Defining Business Needs (L4M2) Free Practice Test

Question 1

Which of the following are typical examples of secondary sources of market data? Select TWO that apply.

A. Communication with suppliers

B. Price comparison websites

C. Published market analysis

D. Supplier marketing publications

E. Trade fairs and exhibitions

Correct Answer: B,C

Question 2

Due to increasing demand, a local restaurant is requesting its fish vendor to supply larger quantity. The restaurant manager also asks the vendor whether it is possible to reduce the total price by 5%. This is known as...?

A. Capital purchase

B. Straight rebuy

C. New purchase

D. Modified rebuy

Correct Answer: D

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Question 3

A " modified re-buy " means ...

A. The existing supplier should be asked to supply the requirement because it is a modified re-buy of the same item

B. The specification should not be considered for future treatment as a stock item because of the modification

C. The existing specifications should be reviewed but not the supply market, as this type of purchase is complex

D. Both the specification and the market should be reviewed to manage the new circumstances

Correct Answer: D

Question 4

Which of the following is an useful tool for value engineering?

A. SAMOA

B. Kano model

C. Star-burst method

D. Kraljic Portfolio Matrix

Correct Answer: B

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Question 5

Which of the following are the focuses of ISO 14001:2015?

A. 1 and 2 only

B. 3 and 4 only

C. 1. Life cycle2. Process3. Capacity4. Information security2 and 4 only

D. 2 and 3 only

Correct Answer: A

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Question 6

To calculate the estimated annual payback period, a buyer will need to know the estimated annual savings made from implementing the option, and also the estimated costs. Is this statement correct?

A. Yes. The calculation will be the estimated annual savings added to the estimated total costs

B. Yes. The calculation will be the estimated total costs divided by the estimated annual savings

C. No. The calculation will be the estimated annual savings multiplied by the rate of inflation

D. No. The calculation will be the estimated total costs multiplied by twelve

Correct Answer: B

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Question 7

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

A. Inequality

B. Health and safety

C. Waste management

D. Modern slavery

E. Pollution control

Correct Answer: C,E

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Question 8

Sabic is a petrochemical manufacturer. It wants to digitalise its operation and is looking for new IT system.
The procurement manager approaches this matter with a through-life specification. He supposes that stating
"good quality" in the specification will be enough for quality standard section. Is the procurement manager's thought appropriate?

A. Yes, because the specification should be concise.

B. No, because "good quality" is very ambiguous for suppliers to identify Sabic's re-quirement

C. Yes, because IT sector has its own standard of quality, therefore, suppliers may deliver good quality without any further explanation

D. No, because "good quality" is an in-house jargon that suppliers are not familiar with

Correct Answer: B

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Question 9

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?

A. Suppliers will invest more heavily in technology

B. Buyers will switch to a different market

C. The market will attract new entrants

D. The regulator will intervene and establish pricing controls

Correct Answer: C

Question 10

Which of the following is true in relation to estimating the costs associated with whole life asset management?

A. Every purchase represents an ' iceberg of costs of which the price it the ' tip '

B. The supplier ' s quoted price includes direct costs only and therefore other costs should be estimated

C. The supplier ' s quoted price represents the true end final cost of purchase

D. All quoted prices are exaggerated and therefore discounts must be demanded to save costs

Correct Answer: A

Question 11

Which of the following are ' secondary sources ' of data for costs and prices?
Industry press
Published economic indices
Trade fairs
Buyer ' s database on market data

A. 1 and 4 only

B. 1 and 2 only

C. 3 and 4 only

D. 2 and 3 only

Correct Answer: B

Question 12

Which of the following events would increase the number of suppliers in a particular market?

A. Introduction of minimum wage regulations

B. De-regulation of a previously government-run industry

C. High and increasing levels of investment required to enter the market

D. Requirement for all companies to have 10,000 or more employees

Correct Answer: B

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Question 13

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?

A. Yes, because this will help compare alternatives and options

B. No, because this can lead to business-focused thinking

C. No, because risk consideration is not John ' s responsibility

D. Yes, because this will assist the purchase order

Correct Answer: A

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Question 14

Halfords is a major bicycle and car parts retailer with long history in the market. Its suppliers are plentiful and there is no threat of forward integration. Some other smaller retailers are applying 3D-printing technology to make personalized bicycle parts but their market share is relatively low. 3D-printing technology is an example of which competitive force?

A. Bargaining power of buyer

B. Threat of substitute

C. New entrants may enter the market

D. Rivalry within the industry

Correct Answer: B

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CIPS Defining Business Needs (L4M2) Free Practice Test