L3M2 Practice Exam Questions with Answers Ethical Procurement and Supply Certification

Explanation

The Economic Order Quantity is a formula which attempts to calculate the most efficient quantity to order at any given time, by attempting to reconcile the cost of stockholding and the cost of plac-ing an order. This could then have implications for the timing of an order being placed.

The cost of holding stock can be reasonably accurately calculated and agreed with one's peers. However, determining the cost of placing an order can keep colleagues up late into the night, and can be a great topic to liven up a sleepy procurement / finance function.

Explanation

The Plan-Do-Check-Act cycle, attributed to Deming, stresses the need for action in improving quali-ty. Plan Do Check and Assess would have been close to the correct answer, but not quite close enough.

The other responses shown here are simply made up to fit the letters.

Explanation

The principle of economies of scale is that cost will decrease as the scale / volume of operations in-creases. Remember that 'cost' is not the same as 'price'.

See also 'learning curve' or 'experience curve'. A clear mathematical ratio between volumes and cost per unit can be calculated / determined. The concept of the learning curve originated within the air-craft manufacturing sector in the United States, where engineers drew up precise cost benefits as the quantity of aircraft manufactured increased - as experience was gained.

These ideas can be very useful when negotiating price for large volumes, especially for new or be-spoke goods or services - the supplier's costs may decrease significantly as volumes or experience increase(s).

Explanation

Decline.

It seems pretty obvious, and I hope you can come up with one or two reasons for this being the cor-rect answer.

Explanation

SMART

Specific, measurable, achievable, realistic, timebound or similar.

Explanation

The product has a defect; it might be rejected, then it would be a reject.

The effect of this might be that it would affect profitability.

Explanation

Make, do or buy decision.

Historically 'make or buy'. Now up dated to take account of services procurement ie 'should we do it ourselves?'

Explanation

While one can take the view that your weekend is yours and nothing to do with your main employ-er, many contracts of employment prohibit extra work unless pre-agreed. In any event, it is likely to be seen as polite and respectful to seek permission from your main employer. The point about need-ing to rest at weekends (and during annual holidays) is a serious point: we should be able to func-tion effectively during normal working hours.

If your main employer does not give consent, you may wish to ask for a pay rise. :)

Explanation

It's a cycle.

This is relevant to the measurement of cycle times, as featured in your syllabus.

Explanation

It's the 'materials usage budget'.

This budget would help monitor whether the usage of materials was in line with forecast (budget), or whether there was a variance.

Explanation

The correct answers to the QUESTION NO: are: 'unimaginable' and 'permeable'. 'Permeable' makes no sense here; and it is possible to imagine both physical products and services.

The other four answers are distinguishing features of services, which result in services being more challenging to buy.

Explanation

Zero defects - a quality concept, recognising the significant cost of re-work - remedying problems created earlier in the process. It is therefore desirable to strive for 'zero defects', thus avoiding error correction, re-work, etc. An important idea within JIT, Lean, etc.

Explanation

Suboptimal

Less than optimum.

Explanation

Revenue.

Added value is really measured through the customer's eyes. I have a choice of six coffee shops from which to buy my morning coffee. One has an attractive mix of cleanliness, tasty coffee, effi-cient and friendly service - more than the others. This appealing all-round mix 'adds value' as far as I am concerned and I give it daily repeat business, visiting the others only occasionally. That added value offering generates the repeat business, and helps make the coffee shop more profitable.

Explanation

Quality, quantity, price, place, time. You will need to memorise these.

Note that for CIPS purposes, none of: goods (product or service), manner (ethics) or supplier, is in-cluded in this list. For the sake of ease, perhaps best to just go along with CIPS' view.

Explanation

Transparency.

Explanation

Alternative dispute resolution (ADR)

The other terms shown are irrelevant / fictional.

Explanation

The price / cost iceberg.

The notion that when you buy something for a price, only part of the total cost has been exposed. a potentially very significant chunk of cost remains unseen, 'below the waterline'.

Explanation

All aspects of an acquisition may be impacted by the use of competition - normally favourably - but the one we are most likely to see immediate impact on is 'price'.

Explanation

Supply Management annual awards are external, and while they may be impressive, they are not to be relied upon as a measure of internal customer service.

The other answers offered however, can be effective in this regard.

Explanation

Achieving an objective.

There is an implication that it should be the right objective.

Explanation

Quality.

Specification is fundamental to receiving the right quality.

Standards can be seen as a form of specification intended for recurrent use (Lysons)