1. Which of the following is a benefit of supplier diversity in
procurement?
A. Greater price control
B. A more competitive supplier base
C. Reduced administrative costs
D. Easier contract negotiation
Answer: b) A more competitive supplier base
Rationale: Supplier diversity encourages competition and
innovation, as a more diverse range of suppliers can bring new
ideas and solutions to the table.
2. Which type of contract would typically be used for a project
with uncertain costs?
A. Fixed-price contract
B. Cost-plus contract
C. Time and materials contract
D. Framework agreement
Answer: b) Cost-plus contract
Rationale: A cost-plus contract is used when costs are uncertain,
allowing the buyer to reimburse the supplier for actual costs plus
a fixed fee.
,3. What is the main advantage of using a 'dual sourcing' strategy?
A. Lower costs due to supplier competition
B. The ability to control quality
C. Reduced risk of supply chain disruptions
D. Stronger supplier relationships
Answer: c) Reduced risk of supply chain disruptions
Rationale: Dual sourcing involves using two suppliers for the same
product or service, reducing the risk of disruptions if one supplier
encounters problems.
4. Which of the following is a disadvantage of the just-in-time
(JIT) inventory system?
A. Excessive stockpiling of goods
B. Increased risk of stockouts
C. Decreased supplier relations
D. Higher carrying costs
Answer: b) Increased risk of stockouts
Rationale: JIT inventory minimizes stock levels, which can lead to
a higher risk of stockouts if demand is unpredictable or there are
supply chain disruptions.
, 5. Which of the following is a characteristic of a centralised
procurement structure?
A. Decentralized decision-making
B. Local teams making independent purchases
C. Standardized procurement processes across the organization
D. Higher autonomy for individual departments
Answer: c) Standardized procurement processes across the
organization
Rationale: A centralised procurement structure consolidates
purchasing decisions and processes into one department, ensuring
consistency across the organization.
6. Which of the following strategies is likely to help reduce
procurement costs?
A. Increasing the number of suppliers
B. Developing long-term supplier relationships
C. Reducing the number of purchase orders
D. Limiting negotiation with suppliers
Answer: b) Developing long-term supplier relationships
Rationale: Building long-term relationships with suppliers can
lead to better pricing, improved collaboration, and more reliable
supply chains, helping to reduce procurement costs.
procurement?
A. Greater price control
B. A more competitive supplier base
C. Reduced administrative costs
D. Easier contract negotiation
Answer: b) A more competitive supplier base
Rationale: Supplier diversity encourages competition and
innovation, as a more diverse range of suppliers can bring new
ideas and solutions to the table.
2. Which type of contract would typically be used for a project
with uncertain costs?
A. Fixed-price contract
B. Cost-plus contract
C. Time and materials contract
D. Framework agreement
Answer: b) Cost-plus contract
Rationale: A cost-plus contract is used when costs are uncertain,
allowing the buyer to reimburse the supplier for actual costs plus
a fixed fee.
,3. What is the main advantage of using a 'dual sourcing' strategy?
A. Lower costs due to supplier competition
B. The ability to control quality
C. Reduced risk of supply chain disruptions
D. Stronger supplier relationships
Answer: c) Reduced risk of supply chain disruptions
Rationale: Dual sourcing involves using two suppliers for the same
product or service, reducing the risk of disruptions if one supplier
encounters problems.
4. Which of the following is a disadvantage of the just-in-time
(JIT) inventory system?
A. Excessive stockpiling of goods
B. Increased risk of stockouts
C. Decreased supplier relations
D. Higher carrying costs
Answer: b) Increased risk of stockouts
Rationale: JIT inventory minimizes stock levels, which can lead to
a higher risk of stockouts if demand is unpredictable or there are
supply chain disruptions.
, 5. Which of the following is a characteristic of a centralised
procurement structure?
A. Decentralized decision-making
B. Local teams making independent purchases
C. Standardized procurement processes across the organization
D. Higher autonomy for individual departments
Answer: c) Standardized procurement processes across the
organization
Rationale: A centralised procurement structure consolidates
purchasing decisions and processes into one department, ensuring
consistency across the organization.
6. Which of the following strategies is likely to help reduce
procurement costs?
A. Increasing the number of suppliers
B. Developing long-term supplier relationships
C. Reducing the number of purchase orders
D. Limiting negotiation with suppliers
Answer: b) Developing long-term supplier relationships
Rationale: Building long-term relationships with suppliers can
lead to better pricing, improved collaboration, and more reliable
supply chains, helping to reduce procurement costs.
