APP Purchasing Principles 3

Question 1

Which type of contract places the greatest financial risk on the buyer?

Accepted Answer

Cost-plus-fixed-fee contract

Answer

Cost-plus contracts reimburse all allowable costs plus a fee, giving the supplier little incentive to control costs, placing risk on the buyer.

Question 2

What is 'forward buying' in purchasing?

Accepted Answer

Purchasing based on expected future price increases or supply shortages

Answer

Forward buying involves purchasing larger quantities than immediately needed in anticipation of price increases or supply disruptions.

Question 3

Which document formally authorizes a supplier to begin work or ship goods after a contract is awarded?

Accepted Answer

Notice to proceed (purchase order)

Answer

A purchase order (or notice to proceed) serves as the formal authorization for the supplier to deliver goods or begin services.

Question 4

An organization uses a 'weighted point evaluation' system for supplier selection. What is the PRIMARY advantage of this method?

Accepted Answer

It provides a structured, comparable score across multiple criteria

Answer

Weighted point systems allow objective comparison of suppliers across multiple factors by assigning importance weights to each criterion.

Question 5

What is the key difference between a 'specification' and a 'standard' in purchasing?

Accepted Answer

A specification describes requirements for a specific purchase; a standard is an established norm used industry-wide

Answer

A specification defines what is needed for a particular procurement, while a standard is a pre-established benchmark recognized across an industry.

(APP) Accredited Purchasing Practitioner Certification Practice Test