50 Multiple Choice and T/F Questions L2M2

1. Value for money is essential and must be practiced in:

A Public sector only
B Private sector only
C Both Public and Private sector
D Service sector
2. A collection of buyers and sellers trading stocks(shares) is known as:
A Exchange market
B Stock market
C Sales market
D Trading market
3. People working for a TSO :
A Receive salary always
B Receive bonus
C Do not always receive a salary
D Receive allowance
4. The following are common in both manufacturing and service sectors:
A Input and output
B Tangible and intangible
C Intensive labour and high technology
D Big storage and big office
5. In service industry or service sector a customer:
A Is not part of service delivery
B Participates in delivery of service
C Provides necessary support
D Is partly involved in service delivery

Indicate True or False(T or F)

6. External stakeholders can be evaluated by considering their interest, power

and influence. T

7. Production organisations often have less staff than service organisations F

 8. Service organisations do not hold inventory in the same way as
manufacturing organisations. T

9. Location and premises are more important in service organisations than

manufacturing organisations. F

10. Quality issues are treated the same way in both manufacturing and
services organisations. F

11. Public limited companies(PLC) are owned by:

A Government

B Shareholders

C Foreign investors

D Public enterprises

12. A company whose liability is with the business and not the person is called:

A Public limited company(PLC)

B Private limited company(LTD)

C Unlimited private company

D Private Corporation

13. A group of Intagible items that can be supplied include the following:

A Computers, insurance, food, electricity

B Consultancy, cleaning, electricity, insurance

C Education, stationery, clothing, music

D Water, books, medicine, coaching

14. The most important assets in any successful business is:

A Machines

B Technology
C People

D Raw materials

15. A statement explaining where the organisation wants to be or to become in

the long term or the future is called:

A Strategy

B Mission

C Direction

D Vision

16. A Steeple framework helps:

A To measure organisation performance in general

B To identify outside factors that affect an organisation

C To set organisations smart goals or objectives

D To increase organisational efficiency and effectiveness

17. An organisation structure with many reporting levels is called

A Flat structure

B Tall structure

C Horizontal structure

D Vertical structure

18. Family owned organisations with very few leaders is an example of:

A Family tree structure

B Tall structure

C Integrated structure

D Flat structure
19. When all departments work together with same vision, mission, objectives,
strategy, rules and regulations is called:

A Team building

B Group approach

C Differentiation

D Integration

20. Procurement Managers contribute to profitable and successful business.

Their major responsibilities include:

A Placing orders for goods, certifying invoices, and processing claims

B Strategic sourcing/procurement , managing contracts, managing suppliers

C Tendering, ensuring timely delivery, processing payments for goods.

D Business relationships, warehousing, transportation and distribution.

21. A successful business organisation should have professionally trained

staff working under a competent procurement manager who reports to:

A Finance Manager

B Production Manager

C Chief Executive Officer

D Marketing Manager

22. Procurement functions attends to identified need generated from the

end user or customer. The next step is:

A Evaluating and selection of suppliers

B Developing or establishing specification’

C Sending ITT or RFQ to potential suppliers

D Awarding the contract and supplier rating

23. Supply Chain is directly related to procurement because:

A Goods purchased from suppliers move through a network of many
organisation in the supply chain.

B Procurement starts the operations of any business which involves whole

supply chain.

C Procurement is like oil that lubricates the whole business organisation by

making goods available.

D Procurement is the main link which enables other functions to work together
as one team.

24. The main objective of procurement function can be summarised as

follows:

A To ensure goods and services are delivered on time without compromising

quality.

B To satisfy customers by delivering value for money to meet their

expectations.

C To ensure goods and services are obtained ethically, for customer

satisfaction.

D Right quantity of goods and services purchased from the right place, in the
right quality, at the right price, at the right time.

25. Several suppliers in the same category that can supply the same product or
service based on the same terms is called:

A Procurement project contract

B Procurement group contract

C Panel contract arrangement

D Consolidated items contract

26. When both persons or parties are happy with the outcome of negotiating
for mutual benefit is called:

A Mutual agreement
B Win-win situation

C Strike a good deal

D Mutual trust situation

27. When a blanket order is used for supply of engines for a car manufacturing
company for a six months period and an agreement is made to maintain same
price this arrangement is called:

A Specific period price

B Agreed season price

C Fixed pricing deal

D Both parties agreement

28. Tendering is preferred where:

A There are few suppliers and low value contracts, short term contracts

B There are many suppliers, high value contracts, long term contracts

C There are selected suppliers, locally preferred suppliers, special groups

D Foreign suppliers, registered private limited companies, public corporations

29. Quotations can be compared as and when they are received because:

A Quotations are not usually governed by deadlines.

B They follow guidelines from top leadership

C They operate under a special committee

D Do not follow strictly laid down regulations.

30.Marketing function in an organisation is responsible for:

A Distribution of goods to customers

B Procurement of packing materials for sales

C Disposal of unwanted or obsolete goods

D Brand identity for promotion of goods and services

31.Procurement function is a profit centre because:

A Its ability to reduce costs, make savings and delivery value for money

B A large portion of organisation expenses is in buying goods and services

C Its popularity world wide as a strategic business function for survival

D It has modern knowledge and technology relevant to current requirements

32.Research for potential suppliers can be done by:

A Using government gazette and other publications

B Business campaigns conducted by private sector

C Trade exhibitions, directories, websites, journals

33.Framework arrangement is:

A An established contract for buying good in the future

B An arrangement for buying goods and services on call off

C Not a contract but explains the terms that will govern the contract

D A mutual agreement for the benefit of both supplier and seller

34.A call off contract is made:

A When a supplier under framework arrangement accepts the order

B When a blanket order is made for an agreed specified period

C When a supplier and seller agree on change of prices in the future

D When goods and services from suppliers are accepted without order

35.Lump sum pricing arrangement is:

A When only cash payment is involved in the contract for goods and services

B When goods and services are delivered under part payments arrangement
C When a supplier and a seller agree to use both fixed and variable pricing

D When the supplier and the buyer agree on the final price for an order at the
beginning of a project.

36.Payment by stages or by instalments are commonly arranged under:

A Spot purchases

B Lump sum pricing

C Less risk pricing

D Special arrangement

37.The amount of money moving in and out of a business in a particular period

is called.

A Business transaction

B Money monitoring

C Cash movement

D Cash flow

38.A table of prices that clearly shows how much a supplier will charge for
goods and services is called:

A Price list

B Schedule of rates

C Items schedule

D Price quotation

39. A situation where the supplier will charge the buyer for the cost of the
project plus agreed fee is called:

A Fixed pricing arrangement

B Variable pricing arrangement

C Lump sum pricing

D Cost reimbursable arrangement

40.When one party promises to delivery something of value to other party is

called:

A Intention

B Agreement

C Consideration

D Capacity

41.Information about something displayed on the shop premises is called:

A Advertising for making a contract.

B An offer for buyers to respond

C Invitation to business

D Invitation to treat

42.Specifications which are outcome focused are called:

A Conformance specification

B Performance specifications

C Specially designed specification

D Result oriented specification

43.Benefits of including KPIs in a contract are:

A Punishing the supplier for wrong specification

B Motivating suppliers to meet buyers expectation

C Maximising suppliers performance on service delivery

D Ensuring stable after sales service from suppliers

44.When a business deals directly with an individual customer is called:

A B2B
B B2C

C BCB

D BBC

45.A complex specification with detailed technical specification is known as:

A Performance specification

B Complex specifications

C HighTech specification

D Conformance specification

46.A score given to an organisation based on the amount of risk they pose to
the creditor is called:

A Vendor rating

B Performance rating

C Credit rating

D Cash flow rating

47.Inventory which appears as assets in the balance sheet is crucial for

business organisation survival because:

A Inventory consist of tangible goods which are essential for running the
business

B Too high inventory investment affects the economy of the business and
cause heavy losses.

C Inventory is life blood of any business organisations it must be available at

any cost.

D Performance of procurement function is judged by how much the

warehouse holds in stock.
48.Many organisations fail because of lack of planning system in ordering,
delivery of goods and inventory holding. As a solution to this problem, every
organisation is encouraged to have:

A Materials ordering schedules

B Materials requirement planning

C Distribution and transport guidelines

D Financial policies and regulations

49.A contract awarded to suppliers should include the following documents :

A Company policies, rules and regulations, mission and vision

B Organisation annual performance reports, auditors report

C Relevant procurement procedures, policies, and guidelines

D Specifications, KPIs, Contractual terms, Pricing information, Schedules.

50.Tendering is used in both public and private sectors. The tender process
involves four stages which are:

A Evaluate, Prepare, Process, Award

B Process, Evaluate, Prepare, Award

C Prepare, Process, Evaluate, Award

D Evaluate, Award, Process, Prepare