HIGHER EDUCATION PROGRAMMES

MEMORANDUM

Academic Year 2023: July - December

Formative Assessment 2: Logistics, Supply and Procurement (HBMN232-1)
NQF Level: 6
Credits: 10
Weighting: 20%
Assessment Type: Multiple Choice Questions
Educator: T. Mabotja
Examiner: K. Perumal
Due Date: 20 October 2023
Total: 50 Marks

Instructions:
• This paper consists of fifty (50) questions.
• It is based on Units 7-11 (Chapters 7-13) of your prescribed textbook.
• All questions are compulsory.

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Question 1: (1 mark)
An example of ....... refers to when suppliers are forced to take back and recycle
packaging materials.
A. Logistics
B. The value chain
C. Life cycle management
D. Standardisation
(Reference: Purchasing and Supply Management, Chapter 7 (Unit 7), page 124)
The following learning outcome is assessed:
Explain the concept of quality in relation to the purchasing and supply function.

Question 2: (1 mark)
……. Is the total combination of features that will meet the expectations of the
customer by being able to satisfy a need.
A. Attributes
B. Functions
C. Standardisation
D. Quality
(Reference: Purchasing and Supply Management, Chapter 7 (Unit 7), page 124)
The following learning outcome is assessed:
Explain the concept of quality in relation to the purchasing and supply function.

Question 3: (1 mark)
....... refers to specific characteristics of the product that determine its value in the
marketplace.
A. Design quality
B. Internal service quality
C. Conformance quality
D. Legal compliance
(Reference: Purchasing and Supply Management, Chapter 7 (Unit 7), page 125)
The following learning outcome is assessed:
Analyse the multiple roles that purchasing and supply has in ensuring internal service
quality.

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Question 4: (1 mark)
By striving for standardisation of materials, a buyer may achieve .......
A. External service quality
B. Less supplier dependence
C. Higher costs
D. Product variety
(Reference: Purchasing and Supply Management, Chapter 7 (Unit 7), page 124)
The following learning outcome is assessed:
Explain the concept of quality in relation to the purchasing and supply function.

Question 5: (1 mark)
Scrap, disposal, and rework are indicative of what type of cost?
A. Failure
B. Prevention
C. External failure
D. Internal failure
(Reference: Purchasing and Supply Management, Chapter 7 (Unit 7), page 127)
The following learning outcome is assessed:
Analyse the multiple roles that purchasing and supply have in ensuring internal service
quality.

Question 6: (1 mark)
The concept of ....... is embedded in the Six Sigma philosophy.
A. Purchasing and supply
B. Control
C. Continuous improvement
D. Preventative cost management
(Reference: Purchasing and Supply Management, Chapter 7 (Unit 7), pages 127-128)
The following learning outcome is assessed:
Compare and discuss the different quality management systems.

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Question 7: (1 mark)
The principles of QMS include .......
A. Customer focus, leadership, and legal
B. Process approach, systems approach, and management
C. Legal, leadership, and process approach
D. Customer focus, leadership, and a process approach
(Reference: Purchasing and Supply Management, Chapter 7 (Unit 7), page 129)
The following learning outcome is assessed:
Compare and discuss the different quality management systems.

Question 8: (1 mark)
The right price is that which is fair and reasonable to …….
A. The buyer and seller
B. The seller
C. The buyer
D. The public
(Reference: Purchasing and Supply Management, Chapter 8 (Unit 8), page 144)
The following learning outcome is assessed:
Explain why purchase prices are important.

Question 9: (1 mark)
Buyers need to understand the cost structures of suppliers in order to understand how
suppliers ….... their prices.
A. Increase
B. Determine
C. Reduce
D. Hike
(Reference: Purchasing and Supply Management, Chapter 8 (Unit 8), page 144)
The following learning outcome is assessed:
Distinguish between the various cost elements.

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Question 10: (1 mark)
Office lease payments are an example of……..
A. Direct costs
B. Ad hoc costs
C. Indirect costs
D. Property costs
(Reference: Purchasing and Supply Management, Chapter 8 (Unit 8), page 146)
The following learning outcome is assessed:
Distinguish between the various cost elements.

Question 11: (1 mark)

Suppliers sometimes use the ……. for innovative products to recover development
costs before competition sets in.
A. Revenue pricing model
B. Price volume model
C. Cost-based marketing
D. Market skimming model
(Reference: Purchasing and Supply Management, Chapter 8 (Unit 8), page 147)
The following learning outcome is assessed:
Distinguish between the various cost elements.

Question 12: (1 mark)

Buyers may be offered ……. if they buy big volumes.
A. A trade discount
B. A quantity discount
C. A cash discount
D. A long/short discount
(Reference: Purchasing and Supply Management, Chapter 8 (Unit 8), page 149)
The following learning outcome is assessed:
Briefly explain different types of discounts.

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Question 13: (1 mark)
If Transnet is the only rail provider for coal miners in South Africa, this would be an
example of .......
A. Market dissonance
B. Competition
C. Oligopoly
D. Monopoly
(Reference: Purchasing and Supply Management, Chapter 8 (Unit 8), page 150)
The following learning outcome is assessed:
Distinguish between the different market conditions and how they can affect buying
prices.

Question 14: (1 mark)

What costs are incurred when a product or capital equipment has reached the end of
its usable life?
A. Production costing
B. Post ownership costs
C. Ownership costing
D. TCO
(Reference: Purchasing and Supply Management, Chapter 8 (unit 8), page 160)
The following learning outcome is assessed:
Briefly explain different techniques to conduct price and cost analyses.

Question 15: (1 mark)

A sufficient amount of inventory helps against …….
A. Supply uncertainties
B. Price decreases
C. A higher cost per unit
D. Shrinkage
(Reference: Purchasing and Supply Management, Chapter 9 (Unit 9), page 166)
The following learning outcome is assessed:
Explain the role of holding inventory and its importance for organisations.

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Question 16: (1 mark)
Hedging against price uncertainties can be achieved by ........
A. Backward buying
B. Price decreases
C. Excess stock in the market
D. Holding inventory
(Reference: Purchasing and Supply Management, Chapter 9 (Unit 9), page 166)
The following learning outcome is assessed:
Explain the role of holding inventory and its importance for organisations.

Question 17: (1 mark)

Raw materials are examples of ........
A. Processing inventories
B. MRO inventories
C. Production inventories
D. Work-in-progress inventories
(Reference: Purchasing and Supply Management, Chapter 9 (Unit 9), page 167)
The following learning outcome is assessed:
Explain the importance of the different cost elements of inventory holding in the
decision to buy the right quantity of items.

Question 18: (1 mark)

It is important to hold stock at the lowest possible ……. to ensure uninterrupted supply
for operations.
A. Price
B. Time
C. Duration
D. Cost
(Reference: Purchasing and Supply Management, Chapter 9 (Unit 9), page 168)
The following learning outcome is assessed:
Explain the importance of the different cost elements of inventory holding in the
decision to buy the right quantity of items.

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Question 19: (1 mark)
Administrative costs and costs of receipt are categorised under ........
A. Inventory carrying costs
B. Ordering costs
C. Purchasing costs
D. Receiving costs
(Reference: Purchasing and Supply Management, Chapter 9 (Unit 9), pages 168 -
169)
The following learning outcome is assessed:
Explain the importance of the different cost elements of inventory holding in the
decision to buy the right quantity of items.

Question 20: (1 mark)

The ....... provides correct information on the requirements regarding every item
according to the master production schedule.
A. MRP
B. MPS
C. Inventory status file
D. Order document
(Reference: Purchasing and Supply Management, Chapter 9 (Unit 9), page 180)
The following learning outcome is assessed:
Discuss the main components of an MRP system.

Question 21: (1 mark)

The objective of the JIT system is achieved by closely co-ordinating ........
A. Deliveries from suppliers
B. Waste removal
C. Production schedules
D. Operations
(Reference: Purchasing and Supply Management, Chapter 9 (Unit 9), pages 182 -
183)
The following learning outcome is assessed:
Explain the philosophy, characteristics and advantages of just-in-time (JIT)
purchasing.

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Question 22: (1 mark)
Good ……. management can ensure that materials are received timeously and in good
condition.
A. Inventory
B. Cost
C. Customer
D. Transport
(Reference: Purchasing and Supply Management, Chapter 10 (Unit 9), page 192)
The following learning outcome is assessed:
Analyse the suitability of various modes of transport.

Question 23: (1 mark)

........ is considered the most popular due to its reliability and speed.
A. Road transport
B. Rail freight
C. Rail transport
D. Sea transport
(Reference: Purchasing and Supply Management, Chapter 10 (Unit 9), page 193)
The following learning outcome is assessed:
Analyse the suitability of various modes of transport.

Question 24: (1 mark)

Vehicles coming into South Africa from Germany would most likely use …….
A. Road transport
B. Sea freight
C. Rail transport
D. Rail and air transport
(Reference: Purchasing and Supply Management, Chapter 10 (Unit 9), page 194)
The following learning outcome is assessed:
Analyse the suitability of various modes of transport.

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Question 25: (1 mark)
Which party is most likely to provide services such as transport and warehousing?
A. Freight forwarders
B. Shipping lines
C. Import clerks
D. Department of Customs and Duty
(Reference: Purchasing and Supply Management, Chapter 10 (Unit 9), page 195)
The following learning outcome is assessed:
Analyse the suitability of various modes of transport.

Question 26: (1 mark)

Which of the below is an objective of materials handling?
A. Maximum handling
B. Reduce warehouse space
C. Minimum handling
D. Freight forwarding
(Reference: Purchasing and Supply Management, Chapter 10 (Unit 9), page 199)
The following learning outcome is assessed:
Discuss the objectives of materials handling.

Question 27: (1 mark)

The primary role of packaging is to ....... the product.
A. Protect
B. Transport
C. Handle
D. Market
(Reference: Purchasing and Supply Management, Chapter 10 (Unit 9), page 200)
The following learning outcome is assessed:
Discuss the role of purchasing and supply management in packaging decision-making.

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Question 28: (1 mark)
Which of the following methods is the most economic means of removing scrap
materials?
A. Sell to employees
B. Dispose of in a river
C. Use it within the organisation
D. Sell on the black market
(Reference: Purchasing and Supply Management, Chapter 10 (Unit 9), pages 203 -
204)
The following learning outcome is assessed:
Suggest methods for reducing scrap materials.

Question 29: (1 mark)

What is probably the single most important reason for a purchasing and supply
management division to undertake market research?
A. Uncertainty
B. Technology development
C. Global conflict and war
D. Increase sales
(Reference: Purchasing and Supply Management, Chapter 11 (Unit 10), page 211)
The following learning outcome is assessed:
Explain the importance of market research in purchasing and supply in South African
organisations.

Question 30: (1 mark)

An advantage of market research for purchasing and supply management is that new
……. may be introduced to streamline purchasing and supply.
A. Locations
B. Research
C. Personnel
D. Technology
(Reference: Purchasing and Supply Management, Chapter 11 (Unit 10), page 213)
The following learning outcome is assessed:
Point out the advantages of market research in purchasing and supply management.

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Question 31: (1 mark)
Products with …… may indicate a need for research.
A. Unsatisfactory profit margins
B. High-profit margins
C. Low price
D. High price
(Reference: Purchasing and Supply Management, Chapter 11 (Unit 10), page 213)
The following learning outcome is assessed:
Identify and discuss factors that will determine which areas of market research should
take priority.

Question 32: (1 mark)

Which of the following focuses on the general economic and business environment?
A. Microeconomic research
B. Macroeconomic research
C. Mesoeconomic research
D. Quantitative research
(Reference: Purchasing and Supply Management, Chapter 11 (Unit 10), page 214)
The following learning outcome is assessed:
Discuss in detail the operational areas of market research in purchasing and supply
management.

Question 33: (1 mark)

Which type of research is related to assessing the strengths and weaknesses of the
organisation?
A. Microeconomic research
B. Macroeconomic research
C. Mesoeconomic research
D. Quantitative research
(Reference: Purchasing and Supply Management, Chapter 11 (Unit 10), page 214)
The following learning outcome is assessed:
Discuss in detail the operational areas of market research in purchasing and supply
management.

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Question 34: (1 mark)
When an organisation conducts research on substitute products, it is engaged in ........
A. Research on strategic aspects
B. Research on profitability
C. Research on suppliers
D. Research on material goods
(Reference: Purchasing and Supply Management, Chapter 11 (Unit 10), page 215)
The following learning outcome is assessed:
Discuss in detail the operational areas of market research in purchasing and supply
management.

Question 35: (1 mark)

When an organisation looks into suppliers’ practices with regard to waste disposal in
rivers, it is engaged in ........
A. Research on social responsibility
B. Macroeconomic research
C. Research on products
D. Research on strategic aspects
(Reference: Purchasing and Supply Management, Chapter 11 (Unit 10), page 216)
The following learning outcome is assessed:
Discuss in detail the operational areas of market research in purchasing and supply
management.

Question 36: (1 mark)

The best outcome of negotiation lies in an agreement that reflects the understanding
between the parties. This is an example of …....
A. Negotiation
B. Constructive negotiation
C. Responsible negotiation
D. Competitive negotiation
(Reference: Purchasing and Supply Management, Chapter 12 (Unit 10), page 224)
The following learning outcome is assessed:
Compare constructive and competitive negotiation in terms of characteristics,
applicability and expected outcome.

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Question 37: (1 mark)
What type of negotiation is aimed at achieving short-term benefits?
A. Primary negotiation
B. Constructive negotiation
C. Responsible negotiation
D. Competitive negotiation
(Reference: Purchasing and Supply Management, Chapter 12 (Unit 10), page 225)
The following learning outcome is assessed:
Compare constructive and competitive negotiation in terms of characteristics,
applicability and expected outcome.

Question 38: (1 mark)

When an alliance and long-term contract is to be concluded with a supplier, negotiation
is necessary due to ........
A. Conflicting interests
B. Technology risks
C. Supply risks
D. Competition
(Reference: Purchasing and Supply Management, Chapter 12 (Unit 10), page 228)
The following learning outcome is assessed:
Identify circumstances under which negotiation should take place in purchasing and
supply.

Question 39: (1 mark)

In terms of service, which of the following are fundamental aspects of negotiation?
A. Duration of rights
B. Guarantees
C. Prices
D. Competition
(Reference: Purchasing and Supply Management, Chapter 12 (Unit 10), page 230)
The following learning outcome is assessed:
Identify circumstances under which negotiation should take place in purchasing and
supply.

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Question 40: (1 mark)
In terms of prices, which of the following are fundamental aspects of negotiation?
A. Transport
B. Ownership
C. Guarantees
D. Exchange rates
(Reference: Purchasing and Supply Management, Chapter 12 (Unit 10), page 230)
The following learning outcome is assessed:
Identify circumstances under which negotiation should take place in purchasing and
supply.

Question 41: (1 mark)

Which of the following should be avoided when sitting in a negotiation?
A. An emotional approach
B. Self-confidence
C. Making decisions
D. Setting deadlines
(Reference: Purchasing and Supply Management, Chapter 12 (Unit 10), page 234)
The following learning outcome is assessed:
Explain the different phases of the purchasing negotiation process.

Question 42: (1 mark)

A good negotiator is also a good ........
A. Purchaser
B. Manager
C. Planner
D. Listener
(Reference: Purchasing and Supply Management, Chapter 12 (Unit 10), page 234)
The following learning outcome is assessed:
Identify tactics in negotiation.

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Question 43: (1 mark)
The real potential of the internet can be found in its ability to transform relationships
.......
A. Between all buyers
B. Across the entire supply chain
C. Amongst employees
D. Between production and marketing
(Reference: Purchasing and Supply Management, Chapter 13 (Unit 11), page 241)
The following learning outcome is assessed:
Explain the impact of e-commerce on business.

Question 44: (1 mark)

Which of the following are essential requirements for safe e-payments/transactions?
A. Encryption and digitisation
B. Value-added networks
C. Local area network
D. Confidentiality
(Reference: Purchasing and Supply Management, Chapter 13 (Unit 11), pages 243 -
244)
The following learning outcome is assessed:
Identify the barriers to implementing e-procurement.

Question 45: (1 mark)

‘Data should be recorded in such a way that it can be audited for integrity
requirements’. This is an example of:
A. Encryption
B. Digital signature
C. Auditability
D. Integrity
(Reference: Purchasing and Supply Management, Chapter 13 (Unit 11), page 244)
The following learning outcome is assessed:
Identify the barriers to implementing e-procurement.

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Question 46: (1 mark)
Which of the following is a benefit of e-procurement?
A. Better terms and conditions
B. Elimination of administrative errors
C. Improved quality of products
D. Relationship-building is guaranteed
(Reference: Purchasing and Supply Management, Chapter 13 (Unit 11), page 245)
The following learning outcome is assessed:
List the most important characteristics of electronic data interchange (EDI).

Question 47: (1 mark)

The buyer must believe that the current price is high enough that the potential savings
realised by an auction justify the use of a ........
A. Reversed auction
B. Electronic bits
C. eRFX
D. Electronic auction
(Reference: Purchasing and Supply Management, Chapter 13 (Unit 11), page 248)
The following learning outcome is assessed:
Compare the different e-auctions.

Question 48: (1 mark)

What can be used when the negotiator finds herself in a tight corner?
A. A recess
B. Set a deadline
C. Make a decision
D. Make a concession
(Reference: Purchasing and Supply Management, Chapter 12 (Unit 10), page 235)
The following learning outcome is assessed:
Explain the different phases of the purchasing negotiation process.

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Question 49: (1 mark)
……. facilitates the closing of the order since it enables activities such as billing.
A. eRFX
B. The finance department
C. E-payment
D. E-sourcing
(Reference: Purchasing and Supply Management, Chapter 13 (Unit 11), page 250)
The following learning outcome is assessed:
Differentiate between the various categories of e-procurement.

Question 50: (1 mark)

Donations of old equipment to educational institutions is an example of …….
A. Sourcing scrap
B. Removing scrap
C. Investing in the future
D. Capacity utilisation
(Reference: Purchasing and Supply Management, Chapter 10 (Unit 9), page 204)
The following learning outcome is assessed:
Suggest methods for reducing scrap materials.

[Total: 50 Marks]

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