International Certificate in Purchasing and Supply

Transcription

1 International Certificate in Purchasing and Supply Understanding Purchasing Principles C1 C1/May12 DATE: 14/05/12 TIME: to DURATION: 3 hours Instructions for Candidates: This examination is in THREE sections. Section A Has TEN compulsory multiple-choice questions, worth 2 marks each. Section B Has SIX compulsory short-answer questions, worth 5 marks each. Section C Has THREE compulsory longer answer questions. Questions 17 and 18 are worth 15 marks each. Question 19 is worth 20 marks. 1. Do not open this question paper until instructed by the invigilator. 2. All answers must be written in the answer booklet provided. 3. All rough work and notes should also be written in the answer booklet. 4. Cross out any work you do not wish to be marked. QP - 03

2 SECTION A Questions 1 10 are multiple choice questions. For each question, select ONE correct answer from A to D and write it in the space provided in your answer booklet. You are advised to spend approximately 30 minutes on this section. Q1 Which of the following best explains why value engineering is used? A. To change the engineering elements of a product B. In order to make the best use of the engineering function C. To develop an optimal solution, maximising value D. In order to buy the cheapest product. Q2 Which of the following best describes the nature and purpose of a contract? A. A purchase order which is legally binding B. An arrangement for the on-going supply of products or services over a period of time C. A legally binding agreement between two parties D. A signed letter that states the specification of the goods or services required. Q3 What is the most likely reason for a buyer to obtain a product sample from a supplier? A. To obtain a product free of charge B. To assess suitability prior to purchase C. To send the sample out to other suppliers to get quotes D. To use as a model for developing their own designs. Q4 Which of the following best describes implied terms? A. Clear agreement between the parties, and virtually always written down in the contract B. Clauses that both parties have agreed to change from the standard terms and conditions C. The first and therefore most important clauses in the buyer s terms and conditions D. Not necessarily discussed by the parties, but nonetheless form part of the contract. Q5 When is value analysis used? A. At the time of product design B. At the end of a products life C. On expensive products D. On existing products. 2

3 Q6 If a buyer places an order with a supplier on the telephone, which of the following is most likely to be true? A. There is a contract but there may be a problem if there is a dispute B. There is no contract the order cannot be binding on either buyer or supplier C. The supplier must keep to the agreement but the buyer can change the order D. There will be a contract but the buyer must confirm it in writing to be legal. Q7 BS, ISO, EN, DIN, SANS, ZABS, UNBS are all examples of which of the following? A. Providers of standards B. Providers of samples C. Providers of INCOTERMS D. Providers of credit. Q8 When does the business problem known as the battle of the forms occur? A. When there is a conflict between the terms and conditions between the buyer and seller B. When the seller includes multiple documents (or forms) when delivering products C. When there is a disagreement between the buyer and seller about who is responsible for obtaining the documents (or forms) required for custom clearance D. When there is a dispute between the buyer and seller over the form in which the seller s invoice is presented. Q9 Which of the following describes the overheads of a business? A. Profit a business makes over sales costs B. Ongoing indirect costs of operating a business C. Costs of distributing goods to customers D. Legal costs charged following a successful defence in court. Q10 Complete the sentence: liquidated damages must be? A. Of sufficient high value to act as a penalty B. Included in contracts with suppliers of oil or chemicals C. Included in all contracts D. A genuine pre-estimate of possible loss. PLEASE TURN OVER 3

4 SECTION B Questions are short-answer questions. You are advised to spend approximately 60 minutes on this section. Q11 State FIVE reasons why some organisations do not buy standard products. Q12 Explain TWO reasons why a buyer might have a no sub-contracting clause included in its terms and conditions. Q13 List FIVE characteristics of an ideal specification. Q14 (a) List FOUR methods of dispute resolution. (b) Select one method of dispute resolution which would be your preferred choice. Provide THREE reasons for your decision. (3 marks) Q15 A retail business has a product that has the following sales pattern: Week 1 Week 2 Week 3 Week 4 Product X Current stock 28 The buyer has to decide the volume to buy at the end of week four. There is a two week delay in receiving stock. Suggest an appropriate size of order to place now, giving reasons for your decision. Q16 (a) State TWO advantages for a buyer of specifying brand names when sourcing products. (b) State THREE disadvantages for a buyer of specifying brand names when sourcing products. (3 marks) 4

5 SECTION C Questions require full answers with examples where appropriate. You are advised to spend a minimum of 30 minutes on each question. Q17 (a) Provide a definition of a performance specification. (1 mark) (b) Describe FOUR benefits for a buyer of using performance specifications. (8 marks) (c) Suggest THREE criteria that might be included in a performance specification for a product of your choice. (6 marks) Q18 The five rights are a common term used in purchasing and supply. (a) Explain the importance of each of the five rights in purchasing and supply. (10 marks) (b) Apart from the five rights describe TWO other factors that are important to a buyer when purchasing goods. PLEASE TURN OVER 5

6 Q19 Great Reputable International Partners Great Reputable International Partners (GRIP) is a privately owned construction company that operates in five countries. GRIP s business is the financing, designing, building and operation of transport, water and electricity facilities. The customers of GRIP are governments and utility companies. GRIP s supply chain director has board level responsibility for the whole of the supply chain. There are 300 people involved in purchasing and supply within GRIP. These include 60 buyers within purchasing, 40 staff in distribution, 20 stock managers, and 180 staff in the five warehouses. It is extremely important to GRIP s customers that business ethics are well managed and that these can be audited. Some contracts operated by GRIP can last for up to 25 years, with a design time of one year, two years of construction and 20 years of maintaining and operating. The cost of the typical project and long term operation makes supplier selection by the customers a high priority. The managing director has looked at which of the directors should take responsibility in developing an ethical policy for the whole of GRIP. The supply chain director has been given this responsibility. The ethical policy has been developed and training provided for all staff within the supply chain function. GRIP has encouraged their customers and potential customers to audit the business ethics of all the functions within GRIP. One of GRIP s major customers, ZTIU, has taken up GRIP s offer and arranges to carry out an audit on GRIP s ethical policy. ZTIU has advised GRIP the audit will consist of a questionnaire and site visits where they will undertake interviews with a number of GRIP s employees who work in the supply chain. TASKS (a) Suggest SIX factors that ZTIU would be expected to see included in GRIP s ethical policy. (6 marks) (b) Explain TWO reasons why it is important for the efficient operation of GRIP that the warehouse staff employed by GRIP follow the new ethical policy. (4 marks) (c) Explain TWO reasons why the supply chain director was seen to be the most appropriate person to write the ethical policy. (4 marks) (d) Explain THREE areas GRIP s customers might include in their audit of GRIP s supply chain function to ensure the ethical policy is being applied. (6 marks) END OF QUESTION PAPER 6

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