Exam Questions

1. Purchasing is a subset of procurement.

a. True
b. False

2. Procurement is the process of acquiring ……………… works, and ……………… covering both
acquisitions from third parties and from in house providers.
a. goods and services
b. services and operations
c. operations and goods
d. None of the above

3. Purchase of goods and services for resale in the industrial market is characteristics of which
type of organization?
a. Industrial Producer
b. Intermediate
c. Public Sector
d. Institutions

4. Purchase of goods and services for institutions that buy independently on their own behalf
is characteristics of which type of organization?

a. Industrial Producer
b. Intermediate
c. Public Sector
d. Institutions

5. Purchasing System includes

a. Need Identification
b. Selection of possible source of supply
c. Determination of Price & Terms
d. All of the above

6. How many steps are there in Purchasing:

a. 5
b. 7
c. 9
d. 3

7. The objectives of Advance Purchase Planning are

a. Integrate the efforts of all personnel responsible for the procurement
b. Maximize competition
c. Ensure that the needs are met in the most effective, economical and timely manner
d. All of the above

Page 1 of 16
 8. Advance procurement planning is informal process.
a. True
b. False

9. Advance Planning ensures needs are met in the most ……………

a. Economic Manner
b. Timely Manner
c. Informal Manner
d. Both a & b

10. Who is responsible for achieving best possible prices

a. Purchasing department
b. Contracts Department
c. Finance Department
d. None of the above

11. ………………….. is the process of integrating purchasing and accounts payable systems to
create greater efficiencies.
a. Source to Pay
b. Procure to Pay
c. Performance Analysis
d. None of the above

12. Final Step in procure to pay process is focused on handling the Purchase Order for payment,
sending the payment , and entering the amount into accounting systems.
a. True
b. False

13. There are ………….. steps in Procure to Pay

a. 5
b. 7
c. 8
d. 9

14. In Procure to Pay method Purchase Orders are sent through an approval to ensure
……………… and …………….. of specification
a. Legitimacy and Accuracy
b. Legitimacy and Correctness
c. Accuracy and Correctness
d. None of the above

15. In Procure to Pay method three way match is done between the purchase order , the vendor
invoice , and the good receipt.
a. True
b. False

Page 2 of 16
16. Receipt, inspection, and acceptance of goods is a …………….. process in purchasing.
a. Pre-Award
b. Post-Award
c. A&B
d. None of the above

17. Digitalizing P2P can help organizations to reduce manual paperwork and spreadsheets.
a. True
b. False

18. P2P doesn’t help in streamlining the process, optimizing spend and improving compliance
a. True
b. False

19. Following are the advantages of EDI except

a. Replacing the paper document
b. Reduction in the cost of inventory
c. Integration of functions like marketing, purchasing, production and finance
d. Increasing the cost of inventory

20. Vendor Management is a structured program to manage suppliers and improve their impact
on the buyer’s business.
a. True
b. False

21. Blanket purchase agreement is enforceable by law.

a. True
b. False

22. What is the difference between JIT & System Ordering?

a. In System Ordering short terms contracts preferred whereas in JIT long term Contracts is
preferred.
b. Both are Same
c. In System Ordering selection of suppliers are made from single source and In JIT multiple
source is considered.
d. None of the above.

23. Standing Orders is also called as……………….

a. Open Ended Ordering
b. Close ended Ordering
c. JIT
d. Open ended Contracts

Page 3 of 16
24. JIT is a concept which includes
a. Making a plan from time to time
b. Getting the items just when they are needed for production
c. Creating purchase orders just before delivery
d. All of the above

25. Which of the following is NOT true about JIT contracts:

a. Purchases are made in small lots with frequent deliveries
b. Less time is spent in formal paper work
c. Primarily used for manufacturing materials and components
d. Is used primarily for MRO items

26. Petty Cash is normally used in the following situations EXCEPT:

a. Suppliers prefer to do business on a cash basis to avoid detailed paperwork which they are
not equipped to handle or which they consider too costly
b. To procure items which are not readily available
c. Individual transactions do not exceed a given amount
d. Provisions for blanket purchase agreements are impractical or unacceptable

27. Which of the following is NOT true about Two-Step bidding:

a. It is a Hybrid method
b. In Step 1 technical proposals are evaluated and in Step 2 price proposals are solicited from
suppliers who have qualified in Step1
c. The order is placed after negotiation with the lowest bidder
d. The award criteria is similar to that in competitive bidding

28. When sole source materials for which cost cannot be established & prices are known to be
competitive the buying team should consider issuing.
a. VMI ( Vendor Managed Inventory )
b. Un- priced Purchase orders
c. Blanket Purchase Order
d. Two-step Bidding

29. Which of the following contemplates a high degree of cooperation between the buyer and
supplier facilitating a reduction in inventory for both the buyer and supplier
a. P-cards
b. Blanket Purchase Orders
c. Standing orders
d. Systems Contracts

30. A Purchase Order becomes a formal contract when:

a. Both the buyer and supplier sign the document
b. The supplier accepts the purchase order by performance
c. Both the above
d. None of the above

Page 4 of 16
31. The PO should have provision for order cancellation if buyer is not happy of the goods
provided after use
a. True
b. False

32. Oral ordering is useful in situations where other simplified methods, such as calls against
blanket purchase agreements are not practical
a. True
b. False

33. The formal purchase system that contemplates high degree of cooperation between the
buyer & supplier facilitating decrease in inventory for both buyer & supplier is called:
a. JIT
b. Systems Contracts
c. GAP analysis
d. Blanket Purchase Agreement

34. Issuance of Blanket Purchase agreement is most common when the material is available
with many suppliers. This method of procurement is adopted when stocks are required on
_________ basis:
a. Definite Quantity- Indefinite Delivery
b. Definite Quantity- Definite Delivery
c. Indefinite Quantity-Definite Delivery
d. Indefinite Quantity- Indefinite Delivery

35. The buyer is not obligated to place any orders and the supplier is not obligated to accept
any orders when using:
a. System Contracts
b. JIT Contracts
c. Blanket Purchase Agreements
d. Purchase Order Drafts

36. The buyer who established the blanket agreement may place orders & if so designed, mostly
& terminate the blanket.
a. True
b. False

37. Main factors which are usually considered for supplier evaluations are:
a. Price- Quality- Quantity
b. Products – Quality- Negotiations
c. Packaging – Defects- Service
d. Price - Quality – Delivery

38. Hybrid method of procurement uses price competitive approach

a. True
b. False

Page 5 of 16
39. Cross -functional teams may lead to comprising experty as people spend less time within
their own functions
a. True
b. False

40. Cross functional teams cannot achieve their desired goals if they are given enough decision-
making power and company resources to make things happen.
a. True
b. False

41. A tool that makes sourcing faster, easier & more effective without disrupting the paper less
procurement process is called:
a. Competitive Bidding
b. Reverse-Auction
c. Use of Standing orders
d. E-Commerce

42. Reverse Auction makes sourcing faster, easier and more effective.
a. True
b. False

43. E procurement facilitates

a. Oral Ordering
b. Quick Petty Cash replenishment
c. Paper less purchasing
d. No requirements for inspection of goods

44. The benefits of e-procurement are:

a. Time Reduction
b. Time and Cost Reduction
c. Time, Cost & Price Reduction
d. None of the above

45. E- Catalogues is
a. A web page that provides information on products and services offered and sold by vendor
and supports online ordering and payment capabilities.
b. A web page that provides information on only services offered and sold by vendor and
supports online ordering and payment capabilities.
c. A web page that provides information on only products offered and sold by vendor and
supports online ordering and payment capabilities.
d. None of the above

46. E-auction is only applicable for B2B

a. True
b. False

Page 6 of 16
47. Reverse auctions are used for spot buying.
a. True
b. False

48. Reverse auctions is useful in following circumstances except

a. When there is uncertainty as to size of market and willingness of sellers to supply a product
b. When purchasing large quantities of an item for which clear specification are possible
c. When selling surplus assets
d. When there is a certainty of size of market and willingness of sellers

49. Security and auditing are important aspects of …………..

a. E-Payment
b. E-Procurement
c. Reverse Auction
d. None of the above

50. The technique based on agreed standards which facilitates business transactions in
standardized electronic form in an automated manner directly from a computer application
in one organization to an application in another.
a. Electronic Data Interchange (EDI)
b. E- Payment
c. Reverse Auction
d. None of the above

51. Strategic Sourcing Management aims to …….

a. Improve quality and service while reducing the total cost of purchased materials, products
and services
b. Improve quality and service while increasing the total cost of purchased materials, products
and services
c. Both A & B
d. None of the above

52. The two general methods of sourcing types are known as:
a. Single or Partnered
b. Spot & Systematic
c. Internal & External
d. Local & Global

53. When switching from domestic to global sourcing it is not important to develop preliminary
sourcing information at a macro level:
a. True
b. False

Page 7 of 16
54. Which of the following combination, refers to domestic sourcing:
a. JIT – Lower costs – One currency
b. Lower cost –Two currencies- Long lead times
c. Two languages – Direct deal – Inventory needed
d. One set of laws – Direct deal – Higher cost of business

55. When sole source materials for which cost cannot be established & prices are known to be
competitive the buying team should consider issuing:
a. VMI (Vendor Managed Inventory)
b. Un- priced Purchase orders
c. Blanket Purchase Order
d. Two-step Bidding

56. A monopoly supplier situation can be described as

a. Sole source
b. Single source
c. Both the above
d. None of the above

57. Woman owned business enterprises and small disadvantaged business are also known as:
a. HUB’s
b. SME’s
c. WBE
d. Traders

58. Focusing on training, marketing, quality & investments refer to :

a. Areas of supplier development
b. Factors affecting signing up of cost + award contracts
c. Criteria’s for supply sourcing
d. Performance measurements of suppliers

59. Market analysis is a quantitative and qualitative assessment of a market.

a. True
b. False

60. Which of the combination refers to Off shore Sourcing

a. JIT – Lower costs – One currency
b. Lower cost –Two currencies- Long lead times
c. Two languages – Direct deal – Inventory needed
d. One set of laws – Direct deal – Higher cost of business

61. Lease vs Purchase is a variation of the Make-Buy analysis

a. True
b. False

Page 8 of 16
62. Which of the following would you prefer when the need is short-term ?
a. Lease
b. Purchase
c. Both A and B
d. None of the above

63. Feasibility, need, component analysis & break even analysis are the steps in:
a. Purchasing analysis
b. Make or Buy analysis
c. Lease or Purchase analysis
d. All of A, B and C

64. In a manufacturing process, the Fixed Costs are AED 100,000 and Variable Costs are AED 300
per unit. The Sale Price of each unit is AED 400. The breakeven quantity is:
a. 10,000
b. 1000
c. 5000
d. None of the above

65. Breakeven is achieved when:

a. Total revenue equals total costs
b. Variable costs equal fixed costs
c. Total revenue exceeds fixed costs
d. None of the above

66. Issuing RFQ/RFP is part of Solicitation Planning

a. True
b. False

67. Benefits of sustainable procurement are as follow:

a. Controlling cost by adopting a wider approach to whole life costs
b. Achieving internal and external standards
c. Complying with environmental and social legislation
d. All of the above

68. What are the barriers to achieve sustainable procurement ?

a. Perception about the process
b. Complexity of cost
c. A&B
d. None of the above

69. Bio-diversity is ………………….. impact of sustainability.

a. Economic
b. Environmental
c. Social
d. None of the above

Page 9 of 16
70. In categorical method a grade of plus, minus and neutral is used .
a. True
b. False

71. Firm with large database usually used the ……………. Supplier performance evaluation
technique
a. Categorical Method
b. Weighted Point Method
c. Cost Ratio Method
d. AHP Process

72. The cost that changes when production output changes is ……………….
a. Variable Cost
b. Fixed Cost
c. Direct & Indirect Cost
d. None of the above

73. Motive of hedging is risk aversion and a monetary gain.

a. True
b. False

74. The outcome of Distributive Negotiation is ……………….

a. Win- lose
b. Lose-lose
c. Win –Win
d. None of the above

75. Which of the following permits the organization to request technical (and other) proposals,
from which the level of quality can be inferred
a. Request for Quotation
b. Best Value
c. Request for information
d. None of the above

76. The reason to negotiate is……………….

a. To agree on how to divide a limited resource
b. To agree on how to share a limited resource
c. To resolve a problem
d. All of the above

77. Receptiveness to partnering or teaming is related to:

a. Service Performance
b. Delivery Performance
c. Price Performance
d. Quality Performance

Page 10 of 16
78. In Alternate Dispute Resolution, a judgment can be imposed by
a. Mediator
b. Arbitrator
c. Conciliator
d. Consultant

79. In a distributive negotiation, the buyer’s resistance point (maximum) is 1000$ lower than
the seller’s resistance point (minimum). The situation can be best described as:
a. Negative ZOPA
b. Neutral ZOPA
c. Positive ZOPA
d. None of the above

80. Lease is only applicable for short term.

a. True
b. False

81. Negotiation that sets to divide up a fixed amount of resources; a win‐lose situation is called:
a. Collective Bargaining
b. Integrative Bargaining
c. Distributive Bargaining
d. Restrictive Bargaining

82. The type of lease that is generally considerably less than the assets useful life is referred as:
a. Financial Lease
b. Dry Lease
c. Operating Lease
d. Leveraged Lease

83. Level IV of International Sourcing is best described as

a. Engage in Worldwide Buying As-Needed
b. Regional and Global Coordination of Worldwide Purchasing Strategies
c. Integration and Coordination of Global Purchasing Strategies with Other Functional Groups
and Processes
d. Regional and Global Coordination of Worldwide Purchasing Strategies

84. Bargaining is an integrative method of negotiation

a. True
b. False

85. Integrative skills are useful in the Value Claiming stage:

a. True
b. False

86. E procurement and E commerce is a same concept.

a. True
b. False

Page 11 of 16
87. Land cost and total cost of ownership is same.
a. True
b. False

88. _____are costs classified as how they behave when output changes:
a. Average Costs
b. Variable Costs
c. Fixed Costs
d. Total Costs

89. In distributive negotiation their (seller)minimum resistance point and your (buyer) maximum
resistance point are called:
a. Manipulating actual Costs
b. Better Alternate to a Negotiated Agreement
c. Walk Away Positions
d. Win-lose

90. Myers & Briggs demonstrated ______types of personality styles:

a. 24
b. 16
c. 18
d. 32

91. The two primary kinds of hedging adopted by purchasing personnel are:
a. Forward and Futures
b. Past and present
c. Both A & B
d. None of the above

92. Law of smaller numbers is :

a. Tendency to draw conclusions from small sample size
b. Issued by banks & traded amongst institutions
c. Cost + Incentive Fee type of contract
d. Traded on currency spot market exchanges

93. Settling quickly in a negotiation may lead to:

a. WATNA
b. Winner’s curse
c. Wrong contact
d. None of the above

94. Factors that facilitate successful Integrative Negotiation are

a. Common Objective/Goal
b. Faith in Problem -Solving Ability
c. Motivation and commitment to work together
d. All of the Above

Page 12 of 16
95. Which of the following Supplier Rating Systems has the greatest potential for long term
improvements:
a. Cost Ratio Model
b. Weighted Average Method
c. Categorical Method
d. None of the above

96. Barter, Buy-back and Offset are all different types of:
a. Negotiation styles
b. Blanket Purchase Agreements
c. Counter-trade
d. System contracts

97. While adopting ‘global sourcing practice’ Delivery Cycle Time:

a. Reports no change
b. Shortens
c. Lengthens
d. Plays no role

98. Negotiation is all about price:

a. True
b. False

99. In global sourcing, cost of conducting business is

a. Low compared to domestic sourcing
b. High compared to domestic sourcing
c. Same as that of domestic sourcing
d. None of the above

100. Considerations like Make-or-Buy analysis, degree of price competition to be sought,

identification of probable sources of supply and identification of risks associated with the
procurement are all:
a. Procurement pitfalls
b. Procurement benefit
c. Advance Purchase Planning
d. None of the above

101. More suppliers increase reliability of supply and therefore single sourcing should never be
used:
a. True
b. False

Page 13 of 16
102. A shift from Transactional purchasing to strategic Procurement would:
a. Increase the value creation to the enterprise
b. Decrease the value creation to the enterprise
c. Has no connection with value to the enterprise
d. None of the above

103. Getting the opponent to change a negative settlement range to positive by moving
resistance point is one of the strategies used in:
a. Integrative negotiation
b. Distributive bargaining
c. Both A & B
d. None of the above

104. Negotiation is an in-born quality and cannot be improved by conscious study:

a. True
b. False

105. Master lease operates like a blanket order.

a. True
b. False

106. TCO or Total Cost of Ownership is best described as:

a. Total Landed price
b. Total acquisition price inclusive of all taxes and duties
c. Life Cycle Cost
d. Total Cost of Ordering

107. When the owner of the asset sells the asset to a second party and then leases it back
from the contracting firm, then it is known as:
a. A sale and leaseback lease
b. Master Lease
c. Dry Lease
d. A leveraged Lease

108. The common mistakes in global sourcing include all the following EXCEPT
a. Involving intermediaries and interpreter
b. Focusing search in the wrong countries
c. Using domestic terms and condition
d. Using exclusively domestic currency

109. The tendering method where only pre-qualified suppliers are invited to bid, is known as:
a. Open Tendering
b. Close Tendering
c. Negotiated Tendering
d. None of the above

Page 14 of 16
110. Negotiation is not needed if the lowest quotation appears to be reasonably priced
a. True
b. False

111. Negotiation is not needed if a supplier wishes to arrive at a quality contract

a. True
b. False

112. Suppliers who have completed the screening process and are identified for future
procurement needs are
a. Partnered Supplier
b. Preferred Supplier
c. Pre-qualified Supplier
d. Primary Supllier

113. Global sourcing helps

a. Lower Cost
b. Increase Capacity
c. Broader supply Base
d. All of the above

114. A conflict enhances personality development

a. True
b. False

115. Which one of the following strategies is not included in Distributive negotiation:
a. Integrating
b. Dominating
c. Avoiding
d. Obliging

116. The process of delegating some non-core activities to an external provider on a contractual
basis, is known as
a. Contracting
b. Delegating
c. Partnering
d. Outsourcing

117. Which of the following gives more confidence and power to a party during negotiation?
a. ZOPA
b. WAP
c. BATNA
d. None of the above

Page 15 of 16
118. An Arm’s Length relationship implies
a. Strong Partnership
b. Weak Partnership
c. Joint Venture
d. All of the above

119. In International trade where buyer & seller have to at least partially exchange goods for
goods is referred as
a. International Business
b. Counter Trade
c. Off Trade
d. Barter

120. A procurement strategy that includes process of research , identifying & contracting viable
suppliers based abroad is called
a. Supply Sourcing rating
b. Supplier source evaluation
c. International sourcing
d. Domestic sourcing

Page 16 of 16