L4M2 by CIPS Actual Free Exam Questions And Answers

Question 1

Which of the following specific markets is most likely to have the lowest entry barrier?

A. Agriculture

B. Retail

C. Financial

D. Manufacturing

E. Services

Discussion 0

Correct Answer: E Vote an answer

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Question 2

A procurement manager is writing a conformance specification for a non-core component. She thinks that if the requirements in specification are higher than ISO standards, her company can achieve greater cost- savings. Is the procurement manager's opinion correct?

A. No, because higher requirements in specification, the greater bargaining power of buying organisation

B. Yes, because higher requirements will help buying organisation find the best supplier

C. No, because higher specification may incur additional costs for the buyer

D. Yes, because optimising the specification is the only method to achieve value for money

Discussion 0

Correct Answer: C Vote an answer

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Question 3

Which of the following are most likely to negatively affect the suppliers' bargaining power in a specific market? Select TWO that apply:

A. There are almost no threats of backward integration

B. Substitute products are readily available in the market

C. Many suppliers are intent on integrating buyers into their business

D. Buyers incur high cost when they change their suppliers

E. There are no differences among suppliers' products

Discussion 0

Correct Answer: B,E Vote an answer

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Question 4

Which of the following factors might prompt an organisation to procure an alternative product? Select THREE that apply:

A. Easy access to distribution channel

B. Relative value to money between options

C. Brand loyalty

D. Switching cost

E. Buying organisation's propensities to change

F. Threat of retaliation

Discussion 0

Correct Answer: B,D,E Vote an answer

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Question 5

Which of the following problems may be identified as closed problems? Select TWO that apply:

A. Logistics costs incur a large portion in wholesale prices

B. Shortage of key medicines in healthcare industry

C. There are not enough data for procurement analytics

D. The suppliers don't comply with the company's policy on underage labour.

E. A cyber attack takes down whole company's IT system

Discussion 0

Correct Answer: B,E Vote an answer

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Question 6

A company buys components from its supplier. However, the supplier has not sent the invoice to the buyer and the buyer will not pay until next month. How will that amount of money be shown in the financial statements of the buying organization?

A. Accounts payable

B. Tax liabilities

C. Accrued interest

D. Accrued expense

Discussion 0

Correct Answer: D Vote an answer

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Question 7

What would provide the best method to ensure a car manufacturer can make adjustments to vehicle production to meet future market demands, such as the inclusion of an additional battery to make a hybrid model?

A. Correct product specification in place to allow variations

B. Investment in versatile robotics to meet changing demand

C. Adequate labour contracts in place to meet changing demand

D. Investment in innovation to predict future trends

Discussion 0

Correct Answer: B Vote an answer

Question 8

A company is evaluating two investment projects: Project A and Project B. Project A has a high initial cost but generates substantial cash flows over time. Project B has a lower initial cost but generates modest cash flows consistently. The company's cost model indicates a payback period of three years for Project A and a payback of four years for Project B. Which of the following statements is correct regarding the cost models and cash flow profiling for these projects?

A. Project B's modest and consistent cash flows make it a risky investment option due to a longer payback period

B. Project B's lower initial cost allows for faster profit realisation, making it the better investment choice

C. Project A's higher initial cost is a disadvantage, and its payback period should be extended for better profitability

D. Project A has a shorter payback period, making it a quicker return on investment compared to Project B

Discussion 0

Correct Answer: D Vote an answer

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Question 9

A "modified re-buy" means ...

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

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

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

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

Discussion 0

Correct Answer: D Vote an answer

CIPS Defining Business Needs - L4M2 Exam Practice Test

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