L4M4 DESIGN QUESTIONS

1. Which of the following is an example of a social value measure in supplier selection for a large
house build contract?

a. Supplier will hire two new trainees as paid workers

b. Suppliers uses recycled Stone from a previous demolition
c. Supplier designs house with thermal properties
d. Supplier will communicate to the local community stakeholders

2. What type of sourcing arrangements is most suitable for a standard product with many
competent suppliers, where there is no opportunity for innovation and the buyer wishes to use
leverage to achieve best value?

a. Single sourcing
b. Multi sourcing
c. Dual sourcing
d. Sole sourcing

3. Why do tenders often have longer timescales in the public sector when compared with those
of the private sector?

a. Regulation of public sector usually dictates minimum timescales

b. There is wider stakeholder involvements in public sector
c. There is more detailed debrief requirements in the public sector
d. All public sector purchases are mandated to use a tendering procedure

4. How can a buyer monitor a supplier's ethical workforce standard throughout a long term
contract?

a. Check the international labour organisation database regularly for information specifically about
that supplier.
b. Commission periodic audits by specialist third parties to highlight any malpractice
c. Request completed self assessment by supplier on a monthly basis
d. Contract management directly on a periodic basis as stipulated in contract terms

5. The procurement manager has received the following data from supplier's account to facilitate
the calculation of the supplier's current ratio:

Current Assets: Stock $200; Debtors $60; Cash $40; Total $300
Short term Liabilities: Bank overdraft $150
Select which calculations the procurement manager will apply to find the current ratio
a. 300 - 200÷150
b. 300÷150
c. 300-200÷150x100
d.300÷150x100

6. Which of the following statements describe a restricted open tender?

a. The tender is openly advertised to the market that is restricted by a monopoly

b. The tender is widely advertised but the suppliers are restricted from attending the opening
session
c. The tender partially pre-qualifies the suppliers when it is advertised restrictively through selected
media
d. The tender is restricted to a spend level that is predetermined by the management

7. Procurement manager, Jack Browser has just received a formal requisition for a new product
being developed by the engineering section. Jack is considering undertaking some market
research using secondary sources of market information. Where is Jack likely to obtain
secondary data on the supply market?

a. Reviewing the historical data base to see the suppliers offerings and performance evaluations
b. Talking to the suppliers representatives at the trade Fair next week
c. Reviewing the websites of suppliers that are known to traditionally deal with this kind of product
d. Meeting with the trade officer at the local Chamber of Commerce to obtain information on some
key suppliers

8. One of the common tasks of a buyer is contacting suppliers in search of quotations. What data
might a typical request for quotation (RFQ) require from the supplier?

1. Price and payment terms e.g. Cash on delivery or after 7 days

2. Invoice number and availability e.g. ex-stock or two weeks lead time
3. Contact name and physical address of the supplier
4. Mode of transport and delivery note number

a. 1 and 2 only
b 1 and 3 only
c. 2 and 3 only
d. 2 and 4 only
9. A multinational company is seeking to negotiate an agreement with global supplier for the
delivery of fresh produce. At which stage of the procurement process should the buyer
consider incoterms?

a. Prior to agreeing the terms of the contract.

b. Once the terms of the contract has been agreed
c. At the point of placing each separate order
d. Prior to deciding when to collect the goods

10. An organisation has decided to increase focus on Corporate Social Responsibility. Which of the
following actions would provide the greatest CSR impact?

a. Adopting use of e-tendering?

b. Selecting lowest cost suppliers
c. Increasing use of local suppliers
d. Outsourcing the supplier chain

11. A company has decided to outsource the delivery of internal staff training to a training services
provider. A list of key performance indicators has been added to the contract. Identify the key
benefits of this.

a. Ensure the cost of training remain fixed

b. Monitor staff feedback on training delivery
c. Ensure legislative requirements are met
d. Track spend levels with the supplier

12. A company is seeking to put out to tender a new contract opportunity, and wants to pre-
qualify the supplier list. The purpose of the pre-qualification is to ensure what?

a. Suppliers which tender will all meet the minimum standards

b. Only the cheapest suppliers are selected
c. Poor scoring suppliers will be filtered after they bid
d. All expressions of interest will be evaluated fully

13 Responsible sourcing demands compliance to basis ethical standards of zero tolerance to

malpractices such as, but not limited to: bribery, corruption and fraud. Which of the following
statements might represent the best guidance to the buyer when addressing bribery as a threat to
responsible sourcing

a. Bribery is an act that is likely to result in costly litigation and loss of reputation to the buying
organization.
b. Bribery is an act that is likely to make the buyer wealthier than colleagues and therefore create
internal problems
c. International buyers should tolerate some level of bribery, where it is accepted in cultures as part
of daily life
d. Suppliers are likely to pass their bribery costs to the buying organisations. Buyers should
therefore negotiate substantial discounts to offset bribery costs.

14. The sourcing process is considered to comprise of the initial stages of the generic procurement
cycle, up to the stage where the contract is awarded to the successful bidder. The stages in the
sourcing process may include

a. Processing the requisitions to facilitate call-offs against newly created framework contracts
b. Chasing the design manager to approve the drawings to accompany the invitation to tender
documents
c. Comparing the suppliers delivery note with the purchase order to confirm the specification
d. Engaging with the suppliers to ensure that they are achieving the KPIs set in the contract

15. The bill of lading is a document signed by a ship owner or agent confirming that goods
havebeen received on a particular ship for shipment. The bill of lading acts as a document of
title transferring ownership of the goods from the supplier to the buyer. Another role of the
bill of lading is...

a. to act as confirmation that the supplier complied with the ethical standards of the buyer
b. to act as evidence of the contract of carriage between the supplier and the carrier
c. to act as evidence of the ship owner's good reputation and ability to refund the buyer's money if
the goods get destroyed in transit
d. to act as confirmation that customs duties will be paid by the supplier should the buyer face
financial hardships

16. Which of the following are examples of primary data for an organisation

a. Online marketing communication and buyer's database

b. Published listings and economic indices
c. Government census and internet searches
d. Commodity pricing and online market analysis

17. What are the two main financial accounting statements of an organisation that show the values
of assets and liabilities, and the change in cash position during the financial year?
a. Cash flow statement and balance sheet
b. Balance sheet and profit and loss statement
c. Cash flow statement and profit and loss statement
d. Profit and loss account and Chairman's statement

18. What is the equation to calculate net profit percentage

a. (Profit - dividend yeild /sales) x 100

b. (Gross profit/sales)x 100
c. (Profit before tax/sales)x100
d. Gross profit - sales/gross profit x 100

19. What is the purpose of incoterms?

a. To identify the time and date that the shipping of the goods will be made
b. To identify who has control of payment of goods in International trade
c. In International trade to explain the rights and duties from buyer to supplier
d. To explain in international trade what language the buyer and supplier should adopt

20. Why is it specifically important for public sector organisations to use a competitive tendering
process?

a. To drive down costs of production

b. Value for money and transparency
c. Increase competition in markets
d. To allow all organisations to tender

21. The incoterm DAT stands for

a. Delivered at time
b. Delivered at terminal
C. Duty and transport
d. Duty and terminal

22. Ethical issues may affect the sourcing requirements from suppliers at which three levels?

a. Macro, corporate and individual

b. Quotation, tender and contract award
c. Market research, engagement and purchase
d. Strategy, management and operational
23. What are the risks of outsourcing?

1. Loss of control of projects

2. Loss of assets
3. Loss of future business opportunities
4. Loss of private information

a. 1 and 4 only
b. 2 and 3 only
c. 3 and 4 only
d. 1 and 2 only

24. What are the benefits of an intranet system?

1. Provide single business interface between partners

2. Improve collaboration and relationships
3. Quicker delivery lead times from suppliers
4. Compliance with quality standards

a. 1 and 2 only
b. 2 and 3 only
c. 3 and 4 only
d. 1 and 4 only

25. in the context of custom procedures, what are the two classifications of goods

1. Free trade goods

2. Goods with community status
3. Goods without community status
4. Free market goods
a. 1 and 2 only
b. 2 and 3 only
26. The single administrative. document SAD is used in which of the following

1. As combined export, community transit and import document

2. For declaration of imports and exports from non EU countries
3. As a traders register to enter transit declarations as part of the community transit system from
EU countries
4. For declarations of imports and exports from EU countries

a. 1 and 2 only
b. 2 and 3 only
c. 3 and 4 only
d. 1 and 4 only

27. You have a high response to a high value tender and just before you decide to award the
contract, a colleague notice you haven't completed a financial assessment on the suppliers. You
decide to stop the award decision and get the financial information assessed. Is this appropriate?

a. Yes, you should complete a financial assessment as part of your selection for all suppliers
b. No. You shouldn't cause any delay which will impact on the timeline
c. No, because you have lots of responses and lots of other relevant data
d. Yes, but you have used some of these companies before, only do a selection of assessments

28. You are providing administrative support to a buying team who have asked you to issue an
award letter to company X who has recently won a tender. You inform your manager that you are
friends with the head buyer of company X. Is this the correct thing to do?

a. Yes, even though you have not been involved in the procurement process
b. No, there is no need as you are the administrator, not the buyer
c. Yes, you should not be issuing any correspondence if you know this company
d. No, it is unlikely that your friend will recognize it is you

29. You are the administration support to a buying team and have been asked to run a request
forquotation, issuing it to five companies. On emailing potential companies, you recognise an email
address and believe it is a distant relative who you don't talk to. You don't tell anyone else about
this and issue the request out.

Is this the correct choice of action?

a. Yes, you don't talk to your relative and they won't know you had sent the request
b. No, you should refuse to send the opportunity out to anyone you recognise
c. Yes, you are not an official buyer and do not usually get involved in tendering
d. No, you should disclose this to your line manager who can decide the next action
30. You have been asked to purchase 500 pens of a specific brand. You decided to use a
weightedpoints system for assessment of proposals. Is this approach appropriate?

a. Yes, weighed points systems is always the best way to evaluate suppliers bids
b. No, it is not necessary as in this case, you are mainly concerned with price
c. Yes, you should follow the same procurement process irrespective of the same circumstances
d. No, you should only use a weighted points system for high spend procurement

31. A cleaning company purchases 1000 toothbrushes, so we can clean the gout in showers.
Severaltoothbrushes break and now the consumer wants to claim a full refund under the Consumer
Right Act, 2015 because they are not fit for purpose. Will the claim be successful?

a. Yes, because they are broken and not fit for purpose
b. Yes, because they snapped during cleaning
c. No, because they were not used for the common purpose
d. No, because the toothbrushes have been used

32 Tariffs and import duties imposed on a buying organisation for goods purchased from an
international supplier provide benefit to

a. the supplying organisation as they receive additional payment

b. the domestic industry through reduced competition
c. local competitors through lower prices
d. consumers by having access to lower prices goods

33. It is correct to suggest that price is the most important contract award criterion when sourcing
requirements from suppliers?

a. Yes, because price is the most crucial determinants of value for money
b. Yes because price is the only essential requirement, other aspects are only desirable
requirements
c. No, because the buyer looks for the most economical advantageous tender which excludes price
d. No, because price might be only part of the broader total cost of ownership

34. The control of gifts and hospitality to ensure that they do not have a corrupt purpose can be
achieved through which international standard

a. ISO 9001
b. ISO 37001
d. ISO 26000
c. ISO 14000
35 Sourcing is part of the generic procurement cycle, and is likely to be used in conjunction with the
following activities.

Select two that apply

a. Raising purchase requisitions

b. Identifying potential suppliers
c. Request for quotations
d. Creating call off orders
e. Uploading goods received notes

36. An organization has decided to use reverse e-auction approach to procure a number of items at
a competitive price. Is this form of e-auction the best approach to use?

a. No as the final price will be higher than the first bid made by the opening bidder.
b. Yes as the final price submitted will be the lowest price quoted for the item
c. Yes as the final price will be the best and final price that the supplier submits
d. No. as the final price for the item may not include all the costs such as transportation

37. When assessing financial performance of a potential supplier it is important to understand how
much gross profit they are making. The Gross profit margin ratio uses which of the following pieces
of information from the balance sheet (statement of financial position). Select two that apply

a. Total current asset

b. Income from sales
c. Current liabilities
d. Costs of Goods sold
e. Value of equity capital

38. Incoterms 2010 is a set of international commercial terms which includes eleven predefined
terms which are referred to using three letter designators. These are linked with the point where
ownership, risk and responsibility for the goods pass from the seller to the buyer.

Which incoterms represent the greatest risk for the seller and buyer? Select two that apply.

a. CFR- Cost and freight

b. CIF- Cost, insurance and freight
c. Deliver duty paid
d. EXW- Ex works
e. FOB- freight on board
39. International sourcing has continued to increase due to technogical advancement and region
specific competitive advantages, among other factors. Incoterms is set of contractual terms that
can be adopted into international contracts designed to be interpreted on a worldwide basis.

Incoterms are structured in four broad groups of increasing responsibility for the seller. These four
groups of incoterms are identified by which four letters?

a. F. O. E and D terms
b. E. F.C. and D terms
c. C.F.E and X. terms
d. D.E.X and P terms

40. Stephen is drafting a business case to support the outsourcing of domestic services.
Which of the following is a factor to support the decision of outsourcing an activity?

a. Domestic services is a core competency

b. Domestic services is seen as high risk
c. Minimal suitable services supply market
d. Domestic services takes place on an infrequent basis

41. Buyers can obtain information on suppliers and the supply market. Which of the following is a
secondary source of market data?

a. Supplier prices provided on price comparison websites.

b. Historical records of supplier prices on the buyer's database.
c. Price brochures provided by the suppliers sales team
d. Suppliers prices provided on the buyer's request for quotation

42. Faisal is a Medical Equipment Maintenance Services Procurement specialist within a local
hospital. Faisal is responsible for ensuring contracts are in place that will ensure operational
continuity and patient safety to high value pieces such as radiology equipment. When carrying out
tender opportunities for these services, Faisal will include as an essential requirement that certain
standards are adhered to. Which of the following is a benefit of incorporating standards as a
requirement within a specification?

a. Standards provide clear guildelines and removes the risk of ambiguity

b. Standards will mirror the buyers requirements in its entirety.
c. Standards will ensure low pricing submitted in the tender response.
d. Standards will ensure suppliers meet all the buyers requirements.
43. Azram is a facilities category buyer within the UK police force and its managing an overseas
sourcing project for police uniform and personal protective equipment. Azram is of the opinion that
international sourcing will help deliver much needed financial savings which can be utilised in other
areas of the UK police force. Azram is aware that exchange rate fluctuations can create risk for his
organisation. How can Azram remove this risk?

a. Conduct a competitive tendering exercise process

b. Ask suppliers to quote in GBP sterling
c. Evaluate international suppliers financial accounts
d. Request to use the exchange rate at the time of delivery.

44. Stephen is writing a business case to promote implementing an e-tendering system within his
procurement department. Which of the following benefits would an e-tendering system offer?

1. Minimal initial investment costs

2. Guaranteed security on confidential information
3. Consistency of tendering procedures
4. Supports cross functional working

a. 1 and 2 only
c. 2 and 3 only
b. 1 and 3 only
d. 3 and 4 only

45. Ratios can be used to analyse supplier financial standing, strength and stability. Which of the
following are measures of a supplier's profitability? Select two that apply?

a. Returns on assets
b. Debt collection period
c. Asset turnover
d. Net profit percentage
e. Price earnings ratio

46. Avram is a buyer for a private sector electrical components company and has been asked to
deliver training to internal members of staff promoting the advantages of his team conducting
competitive bidding processes on behalf of his organisation. When is a competitive bidding
appropriate? Select two that apply

a. When it is impossible to estimate production costs accurately.

b. When price is not the most important award criterion
c. When changes to the specification are likely as the contract progresses
d. When there are adequate numbers of potential suppliers in the market
e. When there is sufficient time to conduct the procedure
47. A procurement manager has decided to use global social compliance program, GSOP, for
assistance with their audit work. Was this the right thing to do?

a. No, because the audit cannot be negotiated further.

b. Yes, because this will avoid the use of multiple audits.
c. Yes, because this will provide certainty of the audit data
d. No. because the audit data cannot be relied upon

48. What are important ethical weightings that might be included in non cost assessment criteria?
Select two that apply

a. Competitive whole life costs

b. Life cycle impacts of materials
c. Use of SMS diverse suppliers
d. Accreditation to relevant standards
e. Cost transparency and fair pricing

49. Total construction Limited has decided to incorporate sustainability criteria to their selection
procedures. However, they have assessed that there may be a number of selection process issues
that arise from this. Which of the following may be a likely issue?

a. Management of performance assessment

b. Commitment to continous improvement
c. Excessive cost to the process
d. Undervaluing sustainability against other issues

50. Which of the following are indicators of responsible purchasing from a buyer's perspective in
ensuring Human Rights in the supply chain?

1. Working towards minimum safety standards

2. Identification of specification and delivery dates
3. Long term; stable risk sharing with the supplier
4. Managing work practices to support the supply chain

a. 1 and 4 only
b. 2 and 3 only
c. 1 and 3 only
d. 2 and 4 only
51. The Directors of Harvey Consultants have instructed their procurement manager that in order
to gain further value for money for the business, e-aution methodology should be investigated and
undertaken thereafter for any appropriate goods and services. Which of the following is likely to be
the first criteria set in the e-aution process?

a. Specific performance criteria

b. Appoint a marketplace provider
c. Identify potential suppliers
d. Invite suppliers to bid

52. Young's Tool Manufacturing has decided to purchase a new CEO's chair, with their own
corporate design displayed. As the best value for money supplier is based in a different country,
Young needs to complete the appropriate documentation for customs. As the item will be used for
Young's own internal business consumption, which type of document should they produce from the
following?

a. Bill of entry
b. Ex-bond bill of entry
c. Consignment Sale
d. Bill of Exchange

53. Harper Blinds is about to use a new supplier establish in a different country. The supplier will be
providing metal brackets that will be used for the assembly of the blinds at the final stage of the
manufacture. The import documentation will be produced by the importer. Of all the different
types of import documentation, which is considered to be the most important document that
certify the sales?

a. Letter of credit
b. Certification of origin
c. Bill of lading
d. Commercial invoice

54. Duty and tariffs may be imposed on goods that are imported through a country's customs
portals. Tariffs are different to Duty in which of the following?

a. Reduce the import volume

b. Collect government income
c. Taxation on the import item
d. Cost of customs service
55. Gear Enterprise are an international company who have decided to purchase bulk technical
equipment from a supplier they have previously used. It is director's intention to warehouse this
equipment at the point of import as soon as it arrives with customs. The director is Keen that the
company should be able to request the consignment in part quantities from the customs
warehouse. Which of the following documentation should the company complete for this purpose?

a. Bill of entry
b. Consignment sale
c. Ex-bond bill of entry
d. Bill of exchange

56. Which is the preferable method of achieving sustainability?

a. To take back products at the end of their useful life

b. To design products that are reusable
d. To use materials which are plentiful
c. To design products which use recyclable materials

57. An organisation wants to measure it's Triple Bottom Line. Which of the following should be
considered to best help achieve this goal?
a. Quality and lead time performance
b. Employee safety and welfare performance
c. Financial and environment performance
d. Quality and process performance

57. An organisation wants to measure it's Triple Bottom Line. Which of the following should be
considered to best help achieve this goal?
a. Quality and lead time performance
b. Employee safety and welfare performance
c. Financial and environment performance
d. Quality and process performance

58. Current ratio is a short term liquidity ratio that might be used to compare a potential supplier's
current assets with current liabilities to determine the financial stability.

Which of the following balance sheet (statement of financial position) items are likely to be
identified as current assets for the purchase of calculating the current ratio. Select two that apply?
a. Cash held in the bank
b. Buildings rented for business
c. Cash locked up in the safe
d. Bank overdraft to pay for stock
e. Suppliers unpaid invoices
59. Simon has written a business case to support the introduction of an e-tendering system for the
procurement department within his organisation. Which of the following are advantages of
adopting e-tendering system? Select two that apply

a. Assists with cross functional working

b. Does not prevent any supplier from responding
c. Ensures complete security of commercial information
d. Ensures pricing submissions are lower
e. Provides a full audit try for the buyer

60. When enforcing compliance by taking corrective action, a buyer might wish to have an
independent third party endorsement to gain additional source of influence within the supply
market.

Which of the following approaches might be suitable. Select two that apply

a. Auditing by qualified expert workers

b. Involving independent workers associations
c. Members of the board investigating compliance
d. Involve internal stakeholders
e. Regular meetings between buyers side and supporters side
ANSWERS
1. A 2. B 3. A 4. B 5. B 6. C 7. D 8. B 9. A 10. C
11. B 12. A 13. A 14. B 15. B 16. A 17. A 18. C 19. C 20. B
21. B 22. A 23. A 24. A 26. A 25. B 27. A 28. A 29. D 30. B
31. C 32. B 33. D 34. B 35. B &C 36. B 37. B &D 38. C & D 39. B 40. D
41. A 42. A 43. B 44. D. 45.A & D 46.D & E 47.B 48.C & D 49.C 50. A
51. A 52.A 53.D 54.A 55.C 56.B 57.C 58.A & C 59.A & E 60. A & B