CIPS L3M1 Procurement and Supply Environments Exam Practice Test

Explanation

A well-known measure of carbon footprint.

Procurement professionals are encouraged to incorporate environmentally-friendly thinking into their workplace activities and decision-making.

Explanation

The definition shown refers to the word 'price'. The price is what someone will pay for something - the extent to which a customer values something - and the reference to the standard monetary unit refers to, for example, a dollar, a Euro, a dinar or whatever.

The other answers are, to some extent, intended to confuse, as they use some of the words shown in the definition. Care must be taken not to jump to a conclusion here.

The response 'cost' should give pause for thought, as, in a sense, the cost of doing or making some-thing may have value. But value is determined by the customer - this definition is a reference to the value the customer would pay - the price.

Explanation

Pre-qualification QUESTION NO:naire is the correct answer.

A supplier quotation comes from the supplier side; both the RFQ and the ITT are intended to be more formally binding, including the price element, than what is described here.

Explanation

Demographics now seen as being a part of STEEPLED.

The other terms shown have nothing to do with this topic and are simply fillers.

Explanation

Because a wide range of organisations (or even individuals) may respond to an open tender, consid-erable administrative resource may have to be devoted to analysing offers.

Explanation

This a definition of liquidated damages. Calculated in advance of the event occurring ie pre-contract and thus agreed by the parties in advance. Meaningful advance calculations (estimates) must be available to enforce legally.

The term and the spirit of 'penalty clause' is discouraged in English law - damages should be aimed at returning the damaged party back into the position they would have been in, had a wrong not been done.

Unliquidated damages can only be awarded by a court after the event, and should not be relied up-on.

An example of a quantum meruit award can be found in the British Steel v Cleveland Bridge (1984) case - a rare occurrence, and again something which must not be relied upon.

Explanation

There is an expression 'painshare' which is an almost-ironic term referring to the opposite of the situ-ation described in the QUESTION NO: - when something has gone wrong, and the additional cost must be shared between the parties. The other two answers are a little bit facetious.

The correct answer is 'gainshare' when the parties share benefits, according to a pre-agreed ratio or formula.

Explanation

'Retention' - from the word 'retain', meaning to 'keep in place', 'hold back', 'keep possession of' something (Concise Oxford Dictionary, fifth edition) . In this case, 5% of the contract price.

Explanation

Agriculture and tourism are normally associated with high levels of seasonal employment, and hence to some extent, unemployment.

Construction also often has an element of seasonality. For example, there is a saying in Alaska: 'there are two seasons - winter and construction', although in some less extreme climates construc-tion carries on year-round.

In most situations, we normally expect police employment levels to be relatively consistent through-out the year.

Explanation

Both wind power and hydro-electric can be used many times over - they are renewable - wind, riv-ers, tides return each day, more or less.

On the other hand, coal, oil as well as wood, turf and gas are non-renewable - that is, there are lim-ited stocks and they will run out.

Many economies are now switching to use of renewables to generate electricity, heat, etc

Explanation

All of these are ways of classifying organisations.

Examples: Retailers, SMEs, limited companies, etc

Explanation

Government decisions and actions regarding the level of interest rates and supply of money in the economy.

Fiscal policy relates to taxation and its relationship to government expenditure.

The other two suggested answers: exchange rates and unemployment rates are a factor of other poli-cies; the size of coins and banknotes is beyond the scope of your syllabus and my knowledge. :)

Explanation

The correct answer is to provide services. However, some other secondary factors may come into play. For example, some public sector organisations may be encouraged to boost national prestige eg airports, airlines; or they may be used as job creation schemes.

Explanation

This is a broad group of people deriving income from employment, including some skilled people through to unskilled.

A, B and C1 would be those people often referred to as upper middle class or upper class; whereas E would describe a broad group of the poor, the unemployed, etc.

These are rough generalisations regarding people's likelihood of income, taste, lifestyle, etc. To take an extreme example, there is probably not much point in trying to market Dom Perignon (an expen-sive brand of champagne) to the E group. But the E group might welcome promotion of a low-cost brand of tobacco or cigarettes.

Explanation

Inflation, in this case, is created by the increased cost of production coming through into the econ-omy.

The other answers are essentially names of alternative types of inflation.

Explanation

Sources of funds for private sector commonly include revenues from sales, shareholders and long-term loans. Taxpayers would not normally be thought of as a source of funds for private sector, alt-hough in recent Coronavirus times, in some countries, such as the UK, businesses have received considerable support. But that is abnormal.

Short-term sources such as overdrafts are not to be relied upon on a regular or long-term basis.

Explanation

It is an economy in which the public and private sectors work together. This is now the norm in most countries, with private sector involvement to a greater or lesser extent. In North Korea there is a (rare example of a) planned economy, and in the United States there is a heavily market-led (pri-vate sector) economy.

Explanation

The x-axis shows time. For some products, it may represent a year; for others, a century.

The other answers given could all be shown on the y-axis of the PLC, depending on circumstances.

Explanation

CO2 is the correct answer - carbon dioxide.

CO is carbon monoxide; H20 is water (or steam or ice) and CO3 is carbon trioxide.

Explanation

Payment (the implication here is 'in full') 60 days after delivery allows the buying organisation time to check the goods carefully, and possibly even use them in that time.

All of the other options would require the buyer to part with money prior to holding the goods, thus exposing that sum to risk. The least risky from the buyer's viewpoint is therefore after 60 days.

Particularly hazardous would be payment at time of order.

Explanation

Corporate Governance. Not to be confused with CSR.

Corporate identity relates to marketing and branding; corporate manslaughter is the concept of an organisation being criminally accountable for the deaths of humans through some lack of care. An example might be the deaths of rail company employees on the railway track, where the prosecution would attempt to show that it was the employers' fault.

Explanation

The Act was introduced in 2010. Although this is a UK-centric QUESTION NO:, it is valid for several rea-sons. Firstly, the UK was one of the first countries to introduce such a wide-ranging Act; secondly the Act is so wide-ranging that all UK managers need to be familiar with it. People who live and work outside the UK may wish to familiarise themselves with the content of the Act to have an idea of what the impact of such legislation might be like.

Interestingly, in the UK, the Act has seldom been used 'in anger'.

Explanation

To the lay person, they may look the same.

However, for a procurement professional, a fixed price may be altered in some circumstances eg 'fixed price with incentive', 'fixed price with exchange rate adjustment', etc.

A firm price on the other hand cannot be altered, and is the price which will be paid under the con-tract.

An earlier text by Patrick Behan on government contracting refers.

Explanation

Specification is the answer. The second sentence in the rubric makes it clear that this is the correct answer.

Explanation

Social and technological are part of STEEPLED: they were also part of PEST, the forerunner to STEEPLED.

The other two words shown as possible answers are included because they sound a bit like 'econom-ic' and 'demographic', which would also be correct answers, had they been included here.

Read the QUESTION NO: carefully.

Explanation

The correct answer is, of course, 'monopoly'.

Explanation

In the not-for-profit sector, funding often comes from external sources or donors. The beneficiaries of the services are often beneficiaries of services because they don't have funds eg the homeless, the poor, the sick, etc

Thus in this sector, the 'paymaster' is often separated from the recipient of services provided, which has implications for the management of such organisations.

Which is the priority? The one providing funding; or the one receiving the services?