CLT Purchasing & Procurement 3

Question 1

What is value analysis in procurement?

Accepted Answer

A systematic review of purchased products to find less costly substitutes without sacrificing function

Answer

Calculating the depreciation of purchased fixed assets

Answer

Analyzing market trends to predict future commodity prices

Answer

Evaluating the financial stability of potential suppliers

Question 2

What does 'FOB Origin' mean in shipping and procurement terms?

Accepted Answer

The buyer assumes ownership and responsibility for freight costs at the point of origin

Answer

The seller pays freight and retains title until goods reach the destination

Answer

Freight charges are split equally between buyer and seller

Answer

The seller handles all shipping arrangements to the final destination

Question 3

What is a standing order in procurement?

Accepted Answer

A recurring order for the same goods at regular intervals with pre-set terms

Answer

An order placed verbally without written documentation

Answer

A one-time order placed for a high-value capital item

Answer

An order placed on hold pending management approval

Question 4

What is the primary purpose of receiving inspection in procurement?

Accepted Answer

To verify that incoming shipments match the purchase order in quantity, quality, and condition

Answer

To negotiate better pricing upon delivery at the dock

Answer

To assign put-away storage locations within the warehouse

Answer

To calculate customs duties on imported goods

Question 5

What does procurement cycle time measure?

Accepted Answer

The total elapsed time from identifying a need to having the goods available for use

Answer

The time from supplier invoice receipt to payment issuance

Answer

The time required to train and onboard new procurement staff

Answer

The duration of a supplier's master contract

Question 6

What is Vendor-Managed Inventory (VMI)?

Accepted Answer

An arrangement where the supplier monitors inventory levels and replenishes stock automatically

Answer

A system where the buyer controls all inventory replenishment decisions independently

Answer

A government regulation requiring suppliers to maintain minimum safety stock levels

Answer

An inventory audit conducted by an independent outside vendor

Question 7

What is a back-order in procurement?

Accepted Answer

An unfilled customer or internal order due to insufficient stock on hand

Answer

An order cancelled by the buyer before shipment was initiated

Answer

A supplemental order placed to correct quantities on a previous order

Answer

An order for goods that have been returned to the supplier for credit