CIPS L4M2 CH6-11

Question 1

Why might a supplier in a market be able to charge a higher price for its product than its competitors?

Accepted Answer

It differentiates its products

Question 2

For which of the following might the procurement team in a company with several business units develop a spending map?

Accepted Answer

Compare prices for similar products by to different parts of the business

Question 3

In which of the following ways might the risk of poor specifications in a procurement contract be reduced for the buyer?

Accepted Answer

Use templates for drawing up specifications

Question 4

Which of the following items should be included in a specifications document for a through life contract? Select 2

Accepted Answer

Service levels, Contract period

Question 5

Why might the cost of switching from buying one component to buying a substitute component be high? Select 2

Accepted Answer

The cost of changing production processes, High staff retraining costs

Question 6

Which of the following is the most appropriate definition of a product’s ‘value’ for customers?

Accepted Answer

Combination of use value and esteem value

Question 7

Which of the following items should be included as a term or condition in a through life contract?

Accepted Answer

Change control procedures

Question 8

What might be the consequences for the buyer of over-specification of requirements in an invitation to tender?

Accepted Answer

Paying an extra cost for no added value

Question 9

Which of the following factors help to determine the degree of competitiveness within an industry? Select 2

Accepted Answer

Market concentration, Switching costs

Question 10

Which of the following items are typically included in a conformance specification for a product? Select 2

Accepted Answer

Packaging requirements, The purpose of the product item

Question 11

Which of the following are possible examples of under-specification by a buyer in a procurement contract? Select 2

Accepted Answer

Failure to specify dispute resolution procedures, Failure to specify a required delivery date

Question 12

What is the purpose of ‘should cost’ analysis?

Accepted Answer

Consider whether to negotiate a lower price for a product from a supplier

Question 13

Which one of the following creates a high barrier to entry into a market for a new competitor?

Accepted Answer

Access to distribution channels

Question 14

Which one of the following is a valid comment about a through life contract?

Accepted Answer

it secures service support for an item throughout its operational life

Question 15

For which one of the following types of product or service are market grade specifications commonly used?

Accepted Answer

Commodities

Question 16

Direct materials costs are:

Accepted Answer

Costs that are attributable in full to an item of output

Question 17

Which of the following are possible causes of stock proliferation? Select 2

Accepted Answer

Differing preferences among buyers, Decentralisation of procurement

Question 18

Which of the following items should be included in a scope document for a through life contract? Select 2

Accepted Answer

Deliverables, Roles and responsibilities

Question 19

Which of the following is an advantage of using standards to specify product requirements in a purchase order for goods?

Accepted Answer

The use of standards shortens the order lead time

Question 20

Which of the following may be used as a source of info about labour costs for a supplier of an outsourced service?

Accepted Answer

Job advertisements

Questions 20