement should work closely with colleagues in accounts when creating an annual budget. This is because the budget will help the company ...

John has been asked to develop a business case before obtaining approval to purchase a large piece of capital equipment for a glove manufacturing unit. Is this the right thing to do?

Which of the following problems may be identified as open-ended problems? Select TWO that apply:

A buying organisation may not have technical capability to produce a highly complex specification. Which of the following are sources of information that can be used to create the specification? Select TWO that apply

Dana is an automobile manufacturer. It has a new electrification strategy that aims at making eco-friendly electric pick-up trucks. To implement this strategy, the procurement department must source new categories of parts that make motors, sensors, solenoids and stators. He starts to analyse the market by identifying specific supply market segments for those parts and finding suppliers who have the best capabilities in those segment. He intends to segment the market based on specific features of the products. Which variable is used by Dana procurement manager to shape and manage supply market?

Which of these are variable costs?

Staff overtime

Premises costs

Insurance costs

Material costs

Which of the following is a challenge of making a business case for straight re-buys?

Which of the following are main focuses of ISO 27001:2013 standard?

1. Confidentiality

2. Logistics

3. Process

4. Life cycle

Which of the following is an advantage of competitive benchmarking over other types of bench-marking?

Over the life of a product, which of the following would be considered non-value-adding costs?

Rework costs

Production costs

Maintenance costs

Waste disposal costs

Which of the following is the structured approach for defining customer requirements and translating them into technical specification?

A procurement team is categorising their purchased items into four quadrants of Kraljic's supply chain portfolio matrix. They realise that there are some low-value items which come from very few suppliers in the market. The organisation is critically dependent on these suppliers. The team plans to reduce the dependence by finding alternative sources. Is this a right course of action?

Which of the following are likely to be disadvantages of using outcome-based specifications? Select THREE that apply

Which of the following positively affects a buyer's company cash flow? Select TWO that apply:

A CPO is making a business case for acquiring a new computer system. He has set out objective, generated options, cost and benefit of each option and implementation plan. Which of the following elements should be included in the business case?

Robert is a senior buyer at MMC Construction Ltd. His company is doing multiple development projects in the country, which increases procurement workload significantly. Meanwhile, most of the tasks are handled manually, which causes bottlenecks in the workflows. The procurement team is overwhelmed by the workload and complains from other departments. From previous experience, Robert knows that electronic system may help his procurement team. He writes a business case to submit to the senior management, in which he insists on the possible productivity improvement by adopting e-system in procurement. Is Robert's action reasonable?

When analyzing direct and indirect costs of potential suppliers for negotiations and planning pur-chasing budget, the procurement manager collects reports from specialist organisations like Mintel, Gartner and Forrester. Which kind of information source is used by the procurement manager?

Which of the following specific markets engage in creation, liquidation and change of ownership of stock?

Which of the following can cause overhead variance? Select TWO that apply:

Jasmine identified a possible new supplier that offers commercial improvements in her category of spend. She decided to put forward a business case to justify the necessity for a new supplier assessment and audit with the aim of adding the supplier to the approved list. Jasmine decided to carry out a cost-benefits analysis. Is this the right approach for Jasmine to use?

A manufacturing organisation has initiated a project focusing on costs, with a view to making significant savings. A procurement manager is leading the project. The initial data sources have focused on the cost of raw materials. Which of the following describes this cost?

In 2016, ANA Airlines had to cancel some of its flight. The airline said it had discovered the cracks to the jet engine turbine blades. What should ANA procurement team do next to solve this problem?

SET Group are a start-up company trying to estimate the direct costs of materials for a project. The organisation has limited procurement records available. Would using general industry averages as a benchmark provide an accurate estimation of the project costs?

Which of the following are typical environmental considerations throughout the contract life cycle? Select the TWO that apply.

A company has installed a new piece of capital equipment but needs to arrange a maintenance contract for three years. The company wants to know as accurately as possible what this price will be for the full contract. What would be an appropriate type of pricing mechanism to use when asking suppliers to quote prices?

GSC Ltd is a manufacturer of car parts. To accommodate growing demands of electric cars, the company is developing a new component which requires different type of steel. The project team estimates that the component will be ready for production in 1.5 years. Until then, they need to keep the production busy.

After checking the inventory records, the production team sees that the company has 3 months of stock. The lead time for each batch is two months. Which of the following should be a priority ac-tion of the company?

What would provide the best method to ensure a car manufacturer can make adjustments to vehicle production to meet future market demands, such as the inclusion of an additional battery to make a hybrid model?

A drawing is an example of…?

A construction company requires a specification that details the exact composition of the concrete mix and the exact methods of construction required for its use. Which specification should it adopt?

British Steel needs to source a set of instruments that will improve quality of steel. Without these instruments British Steel will loss control of the temperature. The bucket may freeze up, or if it is too hot it leaks out of the casting process, damaging the machine. There is limited supply on the market and quality varies greatly. Which of the following will be the most appropriate managing approach to procure these items?

Lider Ltd is a leading bathroom furniture manufacturer in India. The company has more than 30 years experience in the market with extended knowledge of engineering and customers' taste. Lider is planning to launch a new type of bath fitting next year which offers Bluetooth connectivity and thermostat display. The company gathers a team of multi-disciplines, including engineering, procurement, sales and marketing. At the first team meeting, the project leader tells the team to discuss which functions will be valued by the customers, and how to deliver those functions with the lowest costs possible. Which of the following describes the process that the project team is undertaking?

A buyer may consider switching from one product or service to another, or from one supplier to another. Which of the following options are a type of switching cost?

Inflation cost

Historical cost

Retraining cost

Modification cost

In which circumstances would it be relevant to require supplier accreditation to the ISO 14001 international standard in a contract specification? Select THREE that apply.

Which of the following factors would mean a buyer had high bargaining power in a competitive market? Select TWO that apply.

A procurement manager has noticed that profitability within a market has increased steadily over the years. In addition, the market is relatively easy to enter, and demand within the market is predicted to remain high. Which of the following is likely to happen in this particular market as a direct consequence of these factors?

Which of the following market sectors is largely commodity-dependent, impacted by food standards and public health, impacted by climate change and population change, and driven by technology to improve production yield?

Company A sells a product for $100. The total unit variable costs are $60. Fixed costs as in its ac-count are $20,000. How many products does the company have to sell to achieve break-even point?

What issue is a buyer most likely to experience if the technical specification sent to suppliers as part of a Request For Quotation (RFQ) is insufficient?

A procurement manager includes provision on recovery from natural disaster into a through-life specification. Some suppliers suppose that provision is unnecessary. Is procurement manager’s action justified?

Which of the following statements is the best definition of ‘value engineering?

XYZ Ltd is a large supermarket chain which operates mainly in the UK and Europe. Their custom-ers are increasingly concerned about sustainability. Therefore, procurement manager is required to source the products from suppliers who have good environmental performance. Which of the fol-lowing can be an assurance that the supplier has procedures and policies to enhance its environmental performance?

At which stage of through-life contract management, procurement team needs to identify sources of risk and the ways to mitigate them?

Which of the following activities are considered as secondary activities of an organization? Select TWO that apply

XYZ Ltd is the largest consumer of brass in the country. It consumes 48% of all brass manufactured, while the second-largest consumes less than 10% of brass manufactured. Which force or power does XYZ Ltd possess?

A market has a considerable number of buyers and suppliers. Analysis of the market reveals that loyalty from buyers is relatively low and switching to alternative providers is commonplace. Which of the following market characteristics is supporting this type of buyer behaviour?

A buyer in Housing Authority is considering using performance specification in upcoming social housing project. What should buyer be aware when using this type of specification?

The procurement officer for Hunter Manufacturing has been tasked to procure a new manufacturing software management system. They have consulted all relevant internal stakeholders and have the following high-level requirements: flexibility throughout the project, and the supplier to recommend the best solutions for building the system. Which type of specification should be developed?

What is the contribution of marketing function to the development of specification?

This is the information on an organisation’s activities over the past year

• Sale were $5,000,000. The value of accounts receivable was $450,000 at the start of the year and $525,000 at the end of the year

• The value of direct costs was $2,500,000 and 75% of this was bought on credit

• Indirect costs were $3,000,000 and 25% of this was bought on credit

• During the year the organization spent $1,500,000 on new assets and sold $150,000 of old assets. $1,000,000 of the spend on assets was funded by a bank loan

• The organization declared a dividend of $200,000 at the end of the year but this was not paid for another two months

• Opening balance was $175,000

Which of the following is the bank balance of that organization at the end of the year?

What is a form of testing used to establish if a supplier is meeting the requirements of a specification?