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Supplier Relationships
1.Which of the following are typical drivers for a partnership between the buyer and
the supplier? Select the THREE that apply.
A. The buyer has a high spend with the supplier
B. There are many suppliers in the market
C. The product is critical for the buyer
D. The product is a commodity
E. The product is technically complex
F. The supplier provides the product to a buyer’s competitor
Answer: A,C,E
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2.Which of the following options are legitimate reasons for terminating a contract?
Select TWO that apply.
A. You ordered 10,000 items instead of 1,000
B. One of the contracted parties has clearly failed to perform its duties
C. There has been a serious breach of contract terms
D. Your internal stakeholder requested the wrong items
E. Your MRP system placed a replenishment order that you do not need
Answer: B,C
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3.Products or services that are more suitable for partnership sourcing match which of
the following criteria?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 2 and 4 only
Answer: A
C
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4.Stephen Jones is assessing the relationships he has with his supplier base.
Which of the following would be drivers for Stephen to adopt a partnership
relationship with a supplier?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 4 only
D. 2 and 4 only
Answer: D
5.Sugar Doughnut Ltd has a jam supplier that they have used successfully for over
ten years. They have made investments in the supplier’s factory to support them with
capital equipment upgrades in return for cost reduction on jam. The two companies
also collaborate on bids for large supermarkets when looking to supply doughnuts
and work together on quality improvements.
No contracts exist between the two companies. Could this relationship be said to be a
partnership relationship?
A. No, because contracts do not exist between the two companies
B. No, because they have only worked together for ten years
C. Yes, because they have demonstrated close collaboration on various projects
D. Yes, because they both operate in the food sector
Answer: C
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6.A company supplies IT equipment and buys most of its components from first-tier
suppliers in the UK. It wants to analyze its supply market to develop the supply chain
and is going to review the main factors that have an influence. The company wants to
use the STEEPLED external environmental analysis framework to achieve the best
result.
Which of the following STEEPLED factors is most likely to have the greatest effect?
A. Sociocultural
B. Technological
C. Economic
D. Ethical
Answer: B
C
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7.An amicable style approach to ending a buyer-supplier relationship would be most
appropriate in which of the following circumstances?
A. 1 and 2
B. 1 and 3
C. 3 and 4
D. 1 and 4
Answer: A
8.When a large organization partners with a small supplier to develop new
technology, it is necessary for regular communication.
Is this statement true?
A. No, because partnerships do not require regular communication during
development of new technology
B. Yes, because partnerships require regular communication to succeed in meeting
mutual objectives
C. Yes, because a small supplier must be told what to do and when, because they
have fewer employees
D. No, because regular communication will stop a small supplier from doing their work
Answer: B
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10.Price fluctuations can affect profitability.
Is this statement correct?
A. Yes, if the product's costs increase and the price does not
B. No, only decisions made by the chief executive affect the price
C. No, price is not related to profitability
D. Yes, as sales may drop if the product is price inelastic
Answer: A
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9.In the STEEPLED framework, which of the following is an economic factor?
A. Unemployment rates
B. Demographics
C. Supply chain labor standards
D. Election results
Answer: A
C
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11.Joseph works as a category manager for a large electricity supply company. His
company is one of six electricity companies in the country. All have a high annual
spend on the same specifications of cable. There are only five cable manufacturers
capable of supplying the cables. Joseph has established all the suppliers use the
same raw materials using the same types of manufacturing lines. Prices tendered by
all suppliers are very similar. After paying for the cable, Joseph’s company spends an
additional 25% on moving and installing the cable.
In order to enable Joseph to gain advantage over the other electricity companies,
which type of supplier relationship should he adopt?
A. Single-sourced
B. Closer tactical
C. Transactional
D. Partnership
Answer: D
12.Under which circumstances would a partnership sourcing approach be used?
A. 1 and 2 only
B. 1 and 3 only
C. 1 and 4 only
D. 2 and 4 only
Answer: B
13.Which of the following are features of a partnership sourcing relationship
compared with a traditional adversarial relationship? Select TWO that apply.
A. Emphasis on quality with zero defects
B. Emphasis on the lowest price
C. Emphasis on inspection of incoming supplies
D. Emphasis on short-term relationship
E. Emphasis on long-term relationship
Answer: A,E
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14.A competitor develops an alternative type of vacuum cleaner to one produced by
your organization.
Is this an example of the threat of substitutes, one of the five forces of competition
described by competitive forces theory?
A. Yes, customers may switch to alternative products
B. Yes, there are no barriers to entry; it is an oligopoly
C. No, it does not serve the same purpose
D. No, it is a threat from a new entrant to the market
Answer: A
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15.A local government procurement team is undertaking a full review of their current
internal working processes. The team of buyers currently have a partnership-style
relationship with their routine suppliers.
Is this the best relationship style to use?
A. No, as there are many suppliers available
B. No, as these are critical items to the buying organization
C. Yes, as they present a great deal of risk to the organization
D. Yes, as these are low-value items
Answer: A
16.When overcoming stakeholder resistance in a procurement-led project, which of
the following groups would have the highest level of influence on other stakeholders?
A. 2 and 3 only
B. 1 and 4 only
C. 1 and 2 only
D. 3 and 4 only
Answer: B
17.A company is relocating its manufacturing base to a low-cost country and is
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considering a partnership with a local supplier for its key components rather than a
tender process. Although there are some concerns regarding confidentiality and
component competitiveness, the procurement director is recommending a partnership
strategy to the board of directors. The recommendation is based on a range of
advantages including, but not limited to, gaining local market knowledge.
Is this a valid recommendation?
A. No, because confidentiality risk will be higher in a partnership
B. Yes, as intellectual property costs will be lower in a partnership
C. No, local market knowledge is guaranteed in a tender process
D. Yes, as investment costs can be shared in a partnership
Answer: D
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18.An automotive company has hired Tom as the procurement manager. Tom is to
manage a team of two people who have worked in the department for a number of
years. Conflict exists between the two members of staff due to an overlap of
responsibilities.
Which of the following processes would be most appropriate for Tom to use to reduce
this conflict?
A. Tom could avoid mentioning the conflict and hope that it is resolved without action
B. Tom could hire an additional member of staff to take on some of the duties
C. Tom could restructure the team so both members do not have to work together
D. Tom could arrange a meeting and set performance targets for each member
Answer: D
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19.A common reason attributed to many partnerships failing is ...
A. A bad advertising campaign
B. Not winning every contract they bid for
C. No contract being in place
D. Poor communication
Answer: D
20.Which of the following are advantages for the buyer of early supplier involvement
with the buyer's product development team?
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 2 and 4 only
Answer: D
21.A buyer is intending to purchase a new product for their business; however, the
market has a large number of suppliers.
What would be the most beneficial way for them to initially narrow down the supply
options?
A. Look at lowest-cost suppliers only
B. Predefine minimum standards suppliers must meet
C. Go only to companies they have bought other products from
D. Preselect companies who have the largest market share
Answer: B
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22.Which one of the following is an advantage of early supplier involvement?
A. Supplier is responsible for all intellectual property risks
B. Large investment in supplier communications
C. Understanding of supplier capabilities
D. No need for supplier non-disclosure agreements
Answer: C
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23.A law firm is ending an agreement with a client they have represented for many
years.
What is the most important legal consideration to be taken before terminating?
A. Employee rights
B. Confidentiality
C. Finance
D. Security
Answer: B
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24.When using competitive forces theory, suppliers are powerful in which of the
following situations? Select THREE that apply.
A. There are few substitute products
B. The product is highly differentiated
C. There is potential for backward integration
D. The switching costs are high
E. The volume purchased is not important
F. The product is undifferentiated
Answer: A,B,D
25.Which of the following are advantages of partnering?
A. Supply chain consolidation
B. Continual improvement
C. Hard to displace
D. Prioritization of transactions
Answer: A,B
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26.Which of the following are the stages of team development?
A. Starting, forming, benchmarking, performing
B. Forming, storming, norming, performing
C. Beginning, working, reviewing, performing
D. Introducing, forming, managing, performing
Answer: B
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27.In the 1990s, a manufacturer of portable music players partnered with a mini-disk
producer. The aim of the partnership was to reduce the size and cost of the devices
and enhance flexibility. Sales of the product after launch were low due to a
competitive launch of small digital players, which offered better flexibility to customers
at a comparable price. The partners suffered substantial loss and never recovered the
investment.
In order to mitigate the risk described, what should both partners have considered
before investing in the product? Select the TWO that apply.
A. Fast charging markers
B. Customer price expectation
C. New substitute technology
D. Cost of investment
E. Legal implication of partnering
Answer: B,C
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28.A low-cost fashion retailer based in Europe is looking at adding value in their
procurement activities. The retailer buys clothing for resale with a very small profit
margin applied, relying on volume sales to make a profit.
Which of the following added-value approaches will be the most critical for the
procurement team of the retailer to focus on with their supply chain?
A. Improving timescales
B. Quality enhancement
C. Reduction of inventory
D. Price management
Answer: D
29.Construct Builders Ltd works very closely with a supplier called Solid Timber Co on
house-building projects. They have a very close working relationship, sharing
investment, setting pricing levels, and looking at sharing resources. The two
companies also work closely together to set strategic directions and explore new
markets for long-term growth. There is no formal contract in place between the two
companies.
Using the relationship spectrum, what relationship does this scenario best describe?
A. Constructive
B. Transactional
C. Co-operative
D. Partnership
Answer: D
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30.How would a buyer measure value for money from a relationship with a new
supplier for goods?
A. Audit of how suppliers promise
B. Lowest possible cost
C. Balance of quality and cost
D. Quality and volume of goods
Answer: C
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31.The executive board of a manufacturing company is requesting support from the
procurement team because the company needs to improve its levels of profitability.
After segmenting the overall spend by value and risk of supply, the senior buyer for
the company is planning to undertake a cost modeling activity. This will be undertaken
with a cross-organizational team of internal stakeholders and key strategic suppliers.
What would be the buyer's initial objective from the cost modeling activity?
A. To understand the supplier's competitive threats
B. To understand the supplier's financial status
C. To understand the supplier's pricing strategy
D. To understand the supplier's investment plans
Answer: C
32.Which of the following are examples of ways in which businesses can add value?
Select THREE that apply.
A. Through delivering excellent service
B. Creating a win-win price
C. Product features and benefits
D. Reducing customer service levels
E. Investing in customers
F. Offering convenience
Answer: A,C,F
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33.The director of procurement for a global telecommunications firm has segmented
their expenditure and has decided to focus on developing relationships with their
bottleneck suppliers.
Is this the correct process?
A. No, as there is lots of variety of goods available
B. No, as there is vast competition
C. Yes, as there are low costs to switching suppliers
D. Yes, as there are little or no other options available
Answer: D
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34.In the Purchasing Portfolio Matrix, a leverage product is a product in a market
where it is easy to switch suppliers and the quality is standardized.
Is this TRUE or FALSE?
A. False, the product is in a supply market which is highly complex and the product is
of low importance
B. False, the product is in a supply market which is highly complex and the product is
of high importance
C. True, the product is in a supply market which is of low complexity and the product
is of high importance
D. True, the product is in a supply market which is of low complexity and the product
is of low importance
Answer: C
C
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35.A partnership approach to a buyer-supplier relationship, as opposed to a traditional
adversarial approach, would have which of the following characteristics?
A. Greater levels of transparency
B. Increased supplier contractual terms
C. Specifications designed by the buyer
D. Shared cost benefits
Answer: A,D
36.Hungry Sandwich Co. produces over 5,000 freshly made sandwiches on-site every
day. The main ingredient that Hungry Sandwich Co. buys is bread. It is the item they
spend the most money on, and they have a long-term partnership agreement with a
local bakery to manufacture and supply fresh bread every morning.
Using a supplier positioning matrix, which is the appropriate category for bread for
Hungry Sandwich Co.?
A. Non-critical
B. Bottleneck
C. Abundant
D. Strategic
Answer: D
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37.Kyle Grant is a procurement director at ATSS Ltd and has introduced a new policy
within the procurement function. The policy requires the procurement function to
obtain quotations from multiple suppliers if a contract is worth over £10,000.
What is the primary aim of this policy?
A. To deliver an agile process
B. To ensure value for money is achieved
C. To allow procurement to select the lowest price
D. To enable a reduction in competition
Answer: B
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38.Rivalry between suppliers is more likely to be intense in which of the following
situations?
A. 1 and 2 only
B. 2 and 4 only
C. 1 and 3 only
D. 1 and 4 only
Answer: B
C
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39.A partnership between a software development company and a software supplier
has recently been created. In order for the partnership to be successful, what is a
critical action to take in the early stages of their relationship?
A. Define the standards both parties are expected to meet
B. Look at costing models
C. Promote the new partnership
D. Complete audits on the performance of both parties
Answer: A
40.A company is about to invite tenders for a contract to clean external windows at
several premises, all at least three storeys high. It is going to do this in two stages.
For the first stage, it will issue a pre-qualification questionnaire (PQQ) and, from the
replies, select at least five potential suppliers to invite to tender.
Which of the following is a selection criterion rather than an award criterion?
A. Risk assessments at the premises
B. Method statements for previous contracts
C. Price that will be charged
D. Environmental impact assessment
Answer: B
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41.Which of the following would be benefits of partnership sourcing? Select TWO that
apply.
A. Reduction in inflation
B. Reduction in costs
C. No need for contracts
D. Reduction in stakeholder numbers
E. Continuity of supply
Answer: B,E
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42.National Hospital Trust (NHT) has entered into a partnership relationship with a
major facilities management provider. The two organizations have agreed on the
approach to undertake regular reviews and audits.
The audit approach will include which of the following?
A. Category management and supplier rationalization
B. Specification development and management
C. Lessons learned and continuous improvement
D. Macro and micro environmental analysis
Answer: C
C
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43.Which of the following tender processes available to a buyer involves a PreQualification Questionnaire (PQQ) to identify, assess, and create a shortlist of
suppliers being invited to the Invitation to Tender (ITT) stage? Select TWO that apply.
A. Open Procedure
B. Mini-Competition Procedure
C. Restricted Procedure
D. Two-stage Procedure
E. Competitive Bidding Procedure
Answer: C,D
44.A medical consumables buyer has adopted a close relationship approach with
their suppliers that are considered to be complicated, technical suppliers.
Is this the right approach?
A. Yes, as the items are of high financial risk
B. No, as there is often a supply risk with items offered
C. Yes, as all the items supplied are off the shelf
D. No, as there are only a small number of suppliers in the marketplace
Answer: A
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45.Fashion buyer Kamal Sumai is working closely with a key overseas supplier and is
monitoring and forecasting cost volatility within the fabric market. Kamal has decided
it is the right time to raise a purchase order with his supplier for a greater quantity of
fabric than he currently needs. Kamal is attempting to avoid an imminent price
increase.
What is this tactic known as?
A. Spot buying
B. Forward buying
C. Derivative buying
D. Hedging buying
Answer: B
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46.What are the relationship characteristics of a Partnership?
A. Short-term focus and one-off transactions
B. An adversarial relationship
C. Sharing ideas and risk
D. Focus on price competitiveness
Answer: C
C
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47.A partnership was created between a company and one of its local suppliers when
the managing directors of each company met and thought partnering could be a good
idea. No other departments were included in the discussions. The partnership has
been in place for over a year, but neither of the companies has achieved any
additional benefits. The company has been unable to offer any increased business to
the supplier, and the supplier has been unable to improve on the quality of its
products. The partnership is going to be terminated.
What is a possible main reason for the failure of the partnership?
A. Poor planning
B. Market changes
C. Distance barrier
D. Cultural differences
Answer: A
48.Which circumstances make a buyer more attractive to the supplier?
A. Where the brand profile is high
B. When the buyer negotiates longer credit terms
C. Where the buyer exercises a stringent code of conduct
D. When the buyer is very procedural in its systems
Answer: A,C
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49.According to Michael Porter, what is procurement?
A. a support activity which provides a source of competitive advantage
B. a primary activity which provides a source of competitive activity
C. a primary activity which provides value for money
D. a secondary activity which provides value for money
Answer: A
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50.Which of the following are considered part of the '5 Rights of Procurement'? Select
THREE.
A. place
B. quality
C. cost
D. focus
E. time
Answer: A,B,E
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51.In a monopoly market, which of the following statements is true?
A. bargaining power of suppliers is strong
B. bargaining power of buyers is strong
C. There is strong rivalry
D. There is a threat of new entrants
Answer: A
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52.In an oliogopy market, what would a regulator do?
A. prevent price fixing and collusion
B. stop the market becoming a monopoly
C. ensure value for money for buyers
D. ensure health and safety standards
Answer: A
53.Which of the following would not affect rivalry in a marketplace? Select TWO.
A. industry growth or decline
B. exit barriers
C. switching costs
D. supply chain disruption
E. legislative changes
Answer: D,E
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54.Which of the following factors would you use to analyse the macro-environment?
Select THREE.
A. social
B. cultural
C. political
D. philosophical
E. legislative
Answer: A,C,E
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55.Gabriel is a procurement manager who wishes to explore a new avenue to procure
products for his company. His manager has told him that he should invite internal
stakeholders to a meeting to get their feedback.
Who should Gabriel invite? Select THREE.
A. end-users
B. legal department
C. customers
D. suppliers
E. employees
Answer: A,B,E
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56.Value for money is often described at the ‘three Es’; economy, efficiency and
effectiveness. However some people consider a 4th E which refers to the public
sector.
What is the fourth E?
A. Equality
B. Environment
C. Equity
D. Ethics
Answer: C
57.A garden centre has recently purchased some lollypop sticks to use as plant
labels. The staff have written the name of the plant on the lollypop stick and put it next
to the plant. This helps them identify which plant is which. However, after a couple of
weeks, the lollypop sticks have become mouldy and the writing has faded. Staff are
now struggling to identity their plants. The Manager of the garden centre is
considering returning the lollypop sticks and asking for a full refund as they were not
fit for purpose.
Can the Manager do this?
A. Yes- the lollypop sticks have gone mouldy- this is unacceptable
B. Yes- so long as the manager kept the receipt
C. No- as this was not the lollypop sticks intended purpose
D. No- the manager cannot prove that the product is faulty
Answer: C
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58.Fred is a new procurement manager at a large engineering firm. They procure
100s of components and use these to make kitchen appliances such as kettles and
toasters. He has been asked by his manager to look into procuring a new component
which will go into a new environmentally friendly kettle and has been asked to ensure
that the firm receives value for money.
What should Fred do?
A. Hold an open competition
B. Contact current suppliers to try and get a good deal
C. Invite known suppliers to bid for the contract
D. Put together a business case to make the product in-house
Answer: A
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59.Which of the following are considered ‘wastes’ which can be removed from a
business? Select THREE.
A. Over-processing
B. Stockout
C. Equity
D. Transportation
E. Inventory
Answer: A,D,E
60.Tim manages the procurement department at a large retailer. He wants to ensure
that his team are achieving value for money in their procurement activities.
Which of the following should Tim set up?
A. ITT
B. Audit
C. Framework
D. Contract
Answer: B
61.In public sector procurement, tenders are advertised with CPV codes, which
provide a reference to describe the product or service being tendered.
What does CPV stand for?
A. Condensed Procurement Vocabulary
B. Common Procurement Vocabulary
C. Complete Procurement Vocabulary
D. Clear Procurement Vocabulary
Answer: B
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62.In Public Sector procurement a PIN is sent out to inform suppliers of an upcoming
tender opportunity.
What does PIN stand for?
A. Prior Information Notice
B. Procurement Information Number
C. Procurement Identification Number
D. Possibilities Identified Notice
Answer: A
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63.Under what circumstances should a competitive tender not be completed? Select
TWO.
A. When the items are of high value
B. When the items are of low value
C. When there is a clear specifications
D. When there is not a clear specification
Answer: B,D
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64.Which of the following are NOT one of the four key principles of procurement in the
EU?
A. Transparency
B. Value for Money
C. Non-Discrimination
D. Proportionality
Answer: B
65.Which of the following documents can be used at the selection stage of a tender
process to ensure that short listed bidders meet the requirements of the buying
organisation? Select TWO.
A. Request for Information
B. Request for Quotation
C. Pre-Qualification Questionnaire
D. Invitation to Tender
Answer: A,C
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66.Victoria runs a hotel and has recently had several security issues such as
attempted robberies. She has decided that she needs to hire a security firm to ensure
these issues don’t continue. She has done some research and has found there are
several local security firms who may be able to provide services to her hotel.
However, she hasn’t decided exactly what she would require the security firm to do.
What should be Victoria’s next steps?
A. Issue a Request for Proposal
B. Issue an Invitation to Tender
C. Issue a Request for Quotation
D. Issue a Prior Information Notice
Answer: A
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67.David is sourcing a new cleaning contract as he is not impressed with his current
cleaning company’s performance. He believes that his current supplier has been
overcharging him, and due to budget cuts, he is keen to secure a lower price than
what he is paying now. His Manager has suggested using an e-auction as the
procurement method.
Is this the correct way forward?
A. Yes- an e-auction is an electronic system so it will be easy for David to compare
bids
B. Yes- an e-auction will allow David to secure the lowest possible price
C. No- a reverse e-auction would be more suitable as it will secure the lowest price
D. No- a reverse e-auction will ensure only high quality suppliers bid for the
opportunity
Answer: C
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