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L4M4 Questions and Answers

Question # 6

Curly Cake Incorporated makes lots of different types of confectionary items. Although they are most famous for their cakes, they also have a smaller line of cereal bars and biscuits. Which of the following would be the most appropriate items for Curly Cake Incorporated to outsource? Select TWO

A.

cakes

B.

cereal bars and biscuits

C.

cleaning

D.

facilities management

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Question # 7

Added value can be objectively defined. Is this sentence TRUE?

A.

Yes- added value should be assessed along with price

B.

Yes- added value is the same for all organisations

C.

no - added value may change from one company to another

D.

no- added value is always intangible

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Question # 8

What type of relationship should a buyer seek when making strategic sourcing for their business?

A.

transactional

B.

collaborative

C.

arms-length

D.

partnership

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Question # 9

Roberto is running a tender in which his main concern is price. However he is keen to hear also about the companies' Corporate Social Responsibility Policies and how this will impact their delivery. Roberto is considering awarding the CSRquestion4 points in a weighted point system. If he does this, what weight should be given to the price?

A.

4

B.

5

C.

8

D.

96

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Question # 10

What would an EBITDA ratio show you?

A.

how profitable a business is

B.

how solvent a business is

C.

how much of a business's funding is made up of long term debt

D.

how effectively a business uses its assets to generate sales

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Question # 11

Which of the following is considered as part of ESG?

A.

bribery, corruption and the environment

B.

market conditions and product lifecycle

C.

liquidity, gearing and profitability

D.

economic and social governance

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Question # 12

A company has actively included supporting of disadvantaged groups within their ESG commitment. Which of the following groups are considered disadvantaged?

A.

endangered species

B.

pregnant women and children

C.

international suppliers

D.

Muslims

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Question # 13

Compared with single sourcing, what is a key advantage to dual or multiple sourcing? Select TWO

A.

It is easy to drive down costs

B.

There is a risk of failure to supply

C.

Economies of scale

D.

Supplier Loyalty

E.

Low risk of failure to supply

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Question # 14

Steff is a procurement manager at Giant Buttons Ltd who are considering offshoring a small section of their manufacturing operations. Which of the following is a risk of offshoring that Steff should consider.

A.

importation rules and tariffs

B.

exportation rules and tariffs

C.

payments by electronic bank transfer

D.

lower operating costs

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Question # 15

An organisation is keep to include Social Outcomes in it's assessment for Value for Money for a new tender. Which of the following should be considered?

A.

use of local labour to deliver the contract

B.

CO2 emissions of the supplier's delivery vehicles

C.

supplier's ESG policy

D.

accreditations such as Fair Trade

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Question # 16

Amnesty International, Oxfam and CIPS are examples of what type of organisation?

A.

partnerships

B.

limited liability

C.

not-for-profit

D.

public limited companies

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Question # 17

Guillerme is a Category Manager within the procurement department of a Manufacturing company. In his Category there are 200 items he procures, and he has recently undertaken an ABC analysis of these. Which of the following items would be C category items?

A.

high value items

B.

one-off purchases

C.

tail spent

D.

strategic sourcing

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Question # 18

Commodities are items which can be traded on the stock exchange. These are generally divided into four categories. What are these four categories?

A.

metals, energy, elements and agriculture

B.

fruit, vegetables, meat and dairy

C.

energy, agriculture, metals, livestock

D.

chemicals, agriculture, metals and livestock

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Question # 19

A company's balance sheet will show you which of the following?

A.

revenue, profit and expenses

B.

equity, assets and liabilities

C.

cash coming in and out of the business

D.

profit, loss and assets

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Question # 20

Commodities can be traded on a stock exchange and are generally divided into one of four categories. Which of the following is not one of these four categories?

A.

energy

B.

livestock

C.

metals

D.

plastics

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Question # 21

Bob works in the procurement department of a construction firm. He has been asked to procure an item for a short-term project which is considered low risk. What type of sourcing will he be completing?

A.

tactical

B.

strategic

C.

outsourcing

D.

insourcing

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Question # 22

Which of the following areas of legislative and regulatory requirements prevent the deliberate limit-ing of supply and the formation of cartels?

A.

data protection

B.

product safety standards

C.

marketplace competition

D.

ethical practice

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Question # 23

Greg is doing some research on a potential supplier and is concerned that the supplier's funding is based on long-term debts and loans. Working with this supplier therefore might bring additional risks to Greg's business. What should Greg do about his concerns?

A.

use the Return on Investment Ratio

B.

do an Acid Test

C.

work out the supplier's EBITDA

D.

work out the supplier's gearing ratio

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Question # 24

Which of the following payment mechanisms is most beneficial to the buyer?

A.

open/ credit account

B.

term / time draft

C.

sight draft

D.

cash in advance

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Question # 25

If a company is concerned with ethical sourcing and has concerns about issues such as corruption and modern day slavery within the supply chain, what course of action should they take?

A.

Only work with known suppliers

B.

Complete Due-Diligence on all new suppliers

C.

Only work with suppliers who have a published Anti-Slavery policy

D.

Complete formal tenders to find the best suppliers

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Question # 26

A Request for Quotation asks a supplier to submit a price only, with no other details provided. Is this TRUE?

A.

Yes- price is the only factor considered

B.

Yes- this ensures the cheapest supplier is appointed

C.

No - specifications, technical details and quantities can also be provided

D.

No - quotations provide samples too

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Question # 27

Which of the incoterms listed are suitable for transporting goods via train?

A.

FAS

B.

FOB

C.

CRF

D.

EXW

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Question # 28

For what type of purchase would you use a Futures Exchange?

A.

Tail Spend

B.

Capital Expenditure

C.

Commodity

D.

High value, high risk

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Question # 29

What is a risk of pre-warning a supplier that you will conduct an audit of their facilities?

A.

they will not be able to make that time and date

B.

they will not perform regular duties that day

C.

they will not achieve KPIs

D.

they may coach staff in what to say

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Question # 30

It is important that buyers take an approach that is reasonable and fair when selecting suppliers to work with. Which of the following is a voluntary document which can help procurement professionals treat suppliers respectfully?

A.

EU Procurement Directive 2014

B.

CIPS Code of Conduct

C.

ISO 9001

D.

ILO is an organization

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Question # 31

Henry is importing cheese from South East Asia into the UK. He is doing some research on the costs and risks of this and has discovered that the product may be considered of 'non-preferential origin'. What implications would this mean for Henry?

A.

he will require insurance

B.

the goods are subject to tariff quotas

C.

there are no duty charges or limitations

D.

the goods are banned in the UK

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Question # 32

Which of the following is not a type of fraud that procurement professionals should be vigilant for?

A.

coersion

B.

phishing

C.

kickback

D.

identity theft

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Question # 33

If a company is described as 'liquid' what does this mean?

A.

the company is funded on equity rather than debt

B.

the company spends a lot of money

C.

the company is highly profitable

D.

the company has enough money to pay short-term liabilities

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Question # 34

Which of the following payment mechanisms is most beneficial to the supplier?

A.

open account

B.

cash in advance

C.

sight draft

D.

letter of credit

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Question # 35

In which type of market would you be most likely to find a 'perfect competition'?

A.

monopoly

B.

oligopoly

C.

commodity

D.

monopolistic competition

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Question # 36

When selecting a supplier on technical merit, its important that the supplier is a good 'functional fit' for the organisation. What is meant by 'functional fit'?

A.

the supplier is able to adhere to the same ethical standards

B.

the supplier is able to work at the same technical level as the buyer

C.

the supplier shares a common supply chain

D.

the supplier makes a similar profit to that of the buyer

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