South Africa.

This is an example of segmentation based on:

A. Price Levels
B. Design
C. Packaging
D. Performance
E. Features

64, The chief procurement officer (CPO) in a company has produced estimates of the operating costs
of the procurement department in the next financial year. Is the CPO correct in thinking that these
costs estimates will become the department’s operating budget for the year?

A. No, because initial cost estimates are only a starting point for preparing a budget
B. No, because the estimates might be incorrect
C. No, because the cost estimates do not include of material purchases for the
company
D. Yes, because these are the costs that the department is expecting to incur

65. Which of the following are common barriers to entry that could affect competition in a market?
1. Set-up costs.
2. Direct labour costs.
3. Customer switching costs.
4. Inventory holding costs.

A. 1 and 2 only.
B. 3 and 4 only.
C. 2 and 3 only.
D. 1 and 3 only.

66. An organisation has a very clear idea of the service it wants and has described the process
precisely in terms of how the supplier must deliver it. It is intending to produce an ‘outcome-focused
specification’. Is this the right specification approach for the organisation to use?

A. No – with an outcome- focussed specification approach, the supplier will decide how to deliver
the service.
B. No – the best approach would be open specification.
C. Yes – this specification approach allows for maximum innovation from the supplier.
D. Yes – this specification approach states expressly how the service should be delivered.

67. Which of the following are typical environmental considerations throughout the contract life
cycle? Select the TWO that apply.

A. Energy usage in manufacturing.

B. Recycle packaging.
C. Customer demand.
D. Employee welfare.
E. Standards of ethical behaviour.

68. Which of the following are typically found within conformance specifications? Select TWO that
apply.
A. Functions.

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 B. Drawings.
C. Outcomes.
D. Samples.
E. Outputs.

69, Manufacturers in some industries (such as original equipment manufacturers in the car industry)
make complex products in a dynamic business environment. Which one of the following is likely to
be a priority for procurement for a car manufacturer that is switching from production of diesel-
powered cars to electric vehicles?

A. Short product lifecycles

B. Process efficiency
C. Supply chain agility and response to technological change
D. Value for money

70. On the CIPS website, CIPS student members can choose to study with approved Study Centres
which are listed according to the following markets, among others, of the global procurement
community:

i) Africa
ii) Middle East and North Africa (MENA)

Under Africa, the CIPS students must choose the Country (like South Africa) in which they reside and
choose an approved Study Centre they would like to conduct their CIPS Studies with. What kind of
segmentation has CIPS used?

A. Segmentation based on buyers

B. Segmentation based on distribution channels
C. Segmentation based on geography
D. Segmentation based on Products or Services
E. Industry Segmentation Matrix

71. Network marketing allows manufacturers of goods or services (like Edmark, Forever Living,
World Travel, MWR etc) to sell directly to consumers through the model of Independent Business
Owners (IBOs) who create their own network of clients described as down-liners. This is
segmentation based on:

A. Country Groupings
B. Exclusivity
C. Direct Marketing
D. Direct Sales
E. Distribution Channel

72, A company sells fashion clothes to the youth market at very low prices. It is continually designing
new fashion products, which it has manufacturing in the Far East. Which TWO of the following will
be major factors for successful procurement by this company?

A. Short design and production lead times

B. Product quality

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 C. Fluctuating prices for fashion goods
D. Subcontracting
E. Quick response to changes in consumer tastes

73. The South African government blue print for economic growth known as the National
Development Plan (NDP) 2030 vision places manufacturing at the heart industrialization and
economic growth. However, on the 1st of June 2019, Carbon Tax was introduced and this tax is an
addition to the costs of production and lowers the profit margins for manufacturers. As a business
adviser, suggest what the South African auto manufacturers can do to lower the costs of doing
business in the country.

A. Locate in China for low cost on vehicle manufacturing

B. Create a network of car dealers where inspections and test drives are done before consumers
purchase the vehicles
C. Make uniform cars
D. Increase investment in machinery and access to skilled workforce
E. Share production facilities with other auto manufacturers

74, A manufacturer of food products purchases large quantities of vegetables and fruit from farmers
and growers around the world. Which TWO of the following factors are likely to be of most concern
for the manufacturer’s procurement function?

A. Changing consumer tastes and short product lifecycles

B. Sustainable supply
C. Variations in supply and price from one year to the next
D. Competitive tendering
E. Robotic process

75, The chief procurement officer (CPO) of an organisation is concerned that the procurement
function will be criticised for making more purchases than budgeted in the previous budget control
period. Is the CPO’s concern justified?

A. Yes, because additional purchases result in more cash outflows

B. Yes, because additional purchases result in lower levels
C. No, because additional purchases do not affect inventory levels
D. No, because purchases quantities depend largely on usage quantities

76. What are the challenges facing new players in the Construction Industry of South Africa?

A. Lack of the Porter’s 5 Forces

B. Globalisation
C. Lack of experience and reputation
D. Lack of single Standard Industry Classification (SIC) Code
E. Government policies supporting new players to enter the industry

77. The stages of the Product Life Cycle (PLC) are:

A. Decline, maturity, growth, introduction

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 B. Innovators, early adopters, middle majority, laggards
C. Laggards, middle majority, early adopters, Innovators
D. Introduction, growth, maturity, decline
E. Buyer power, Supplier power, substitutes, new entrants

78. What do you understand by value-to-price ratio?

A. Switching costs in moving from one product to another

B. The value that a product provides in meeting buyer’s needs compared to its purchase price
C. Ratio of economies of scale to capital requirements
D. Ratio of direct costs to indirect costs
E. Ratio of fixed costs to variable costs

79. In the absence of open book costing, explain how you, as a buyer, can establish the break- even
point for a particular supplier

A. Conduct plant or site visits to the suppliers premises to gain insight into supplier’s direct and
indirect costs
B. Issue RFI where potential suppliers are asked for information on their direct and indirect costs or
the ratio between the two
C. Use company annual reports and capture cost and output data points through which a line of best
fit is drawn
D. Ask an organisation’s technical staff like manufacturing engineers, R&D staff or sales staff to
provide technical data from the accounting system

80. What is the meaning of the acronym OWN-IT in collection and analysis of data?

A. Outline, Wide Search, Narrow Search, Increase your stockpile of information, Transform your
stockpile into new knowledge
B. Outsource, Win-Win, Negotiate, Integrate, Transform
C. Operations, Whole life cycle Costing,
D. Outcomes, Warranties, Normal Distribution, Issues Management, Through Life Contracts
E. Output Specification, Whole life cycle costing, non-functional requirements, internal
benchmarking, Target cost analysis

81. Which of the following describe ancillary services?

A. After sale service
B. Two or more distinctive products sold as one
C. A product sold at premium price
D. Service for digital demands

82, One of the purposes of a financial budget is:

A. To determine how procurement costs will be controlled

B. to plan what procurement prices should be in the next financial year
C. to determine the prices that will be paid for purchases in the next financial year
D. to forecast what material purchases will be in the next financial year

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 83. Michael Porter’s ‘Five Forces’ model determines the extent of competition in an industry. The
five forces are:

A. Threats from New Entrants; Threats from Buyers; Threats from Sellers; Threats from Markets and
Competitive Rivalry
B. Power of New Entrants; Power of Substitutes; Buyers’ Power; Sellers’ Power and Competitive
Rivalry
C. Threats from New Entrants; Threats from Substitutes; Buyers’ Power; Sellers’ Power and
Competitive Rivalry
D. Threats from New Entrants; Threats from Substitutes; Buyers’ Power; Sellers’ Power and Perfect
Competition

84. A monopoly supplier has a high bargaining power such as being a…

A. Price Maker
B. Price Marker
C. Price Taker
D. Price Manager

85. At the ‘decline’ stage of the product life cycle, the buyer of that product would expect…

A. Price to increase
B. Price to remain stable
C. Price to fall
D. Price to double

86. Consumers in a market place who prefer to buy new technologies early in their development
are called…?
A. Leaders
B. Late adopters
C. Laggards
D. Early adopters

87. Coca Cola and Pepsi Cola provide a good example of supplier bargaining power this is known
as…
A. a monopoly market
B. a duopoly market
C. a triopoly market
D. a flexible market

88. In economic terms, margarine was introduced into a market where there was butter this is
an example of what?
A. Substitutes
B. Flavours
C. Complements
D. Equilibrium

89. Which of the following market structure with the highest barriers or highest switching costs?
A. Monopolistic competition
B. Imperfect competition

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 C. Oligopoly
D. Monopoly
E. Duopoly

90. Consumers who wait until the last possible moment before changing to a new product or
service are called what?

A. Enthusiasts
B. Growers
C. Early adopters
D. Laggards

91. The Organisation of Petroleum Exporting Countries (‘OPEC’) is a sole buyer of oil rigging
equipment which gives him the buyer bargaining power this an example of…
A. a monopoly
B. a oligopoly
C. a monopsony
D. a oligopsony

92. At what stage of the Product Life Cycle would a supplier begin to earn a profit from a new
product?
A. Development
B. Growth
C. Decline
D. Maturity

93. Product life cycle is linked to the customers based on how quick they respond to the products in
the market. Middle majority are consumers/customers in the who are seen to have a bargaining
power to negotiate hard on the price?

A. True
B. False

94. Skimming prices are…

A. Normal price that a buyer pays for the goods
B. highest price when the product is launched
C. Low prices when a product is launched
D. Is the prices normally paid by the laggards

CHAPTER 3

95. The three types of performance specification are:

A. Design, Technical, Conformance

B. Statement of Work (SOW), Output, Outcome
C. Drawings, Samples, Brands
D. Statement of Needs, Procurement Specifications, Performance Specifications
E. Technical, Conformance, Performance

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 96. What is the difference between an output-based specification and an outcome-based
specification?

A. Output-based specification places the risk of bad performance on the contract upon the supplier
whereas outcome-based specification places that same risk on the buyer
B. An output specification describes what is needed whereas an outcome specification explains why
it is needed
C. An outcome specification is more difficult to draft than an output specification
D. It takes an output to deliver an outcome so output specifications are therefore the same as
outcome based specifications
E. Output specification looks at the 5 Rights of procurement namely right price, right quality,
right quantity, right place and right time whereas outcome based specifications are not concerned
with the 5 Rights

97. List 5 of the questions that are asked in the Star-burst method of brainstorming:
A. 5 Whys
B. Is price right, Is quality right, Is quantity right, Is Place right, Is delivery time right?
C. What, Who, When, Where, Why
D. What is the Return on Investment, Is there Customer Satisfaction, Is Time to Market Right,
Is Productivity high, Are all stakeholders involved?
E. All of the above.

98. The three (3) types of performance specification are:

A. Outcome specification, output specification, Statement of Work (SOW) Specification
B. Statement of Work (SOW) Specification, Design Specification, Technical Specification
C. Specification by Sample, Specification by Brand, Specification by Drawing
D. Outcome Specification, Procurement Specification, Statement of Need
E. Output Specification, Statement of Work (SOW), Design Specification

99. Which statement is true about the Statement of Work (SOW)?

i).A SOW can be used together with both output and outcome specifications as supporting
document
ii). A SOW is mostly used in projects and services
iii). A SOW is a form of specification as it defines the activities, deliverables and timelines for projects
and services
iv). A design SOW provides the supplier with the purpose of the project or service but does not
specify how the work will be done or what materials are to be used
v). A level of effort and materials/Unit rate SOW is where a supplier is instructed as to how the work
should be done, the quality levels required and the specification of any materials used
vi). A performance based SOW is specifically based on standards like the ISO 9000

A. i) iv) v)
B. ii) iii) vi)
C. iii, iv) v)
D. iv), v), vi)
E. i) ii) iii)

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 100. What tool would you employ to mitigate the challenges arising from the use of the internet as
a source of information for developing specifications?

A. OWN-IT
B. RAQSCI
C. ORAPAPA
D. SAMOA
E. RACI

101. Which of the following can is an example of “A” of the acronym SAMOA
A. Endorsement
B. Encyclopaedia
C. Emergent sources
D. Elegant reports

102. The Gauteng Department of Education (GDE) in 2013 developed and printed the right training
material in the English Language to help parents to get involved in their children’s school work life
under a project described as Parental Involvement Project (PIP). However, when delivered to the
districts, a significant proportion of the parents and guardians could not read and understand the
material. There was material printed in braille or large print for the blind of partially blind
respectively. To mitigate the above challenges, the Department resolved to reprint the material
again in English, Afrikaans and vernacular languages of Sepedi, Tshwana, Zulu and Venda, Tsonga. All
the languages were in one booklet and the parent would choose the relevant page to read.

Which element of through life specifications was missing in the above scenario?

A. Acceptance testing to find out whether the Department has printed the right training material
B. Functional testing to find out whether the material printed was in the language which the parents
understood
C. Black box testing of the software used in the graphic design and display of illustrations,
images and graphs used in the books
D. Alpha testing with the authors, editors, graphic designers during the development of the
training material
E. Regulation acceptance testing to check compliance with the health and safety requirements
and the South African Schools Act (SASA)

103. Inadequate specifications can take any of the following forms:

A. Defects, Over-processing, Over-production

B. Risk Register, misinterpreted need, under-specification
C. Waste, over-specification, under-specification
D. Opportunity cost, cost variance, social and environmental factors
E. Under-specification, over-specification, misinterpreted need

104, Which of the following may be found within conformance specifications but are unlikely to be
found in performance specifications? Select TWO that apply.

A. Branded products
B. Drawings
C. Variety reduction
D. Outputs

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 E. Functions

105. Risk management in procurement and supply must be done in this chronological order:
A. Tolerate the risk, Treat the risk, Transfer the risk, Terminate the risk
B. Give unique identifier of each risk, Write the Date the risk was identified, provide
Description of the risk, Allocate the risk to the relevant risk Owner
C. Identify the risk, Assess the risk, Control the risk, Monitor the risk
D. Draft Project Initiation Document (PID), carry out Schedule Variance, do Cost Variance, Conduct
Stakeholder Satisfaction
E. None of the above.

106. List 6 of the major concepts or terminology associated with lean thinking in business:

A. Just in Time (JIT), Defects, Inventory, Motion, Transportation, Waiting

B. Overproduction, Not Using Talent, Six Sigma, Defects, Value Engineering, Value Analysis
C. Target Costing, Whole Life Cycle Costing, Total Cost of Ownership, Should Cost Analysis, Purchase
Cost Analysis, Price Analysis
D. Zero based Budgets, Cost Variance, Monte Carlo, Decision Support Models, Simulation
Models, Optimisation Models
E. Lead Time and Process Speed, Work in Process, Delays/Queue Time, Value Add and Non
Value Add, Process Efficiency, Waste

107. What does the acronym DOWN TIME mean in lean studies?

A. Decommissioning, Open Book Costing, Waste, Negotiation, Tendering, Internet, Middle

Majority, Ergonomics
B. Differentiation, Open Ended Problems, Whole Life Cycle Costing, Non-functional
requirements, Through Life Contracts, Invitation to Tender, MRO, Early Supplier Involvement (ESI)
C. Decision Support Models, Optimisation Models, Whole Life Cycle Costing, New Purchase,
Technical Specification, Issues Management, Modified Re-buy, Energy Efficiency
D. Direct Costs, Overheads, Work in Process, Normal distribution, Target Costs, Inventory, Monte
Carlo, Early Supplier Involvement (ESI)
E. Defects, Overproduction, Waiting, Not using Talent, Transport and handling, Inventory,
Motion Waste, Excess processing

108, The purpose of acceptance testing is to:

A. Train the user’s staff

B. Check the adequacy of the buyer’s specifications
C. Trial the item in simulated operational conditions
D. Establish change control mechanisms

109. The five (5) steps for doing value analysis are:

A. Outline, Wide Search, Narrow Search, Increase your stockpile of information, Transform your
Stockpile into new knowledge
B. Be specific, Define what is already known, create the outline, Define any gaps, Variance
Analysis
C. Purchase Cost Analysis, Negotiating, Carry out functional analysis, Pugh Analysis, Be creative
D. Gather information, Carry out functional analysis, be creative, Evaluate, Develop

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 E. None of the above

110. The following are the hindrances to creativity in procurement:

A. Right answer, avoidance of ambiguity, not my area, logic, rules

B. Play is frivolous, not wanting to fail, non-value adding activities, switching cost, social and
Environmental criteria
C. Risks, past experience, people, alignment and ethics, Analysis
D. Indifferent requirements, one dimensional requirements, mandatory requirements, reverse
requirements, attractive requirements

111. Early supplier involvement is a process of involving suppliers early during the specification
design. Which of the following can be the advantage of this process
A. Reduced supply chain risk
B. Expensive process
C. Locked in a relationship
D. Quality failures

112, Track manufacturing (track) makes and sells a range of industrial products. All its products,
which are made in a fairly simple and efficient manufacturing process, are very profitable. The
components that Track uses in its products are not complex and are available from a large number
of suppliers. However, Track’s CHIEF Procurement Officer (CPO) is concerned about the large range
of items that the company both buys and manufactures. Which one of the following should the CPO
recommend for priority action by Track?

A. Standardisation
B. Five forces analysis
C. Function analysis
D. Value analysis

113. What are the six main components of a through life specification
A. Dedicate, Manufacture, Inform, In-service support, Decompose n and disposal
B. Devolve, manufacture, installation, in – service support, demolish and disposal
C. Design, materialise, installation, in-service support, decommission and dedicate
D. Design, manufacture, installation, in-service support, decommission and disposal

114, In a service level agreement there might be a risk of under-specification of the buyer’s
requirement due to a failure to:

A. Specify the service level required

B. Agree a dispute resolution procedure
C. Prepare an outcome-based specification
D. Agree the price for the service

115. Risk mitigation in procurement and supply must be done through which of the following:
A. Tolerate the risk, Treat the risk, Transfer the risk, Terminate the risk
B. Give unique identifier of each risk, Write the Date the risk was identified, provide
Description of the risk, Allocate the risk to the relevant risk Owner
C. Identify the risk, Assess the risk, Control the risk, Monitor the risk

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 D. Draft Project Initiation Document (PID), carry out Schedule Variance, do Cost Variance, Conduct
Stakeholder Satisfaction
E. None of the above.

116. 4 T’s are methods of controlling the risk. Which of the following is an example of Transfer
A. Cancel the project
B. Outsourcing
C. Supplier optimisation
D. Re-shoring

117. Which of the following processes has the risk register as primary output?
A. Performance Qualitative risk analysis
B. Monitor and control risk
C. Plan risk management
D. Identify risk

118, Metal products company (MPC) manufactures a range of similar products for sale to industrial
buyers and is continually developing new and improved products to add to its range. The Chief
Procurement Officer (CPO) of MPC is concerned about the large number of new components in new
products designs, and thinks that all of these are not necessary. Which of the following measures
might the CPO therefore recommend?

A. Output-based specifications for new products

B. Value analysis
C. Variety reduction
D. Internal stakeholder involvement

119. Through-life contracts are commonly used in procuring assets such machinery or IT equipment.
A. True
B.False

120. Specifications that are prepared to consider environmental issues should look at the following
aspects
A. Remind, Rethink, Remedy, recycle
B. Reduce, re-consider, recycle, rethink
C. Rethink, reduce, recycle and reuse
D. Ready, reduce, Remedy, rethink

121, Which of the following might be consequences of under-specification? Select TWO.

A. Difficulty in comparison rival bids

B. Restricting the number of suppliers willing to bid
C. Spending money to correct the problem
D. Obtaining something that is not sufficient
E. Less scope for innovation by suppliers

122. The stage of the procurement cycle when the procurement can add most value is at the point
when the business is..
A. Setting out and defining the need

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 B. Ready to source the market
C. Selecting the right supplier
D. Starting the final negotiation with a shortlisted Vendor

123. Value engineering (VE) is similar to value analysis in many ways. Which of the following explains
value engineering (VE)? Two answers apply
A. VE is concerned about the longer term issues such as cost and quality for product design and
specification
B. VE is concerned about value attached to the product during use or sampling
C. VE considers whole life costs of the product
D. VE does not consider the whole life cost of the product

124. Green issues have come to the forefront in recent years. Which of the following would be used
to reduce waste in a business?
A. Increase the use of pesticides
B. Reduce the development of recyclable products
C. Increase the use of plastic bags
D. Reduce product packaging

125. Which of the following are likely benefits from a successful initiative for standardisation and
variety reduction? Select TWO.

A. Less risk of stock obsolescence

B. Larger supplier base
C. Simplified procurement procedures
D. Improved product quality
E. Smaller range of finished goods products

126, An example of over-specification is:

A. Using conformance specification rather than outcome-based specifications

B. Specifying more restrictive tolerances than needed
C. Misunderstanding the buyer’s requirements
D. Under-stating the required production volume capacity for a machine

127, A benefit of a through-life contract with a manufacturer for the procurement and
installation of an item of equipment, and ongoing support through its operational life, is:
A. A securing the supply of replacement parts
B. A guarantee of technology updates
C. Greater reliability of the equipment
D. Simplification of the procurement process

128, A company is planning the procure of an IT system and wants to agree a through-life
contract with the supplier to ensure ongoing system support. An initial step in the
procurement process should be to:
A. Prepare specifications
B. Consult internal stakeholders about their requirement
C. Identity the IT system supplier
D. Prepare a score document

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 129, Which of the following might typically be included in an output-based specification?
Select TWO.
A. A sample
B. Packaging specifications
C. Composition specifications
D. Required quality levels
E. Required quality environmental performance levels

130, An organisation intends to prepare invitations to tender (ITTs) for a contract for the
provision of a service. The organisation has procured similar services in the past and has a very
clear and detailed idea of the service that it wants this time. The organisation intends to prepare
an outcome-based specification, to issue with the ITTs. Is this the appropriate type of
specification for the organisation to use?

A. Yes, because outcome-based specifications are the easiest type of specification to

prepare
B. Yes, because outcome- based specifications give suppliers the greatest scope to
innovate
C. No, because with an outcome specification, the supplier decided how the service
will be delivered
D. No, because the specification should focus on specifying outputs rather than
outcomes

131. Which of the following statement explains value analysis?

A. A study of eliminating unnecessary cost that do not add value to the product or a service during
the design stage
B. A study of eliminating unnecessary cost in existing products that do not add value to the product
or a service
C. Is the value that something creates or provides through use
D. Is the value that the buyer attaches to the item

132. In recent years there has been raised awareness on Sustainability, a buyer may wish include
social criteria in specifications. Which of the following is an example of the social criteria. Two
answers may apply

A. Promoting local communities and local employment

B. Insisting on getting lower prices from individuals or small businesses
C. All contracts the buyer will award are based on fixed price arrangement
D. The supplier must comply with all laws and regulations relating to employees rights

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