MRP Procurement & Vendor Management 1 — Questions and Answers
Question 1: In MRP-driven procurement, what document formally authorizes a supplier to deliver materials at a specified time and quantity?
- Purchase requisition
- Purchase order (Correct answer)
- Receiving report
- Material release
Correct answer: Purchase order
A purchase order is the legally binding document that authorizes a supplier to deliver specific materials at an agreed price, quantity, and delivery date.
Question 2: Which procurement strategy involves establishing long-term agreements with suppliers that specify pricing and terms but release individual shipments based on MRP signals?
- Spot buying
- Blanket purchase order (Correct answer)
- Just-in-time purchasing
- Consignment stocking
Correct answer: Blanket purchase order
A blanket purchase order pre-negotiates terms for a period, allowing individual releases to be issued quickly as MRP generates planned orders.
Question 3: What is the primary purpose of a Vendor Managed Inventory (VMI) arrangement in an MRP environment?
- Transfer inventory ownership permanently to the vendor
- Allow the supplier to monitor stock levels and replenish without separate purchase orders (Correct answer)
- Eliminate the need for safety stock
- Replace MRP with supplier scheduling systems
Correct answer: Allow the supplier to monitor stock levels and replenish without separate purchase orders
In VMI, the supplier monitors the buyer's inventory levels and triggers replenishment, reducing buyer administrative burden and improving supply continuity.
Question 4: When evaluating suppliers for MRP integration, which metric measures the percentage of orders delivered on or before the required date?
- Fill rate
- On-time delivery rate (Correct answer)
- Order cycle time
- Defect rate
Correct answer: On-time delivery rate
On-time delivery rate measures the percentage of purchase orders fulfilled by the supplier on or before the scheduled delivery date, which is critical for MRP schedule integrity.
Question 5: In MRP, what term describes the time between issuing a purchase order and receiving the material into stock?
- Manufacturing lead time
- Purchase lead time (Correct answer)
- Cumulative lead time
- Queue time
Correct answer: Purchase lead time
Purchase lead time is the elapsed time from issuing a purchase order to receipt of the material, and it is a key input MRP uses to offset planned order releases.
Question 6: Which sourcing strategy reduces supply risk by qualifying multiple suppliers for the same component?
- Single sourcing
- Sole sourcing
- Dual or multiple sourcing (Correct answer)
- Global sourcing
Correct answer: Dual or multiple sourcing
Dual or multiple sourcing qualifies more than one supplier for a component, reducing dependence on any single source and providing an alternative if one supplier fails.
Question 7: What is a Request for Quotation (RFQ) used for in procurement?
- To notify suppliers of delivery schedule changes
- To solicit competitive pricing and terms from potential suppliers (Correct answer)
- To authorize payment for received goods
- To document non-conforming material returns
Correct answer: To solicit competitive pricing and terms from potential suppliers
An RFQ is sent to potential suppliers asking them to submit price, lead time, and terms for specified materials, enabling buyers to compare and select the best offer.
MRP Procurement & Vendor Management 1
In MRP-driven procurement, what document formally authorizes a supplier to deliver materials at a specified time and quantity?