CIP Level 4 Module 1 Exam Questions with
complete Solutions
5 rights of procurement - ANSWER Right Quality
Right Quantity
Right Price
Right Place
Right Time
Right Quality - ANSWER goods which are of satisfactory quality and fit for their intended
purpose e.g. ensuring an accurate specification of the requirement and its quality
standards.
Right Quantity - ANSWER sufficient to meet demand and maintain service levels while
minimising stock holding e.g. by ensuring that there is accurate demand forecasting and
efficient inventory management.
Right Place - ANSWER goods delivered to the appropriate delivery point, packaged and
transported so as to secure their safe arrival in good condition e.g. by including
transport instructions including packaging requirements as part of purchase orders.
Right Time - ANSWER delivery of goods at the right time to meet demand, i.e. not too
late but not so early as to incur unnecessary inventory costs e.g. by ensuring accurate
demand management, placing orders in time for suppliers to provide timely delivery and
ensuring that suppliers are aware of delivery requirements.
Right Price - ANSWER securing all of the above at a reasonable, fair, competitive and
affordable price. Ideally, minimising procurement costs in order to maximise profit e.g.
,by carrying out price and supplier cost analysis and/or by carrying out competitive
tendering and negotiation. The 'right' price is one that represents good value for money.
Life Cycle cost (LLC) - ANSWER The total cost throughout its life including planning,
design, acquisition and support costs and any other costs directly attributable to owning
or using the asset".
Total Cost of Ownership (TCO) - ANSWER 1. TCA
2. Tooling
3. Insurance
4. Operation
5 Maintenance
6 Training
7. Storage
8. Disposal
TCO Acquisition costs - ANSWER Acquisition/Physical Hardware costs include the cost of
equipment or property before taxes, but after commissions, discounts, purchasing
incentives, and closing costs.
Sometimes this will include one-time peripheral equipment or upgrades necessary to
installation or utilisation of the asset.
TCO Operating costs - ANSWER Operating costs include subscriptions or services needed
to put the item into business use. This includes utility costs, direct operator labour, and
initial training costs.
TCO Personnel costs - ANSWER Personnel overhead may include administrative staffing,
support personnel to the equipment, facility housing the equipment and operators.
,This may include ongoing training and troubleshooting labour for maintenance
purposes.
Opening Considerations 1 of 2 - ANSWER 1. Procurement involcves something which
may be tangible (goods) or intangible (services
2. The procurement process begins by indentifying a need and is completed once the
goods or services that meet the need are delivered.
3 Procurement is increasingle becoming a strategic function of the business and involves
a high level of skill
4. Procurement takes place in most of all organisations; everything that needs sourcing
and buying for an organisation involves procurement. Therefore, the costs of an
organisation can be linked to procurement
Supply Chain - ANSWER a network of individuals, organisations, technology, activities
and resources that work together to make sure goods or services flow.
If one part of the chain fails, every organisation further along the chain can also fail.
Suppl chain managment aims to - ANSWER 1. Reduce costs
2. Improve Value
3. Reduce risk
Should give the supplying organisation a competitive advantage by adding value
throughout the process, and achieving it in the most effective, efficient and ethical way.
SCM - ANSWER Supply chain management and procurement are not the same thing,
although they are inter-related
Without procurement, there would be no supply chain
1. Procurement as part of supply chain management
, 2. Procurement is about procuring products and servicing as a response to a need, while
a supply chain is the infrastructure involved in physically getting the products or services
needed.
Procurement includes the following
3. Preparing specifications
4. Monitoring quality
5. Sourcing
6. Buying
7. Stock control
8. Disposal of waste
What is logistics - ANSWER The process of planning, implementing and controlling
procedures for the efficient transporting and storage of goods, including services and
related information, from the point of origin to the point of consumption, for the
purpose of conforming to customer requirements.
Logistics can be - ANSWER 1. Inbound and outbound
2. Internal logistics (processes related to getting materials into the desired end state-
Extraction/production /Manufacturing /Warehousing/storage
3. External logistics (Distribution /Transport/ Retail )
Logistics requires several areas to be managed - ANSWER 1. Demand planning - knowing
what is required and when
2. Fleet management - solutions to physically transport goods from one place to another
3. Inventory management -knowing amount of stock available
4. Materials management - handling, storage, inspection and issuing of raw materials,
components and finished goods
5. Materials Requirement Planning (MRP I and II) - electronic system for scheduling
orders, monitoring inventory and managing the production process
complete Solutions
5 rights of procurement - ANSWER Right Quality
Right Quantity
Right Price
Right Place
Right Time
Right Quality - ANSWER goods which are of satisfactory quality and fit for their intended
purpose e.g. ensuring an accurate specification of the requirement and its quality
standards.
Right Quantity - ANSWER sufficient to meet demand and maintain service levels while
minimising stock holding e.g. by ensuring that there is accurate demand forecasting and
efficient inventory management.
Right Place - ANSWER goods delivered to the appropriate delivery point, packaged and
transported so as to secure their safe arrival in good condition e.g. by including
transport instructions including packaging requirements as part of purchase orders.
Right Time - ANSWER delivery of goods at the right time to meet demand, i.e. not too
late but not so early as to incur unnecessary inventory costs e.g. by ensuring accurate
demand management, placing orders in time for suppliers to provide timely delivery and
ensuring that suppliers are aware of delivery requirements.
Right Price - ANSWER securing all of the above at a reasonable, fair, competitive and
affordable price. Ideally, minimising procurement costs in order to maximise profit e.g.
,by carrying out price and supplier cost analysis and/or by carrying out competitive
tendering and negotiation. The 'right' price is one that represents good value for money.
Life Cycle cost (LLC) - ANSWER The total cost throughout its life including planning,
design, acquisition and support costs and any other costs directly attributable to owning
or using the asset".
Total Cost of Ownership (TCO) - ANSWER 1. TCA
2. Tooling
3. Insurance
4. Operation
5 Maintenance
6 Training
7. Storage
8. Disposal
TCO Acquisition costs - ANSWER Acquisition/Physical Hardware costs include the cost of
equipment or property before taxes, but after commissions, discounts, purchasing
incentives, and closing costs.
Sometimes this will include one-time peripheral equipment or upgrades necessary to
installation or utilisation of the asset.
TCO Operating costs - ANSWER Operating costs include subscriptions or services needed
to put the item into business use. This includes utility costs, direct operator labour, and
initial training costs.
TCO Personnel costs - ANSWER Personnel overhead may include administrative staffing,
support personnel to the equipment, facility housing the equipment and operators.
,This may include ongoing training and troubleshooting labour for maintenance
purposes.
Opening Considerations 1 of 2 - ANSWER 1. Procurement involcves something which
may be tangible (goods) or intangible (services
2. The procurement process begins by indentifying a need and is completed once the
goods or services that meet the need are delivered.
3 Procurement is increasingle becoming a strategic function of the business and involves
a high level of skill
4. Procurement takes place in most of all organisations; everything that needs sourcing
and buying for an organisation involves procurement. Therefore, the costs of an
organisation can be linked to procurement
Supply Chain - ANSWER a network of individuals, organisations, technology, activities
and resources that work together to make sure goods or services flow.
If one part of the chain fails, every organisation further along the chain can also fail.
Suppl chain managment aims to - ANSWER 1. Reduce costs
2. Improve Value
3. Reduce risk
Should give the supplying organisation a competitive advantage by adding value
throughout the process, and achieving it in the most effective, efficient and ethical way.
SCM - ANSWER Supply chain management and procurement are not the same thing,
although they are inter-related
Without procurement, there would be no supply chain
1. Procurement as part of supply chain management
, 2. Procurement is about procuring products and servicing as a response to a need, while
a supply chain is the infrastructure involved in physically getting the products or services
needed.
Procurement includes the following
3. Preparing specifications
4. Monitoring quality
5. Sourcing
6. Buying
7. Stock control
8. Disposal of waste
What is logistics - ANSWER The process of planning, implementing and controlling
procedures for the efficient transporting and storage of goods, including services and
related information, from the point of origin to the point of consumption, for the
purpose of conforming to customer requirements.
Logistics can be - ANSWER 1. Inbound and outbound
2. Internal logistics (processes related to getting materials into the desired end state-
Extraction/production /Manufacturing /Warehousing/storage
3. External logistics (Distribution /Transport/ Retail )
Logistics requires several areas to be managed - ANSWER 1. Demand planning - knowing
what is required and when
2. Fleet management - solutions to physically transport goods from one place to another
3. Inventory management -knowing amount of stock available
4. Materials management - handling, storage, inspection and issuing of raw materials,
components and finished goods
5. Materials Requirement Planning (MRP I and II) - electronic system for scheduling
orders, monitoring inventory and managing the production process
