CLA Procurement & Strategic Sourcing 1 — Questions and Answers
Question 1: Which procurement strategy involves purchasing from a single supplier to leverage volume discounts and build a strong partnership?
- Single sourcing (Correct answer)
- Multiple sourcing
- Global sourcing
- Spot buying
Correct answer: Single sourcing
Single sourcing concentrates all purchasing with one supplier to maximize volume leverage and develop a deeper strategic partnership.
Question 2: What is the primary purpose of a Request for Proposal (RFP) in procurement?
- To invite suppliers to bid on a specific requirement with detailed specifications (Correct answer)
- To notify suppliers of a contract award
- To request an invoice from a supplier
- To cancel an existing purchase order
Correct answer: To invite suppliers to bid on a specific requirement with detailed specifications
An RFP solicits detailed proposals from potential suppliers, including pricing, methodology, and qualifications for a defined requirement.
Question 3: Total Cost of Ownership (TCO) in procurement includes which of the following beyond the purchase price?
- Acquisition, operating, maintenance, and disposal costs (Correct answer)
- Only the unit price and shipping costs
- Supplier profit margin and overhead
- Import duties only
Correct answer: Acquisition, operating, maintenance, and disposal costs
TCO captures all costs across the full lifecycle of an asset or product, including acquisition, operation, maintenance, and end-of-life disposal.
Question 4: A blanket purchase order (BPO) is best used when a buyer needs to:
- Purchase recurring items from a supplier over a set period at agreed prices (Correct answer)
- Order a one-time large shipment
- Solicit competitive bids for a new product
- Return defective goods to a supplier
Correct answer: Purchase recurring items from a supplier over a set period at agreed prices
A BPO establishes pricing and terms for repeated purchases of the same item over a defined timeframe, reducing administrative overhead.
Question 5: Which method of supplier evaluation scores vendors across multiple criteria such as quality, delivery, and price?
- Weighted scorecard (Correct answer)
- ABC analysis
- Economic order quantity
- Kanban system
Correct answer: Weighted scorecard
A weighted scorecard assigns importance weights to each criterion and combines scores to rank suppliers objectively.
Question 6: Make-or-buy analysis in procurement evaluates whether a company should:
- Produce a component internally or purchase it from an external supplier (Correct answer)
- Increase or decrease safety stock levels
- Use air or ocean freight for shipment
- Expand warehouse space or outsource storage
Correct answer: Produce a component internally or purchase it from an external supplier
Make-or-buy analysis compares the cost, capability, and strategic implications of internal production versus external procurement.
CLA Procurement & Strategic Sourcing 1
Which procurement strategy involves purchasing from a single supplier to leverage volume discounts and build a strong partnership?