CLT Purchasing & Procurement 2

Question 1

What is Economic Order Quantity (EOQ)?

Accepted Answer

The formula that determines the optimal order size to minimize total inventory costs

Answer

EOQ is the optimal order quantity that minimizes the combined total of ordering costs and inventory holding costs, balancing these two competing factors.

Question 2

What is a Request for Proposal (RFP) in procurement?

Accepted Answer

A document soliciting detailed proposals from suppliers for goods or services

Answer

An RFP is a formal document sent to potential suppliers requesting detailed proposals including price, approach, and qualifications for fulfilling a specific requirement.

Question 3

What does 'sole source' procurement mean?

Accepted Answer

Purchasing from one vendor without competitive bidding when no alternatives are available or justified

Answer

Sole source procurement occurs when a purchase is made from a single supplier without competitive bidding, typically due to unique capabilities, proprietary products, or urgent need.

Question 4

What is a 'three-way match' in procurement and accounts payable?

Accepted Answer

Verifying that the purchase order, receiving report, and invoice all agree before authorizing payment

Answer

The three-way match is an internal control that verifies the purchase order, receiving report, and supplier invoice all correspond before authorizing payment.

Question 5

What is a vendor scorecard primarily used for in procurement?

Accepted Answer

Measuring and monitoring supplier performance over time using quantifiable metrics

Answer

A vendor scorecard tracks key performance indicators (KPIs) such as on-time delivery rate, quality defect rates, and responsiveness to systematically evaluate suppliers.

CLT - Certified Logistics Technician Practice Test

CLT - Certified Logistics Technician Practice Test

CLT Purchasing & Procurement 2