Deck 2: Industrial Buying Behavior: Decision-Making in Purchasing

Question 1

Which of the following is not a type of E-Procurement solution? 

A) Electronic marketplaces. 
B) Electronic auctions. 
C) Electronic catalogues 
D) Electronic inventory

Answer 1

  D

Question 2

Which of the following better explains 'Budget'? 

A) A budget serves as a vehicle for delegating activities and responsibilities to lower management levels in the organization. 
B) A budget serves as a vehicle for activities and responsibilities of senior management levels in the organization. 
C) A budget serves as a vehicle for delegating activities and responsibilities to senior management levels in the organization. 
D) A budget serves as a vehicle for monitoring activities and responsibilities of lower management levels in the organization.

Answer 2

  A

Question 3

Which of the following better explains 'Contract Unit Rate'? 

A) This is a situation where payments are made based upon the contract number of units produced during the completion of the work. 
B) This is a situation where payments are made based upon the actual number of units produced during the completion of the work. 
C) This is a situation where payments are made based upon the number of units started during the work. 
D) This is a situation where payments are made based upon the planned number of units to be produced during the completion of the work.

Answer 3

  B

Question 4

Which of the following better explains 'Bidders Long List'? 

A) Includes those suppliers that fail to meet the buyer's prequalification criteria and that will be requested to submit a first proposal. 
B) Includes those suppliers that meet the buyer's prequalification criteria and that will be requested to submit a bid in the future. 
C) Includes those suppliers that meet the buyer's prequalification criteria but will not be requested to submit a first proposal. 
D) Includes those suppliers that meet the buyer's prequalification criteria and that will be requested to submit a first proposal.

Question 5

Which of the following is an explanation of 'Derived Demand'? 

A) Developments in industrial markets are rarely influenced by changes which occur in the end-user markets. 
B) Developments in industrial markets are never influenced by changes which occur in the end-user markets. 
C) Developments in industrial markets are often influenced by changes which occur in the end-user markets. 
D) Developments in industrial markets are often influenced by exchange rates.

Question 6

Which of the following better explains 'Electronic Auction (e-auction)'? 

A) Electronic auction (e-auction) is a tool used by the suppliers to invite buyers to bid simultaneously based on a predetermined purchasing specification using Skype. 
B) Electronic auction (e-auction) is a tool used by the suppliers to invite buyers to bid independently based on a predetermined purchasing specification using web technology. 
C) Electronic auction (e-auction) is a tool used by the buyer to invite suppliers to bid simultaneously based on a predetermined purchasing specification using web technology.?d. Electronic auction (e-auction) is a tool used by the suppliers to invite buyers to bid simultaneously based on a predetermined purchasing specification using web technology.

Question 7

Which of the following better explains 'Auction Forward'? 

A) An e-auction which is used by suppliers to enforce bidding among a number of prospective buyers based on a starting price that is increased during the auction. 
B) An e-auction which is used by buyers to enforce bidding among a number of prospective suppliers based on a starting price that is increased during the auction. 
C) An e-auction which is used by suppliers to minimise bidding among a number of prospective buyers based on a starting price that is increased during the auction. 
D) An e-auction which is used by suppliers to enforce bidding among a number of prospective buyers based on a starting price that is decreased during the auction.

Question 8

Which of the following better explains 'Budget Authority'? 

A) This allows a manager to collect money and resources of the company for company purposes. 
B) This allows a manager to spend money and resources of the company for company purposes. 
C) This allows a manager to spend money and resources of the company for personal purposes. 
D) This prohibits a manager from spending money for company purposes.

Question 9

Which of the following better explains 'Auction Reverse'? 

A) An e-auction which is used by buyers to enforce competitive bidding among a large number of prequalified suppliers based on a starting price that is lowered during the auction. 
B) An e-auction which is used by buyers to enforce competitive bidding among a limited number of prequalified suppliers based on a starting price that is lowered during the auction 
C) An e-auction which is used by suppliers to minimise bidding among a number of prospective buyers based on a starting price that is increased during the auction. 
D) An e-auction which is used by buyers to limit competitive bidding among a large number of prequalified suppliers based on a starting price that is lowered during the auction.

Question 10

Which of the following better explains 'Buying Centre'? 

A) A buying centre relates to all those individuals and groups who respond to the purchasing decision-making process. 
B) A buying centre relates to all those individuals and groups who participate in the purchasing decision-making process. 
C) A buying centre relates to all those individuals and groups who participate in the purchasing decision-making process, who share some common goals and the risks arising from the decisions. 
D) A buying centre relates to all those individuals and groups who share some common goals and the risks arising from the decisions.

Question 11

Which of the following best explains a situation where a contractor agrees to work based on a fixed sum? 

A) Fixed sum contract. 
B) Fixed price contract. 
C) Contractor commitment. 
D) Fixed profit contract.

Question 12

Which of the following is not an explanation of 'Cost Reductions'? 

A) Purchasing cost reductions are not sustainable in character. These may be the result from a change of the specification, a change of supplier, or omitting an unnecessary product quality requirement. 
B) Purchasing cost reductions are sustainable in character. These may be the result from a change of the specification. 
C) Purchasing cost reductions are sustainable in character. These may be the result from a change of supplier. 
D) Purchasing cost reductions are sustainable in character. These may be the result of omitting an unnecessary product quality requirement.

Question 13

Which of the following explains 'Acceptance Test'? 

A) This is a technical test performed at the supplier's site, the buyer's site or both, to check whether the equipment that is bought by the buyer meets their functional and technical requirements. 
B) This is a technical test performed at the supplier's site to check whether the equipment that is bought by the buyer meets their functional and technical requirements. 
C) This is a technical test performed at the buyer's site to check whether the equipment that is bought by the buyer meets their functional and technical requirements. 
D) This is a technical test performed at either the supplier's site, the buyer's site or both, to check whether the equipment that is bought by the buyer meets their functional requirements.

Question 14

Which of the following better explains 'Bottleneck Products'? 

A) These items represent a high value in terms of money but they are vulnerable with regard to their supply. They can only be obtained from one supplier. 
B) These items represent a relatively limited value in terms of money but they are vulnerable with regard to their supply. They can be obtained from many suppliers. 
C) These items represent a relatively limited value in terms of money but they are vulnerable with regard to their demand. They can only be obtained from one supplier. 
D) These items represent a relatively limited value in terms of money but they are vulnerable with regard to their supply. They can only be obtained from one supplier.

Question 15

Which of the following better explains 'Buying Process'? 

A) Includes determining the purchasing needs, selecting the supplier, arriving at a proper price, specifying terms and conditions, issuing the contract or order, and following up to ensure proper delivery and payment. 
B) Includes selecting the supplier, specifying terms and conditions, issuing the contract or order, and following up to ensure proper delivery and payment. 
C) Includes determining the purchasing needs, selecting the supplier, issuing the contract or order, and following up to ensure proper delivery and payment. 
D) Includes determining the purchasing needs, selecting the supplier, arriving at a proper price, specifying terms and conditions and issuing the contract or order.

Question 16

Which of the following better explains 'Advance Payments'? 

A) Payments made by a client after delivery of the contractor's work. 
B) Payments made by a client on the delivery of the contractor's work. 
C) Payments made to compensate for a failure to meet deadline. 
D) Payments made by a client ahead of actual delivery of the contractor's work.

Question 17

Which of the following better explains 'Competitive Bidding'? 

A) This is a situation where a supplier asks for orders from different buyers. 
B) This is a situation where a buyer asks for bids from different suppliers. 
C) This is a situation where a buyer asks for information from one supplier. 
D) This is a situation where a buyer asks for bids from different suppliers, creating a level playing field.

Question 18

Which of the following best explains a situation where price is linked to a price adjustment formula,which is based on external factors such as material costs or changes in labour costs? 

A) Escalator clause. 
B) Escalation clause. 
C) Inflation clause. 
D) Exchange rate clause.

Question 19

Which of the following better explains 'Bidders short List'? 

A) Includes those suppliers that meet the buyer's prequalification criteria and who will be requested to submit a detailed bid. 
B) Includes those suppliers that meet the buyer's prequalification criteria and that will be requested to submit a bid in the future. 
C) Includes those suppliers that meet the buyer's prequalification criteria but will not be requested to submit a first proposal. 
D) Includes those suppliers that meet the buyer's prequalification criteria and that will be requested to submit a first outline proposal.

Question 20

Which of the following better explains 'Battle of Forms'? 

A) Disputes that may arise over whether supplier or buyer general terms and conditions will apply to a payment. 
B) Disputes that may arise over whether buyer general terms and conditions will apply to a commercial transaction. 
C) Disputes that may arise over whether supplier or buyer general terms and conditions will apply to a commercial transaction. 
D) Disputes that may arise over whether supplier general terms and conditions will apply to a commercial transaction.

Question 21

Which of the following best explains 'Performance bond'? 

A) A penalty clause. 
B) A bonus payment. 
C) A monetary settlement. 
D) A written guarantee from a third party guarantor.

Question 22

Which of the following best explains  'Penalty clause'? 

A) That part of the contract which will stipulate what will happen if a supplier does not meet its obligations. 
B) That part of the contract which will stipulate what will happen if a supplier meets its obligations. 
C) That part of the order which will stipulate what will happen if a supplier does not meet its obligations. 
D) That part of the order which will stipulate what will happen if a supplier meets its obligations.

Question 23

Which of the following is not a characteristic of a 'Routine product'? 

A) These products produce few technical or commercial problems from a purchasing point of view. 
B) They usually have a small value per item. 
C) There are many alternative suppliers. 
D) They are expensive to purchase.

Question 24

Which of the following best explains 'Price change clause'? 

A) A figure that is agreed between buyer and seller to accommodate for price changes of the supplier's cost structure. 
B) An index that is stated by the buyer to accommodate for price changes of the supplier's cost structure. 
C) An index that is agreed between buyer and seller to accommodate for price changes of the supplier's cost structure. 
D) An index that is stated by the seller to accommodate for price changes of the supplier's cost structure.

Question 25

Which of the following best explains a 'Purchase order confirmation'? 

A) A document that is used by the buyer in which they agree to perform according to the order. 
B) A document that is used by the supplier in which they agree to perform according to the buyer's purchase order. 
C) A document that is used by the buyer in which they agree to perform according to the supplier's contract. 
D) A document that is used by the supplier in which they agree to receive payment according to the buyer's purchase order.

Question 26

Which of the following is not a term equivalent to 'Principal'? 

A) Customer. 
B) Manager. 
C) Buyer. 
D) Client.

Question 27

Which of the following best explains 'Price elasticity'? 

A) Extent to which price per unit changes with the volume that is purchased. 
B) Extent to which price per unit changes with the volume that is sold. 
C) Extent to which price per unit does not change with the volume that is purchased. 
D) Extent to which total price changes with the volume that is purchased.

Question 28

Which of the following best explains a situation where a contractor agrees to work based on a fixed sum plus extra payments based upon superior performance? 

A) Fixed sum contract. 
B) Fixed price contract. 
C) Contractor commitment. 
D) Fixed price plus incentive fee contract.

Question 29

Which of the following are not implications of 'outsourcing'? 

A) Divestment of assets. 
B) Divestment of infrastructure. 
C) Divestment of people. 
D) Increased Profits.

Question 30

Which of the following best explains a 'Routine buy'? 

A) A known product from a known supplier. 
B) A known product from an unknown supplier. 
C) A new product from a known supplier. 
D) A new product from an unknown supplier.

Question 31

Which of the following is not an example of 'order -to-pay-solutions'? 

A) Systems that are used for requisitioning. 
B) Systems that are used for quality control. 
C) Systems that are used for ordering. 
D) Systems that are used for supplier delivery and payment.

Question 32

Which of the following is an example of 'New-task situation'? 

A) Situation when the organization decides to buy a completely new product, supplied by an unknown supplier. 
B) Relates to a situation when the organization wants to purchase a new product from a known supplier. 
C) Relates to a situation when the organization wants to purchase an existing product from a new supplier. 
D) Relates to a situation when the organization wants to purchase an existing product from a unknown supplier.

Question 33

Which of the following are not elements of a 'Purchase (order) specification'? 

A) Unit price specifications 
B) Quality specifications. 
C) Target budget 
D) Logistics specifications.

Question 34

Which of the following best explains a 'Request for Proposal (RFP)'? 

A) Suppliers are invited to submit a final proposal after the buyer's invitation to tender which meets the requirements as laid down in the request for quotation. 
B) Suppliers are invited to submit a first proposal prior to the buyer's invitation to tender which meets the requirements as laid down in the request for quotation. 
C) Suppliers are invited to submit a first proposal after the buyer's invitation to tender which meets the requirements as laid down in the request for quotation. 
D) Suppliers are invited to submit a final proposal prior to the buyer's invitation to tender which meets the requirements as laid down in the request for quotation.

Question 35

Which of the following best explains 'Performance guarantee'? 

A) Contractor guarantees the actual output or outcome of the work to be delivered. 
B) Contractor guarantees the actual price of the work to be delivered. 
C) Contractor guarantees the date of the work to be delivered. 
D) Contractor guarantees the approximate output or outcome of the work to be delivered.

Question 36

Which of the following is an example of 'optional prices'? 

A) Prices for current deliveries of spare parts and services after delivery of the work 
B) Prices for future deliveries of spare parts and services before delivery of the work. 
C) Prices for future deliveries of spare parts and services after delivery of the work. 
D) Prices for current deliveries of spare parts and services before delivery of the work.

Question 37

Which of the following best explains the standard legal and commercial conditions that will apply to every purchase order issued by the buyer? 

A) General terms of purchase. 
B) Specified terms of purchase. 
C) Non-negotiable contractual terms. 
D) Guarantees

Question 38

Which of the following best explains 'Maverick buying'? 

A) The percentage of purchases made outside existing corporate purchasing agreements. 
B) Speculative purchase. 
C) Paying too much for supplies. 
D) The percentage of purchases made within existing corporate purchasing agreements.

Question 39

Which of the following best explains the set of internal and external variables that explain how organizations make buying decisions? 

A) Consumer buying behaviour. 
B) Psychological influences on buying. 
C) Buyer motivation 
D) Industrial buying behaviour

Question 40

Which of the following best explains a 'Purchase order requisition'? 

A) A document that is used by the buyer in which they agree to perform according to the order. 
B) A description of internal customer requirements for goods and/or services needed to be obtained from suppliers. 
C) A description of external customer requirements for goods and/or services needed to be obtained from suppliers, which will serve as the basis for the purchase order. 
D) A description of internal customer requirements for goods and/or services needed to be obtained from suppliers, which will serve as the basis for the purchase order.

Question 41

Which of the following is not an activity in the supplier selection process? 

A) Terminating supplier contracts. 
B) Selection of the supplier. 
C) Analysis of the bids received. 
D) Preparing the request for quotation

Question 42

Which of the following are not elements in the 'Supplier Selection Proposal'? 

A) A decision to select a certain supplier. 
B) The past reputation of the supplier. 
C) The underlying quotations which have been considered. 
D) The underlying ranking schemes.

Question 43

Which of the following better explains 'Influencers'? 

A) Those who control the flow of information from the supplier towards the other members of the Decision Making Unit (DMU). 
B) Those who are able to affect the outcome of the purchasing process by means of solicited or unsolicited advice. 
C) Those who can influence the media. 
D) Those suppliers that meet the buyer's prequalification criteria and that will be requested to submit a first proposal.

Question 44

Which of the following better explains 'free on board (FOB)'? 

A) The seller must place the goods alongside the ship at the named port. 
B) The seller must load the goods on board the vessel nominated by the buyer. 
C) The seller must pay the costs and freight to bring the goods to the port of destination. 
D) The seller must pay the costs and freight to bring the goods to the port of destination and procure and pay for the insurance.

Question 45

Which of the following better explains 'The Linear Purchase Process Model'? 

A) A schematic overview of the most important steps on the linear purchase process. 
B) A description of supplier selection. 
C) Evaluation and rating of suppliers 
D) Ordering and Expediting.

Question 46

Which of the following best explains a 'Straight buy'? 

A) A known product from a known supplier. 
B) A known product from an unknown supplier. 
C) A new product from a known supplier. 
D) A new product from an unknown supplier.

Question 47

Which of the following best explains the term 'Sourcing Multiple'? 

A) A situation in which several companies within a certain category buy from more than one supplier. 
B) A situation in which several companies within a certain category buys from one supplier. 
C) A situation in which a company within a certain category buys from one supplier. 
D) A situation in which a company within a certain category buys from more than one supplier.

Question 48

Which of the following best explains a 'Tendering'? 

A) Activities needed to select contractor for the work based upon competitive bids. 
B) Activities needed to select contractor for the work. 
C) Activities needed to select contractor for the work based upon personal contacts. 
D) Activities needed to select contractor for the work based upon risk analysis.

Question 49

Which of the following is not a 'Task Variable'? 

A) Tasks assigned by the organization to the persons involved in the purchase decision-making process. 
B) Responsibilities assigned by the organization to the persons involved in the purchase decision-making process. 
C) Competences assigned by the organization to the persons involved in the purchase decision-making process. 
D) Remuneration of the persons involved in the purchase decision-making process.

Question 50

Which of the following better explains 'Warranty Conditions'? 

A) The specification of the period during which the supplier is liable for the reliability and adequate functioning of the delivered goods. 
B) The specification of the period during which the supplier is liable for accidents incurred as a consequence of goods supplied which are sub-standard. 
C) The specification of the period during which the supplier is liable for reimbursing the price paid to the purchase if the good supplied prove to be faulty. 
D) The specification of the period during which the supplier is liable for the repair and maintenance of the delivered goods.

Question 51

Which of the following is not a main stakeholder in a 'strategic triangle'? 

A) Customers. 
B) Competitors. 
C) Suppliers. 
D) Communities.

Question 52

Which of the following is not an activity in the supplier selection process? 

A) Determining the method of subcontracting. 
B) Preliminary qualifications of suppliers. 
C) Paying suppliers. 
D) Drawing up the 'bidders' list.

Question 53

Which of the following is not an element in a 'Technical specification'? 

A) The specification of the technical properties of the product 
B) The specification of the characteristics of the product. 
C) The specification of the deadline for tenders to be submitted. 
D) The specification of the activities to be performed by the supplier.

Question 54

Which of the following are not key processes in the 'Extended Purchasing Model'? 

A) Source 
B) Purchase 
C) Pay 
D) Evaluation

Question 55

Which of the following better explains 'free alongside ship (FAS)'? 

A) The seller must place the goods alongside the ship at the named port. 
B) The seller must load the goods on board the vessel nominated by the buyer. 
C) The seller must pay the costs and freight to bring the goods to the port of destination. 
D) The seller must pay the costs and freight to bring the goods to the port of destination and procure and pay for the insurance.

Question 56

Which of the following best explains a 'Tender'? 

A) Situation where a buyer asks for bids from a single supplier. 
B) Situation where a buyer asks for expressions of interest from different suppliers. 
C) Situation where a buyer asks for expressions of interest from a single supplier. 
D) Situation where a buyer asks for bids from different suppliers, creating a level playing field.

Question 57

Which of the following better explains 'cost and freight (CFR)'? 

A) The seller must place the goods alongside the ship at the named port. 
B) The seller must load the goods on board the vessel nominated by the buyer. 
C) The seller must pay the costs and freight to bring the goods to the port of destination. 
D) The seller must pay the costs and freight to bring the goods to the port of destination and procure and pay for the insurance.

Question 58

Which of the following better explains 'Gatekeepers'? 

A) Those who control the flow of information from the supplier towards the other members of the Decision Making Unit (DMU). 
B) Those who control access to the organizations' property. 
C) Those who can influence the media. 
D) Those suppliers that meet the buyer's prequalification criteria and that will be requested to submit a first proposal.