Question 1

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

Accepted Answer

The three options listed: electronic marketplaces, electronic auctions, and electronic catalogues, are all examples of E-Procurement solutions. Electronic inventory is not typically classified as an E-Procurement solution, as it is usually seen as a part of inventory management rather than a means of procuring goods or services.

Question 2

Which of the following better explains 'Budget'?

Accepted Answer

A budget is a tool used to allocate resources and responsibilities to lower management, allowing them to manage specific activities within the organization.

Question 3

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

Accepted Answer

Contract Unit Rate refers to payments made based on the actual number of units produced during the completion of the work.

Question 4

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

Accepted Answer

Bidders Long List 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'?

Accepted Answer

Derived demand refers to a situation where the demand for a product or service is based on the demand for another product or service. In industrial markets, the demand for raw materials and intermediate goods is often derived from the demand for the final products that these goods help produce. Therefore, developments in industrial markets are often influenced by changes that occur in the end-user markets. Option A and B are incorrect because they are extreme statements that are not supported by the concept of derived demand. Option D is incorrect because it refers to the influence of exchange rates, which is not directly related to derived demand.

Question 6

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

Accepted Answer

Electronic auctions (e-auctions) are typically platforms where buyers invite suppliers to bid for products or services online, allowing for simultaneous bids based on specific purchase requirements. This process leverages web technology for efficiency and broader access.

Question 7

Which of the following better explains 'Auction Forward'?

Accepted Answer

Auction Forward refers to a type of auction where suppliers enforce bidding among buyers, starting at a low price that increases as the auction progresses.

Question 8

Which of the following better explains 'Budget Authority'?

Accepted Answer

Budget authority refers to the power given to a manager to spend money and resources of the company for company purposes. Therefore, option B is the correct choice. Option A is incorrect because it refers to collection of money and resources, whereas budget authority pertains to spending. Option C is incorrect because it refers to spending for personal purposes, which goes against the purpose of budget authority. Option D is incorrect because it implies that managers are prohibited from spending money for company purposes, which is not the case with budget authority.

Question 9

Which of the following better explains 'Auction Reverse'?

Accepted Answer

Reverse auctions are characterized by buyers inviting suppliers to bid for their business, typically with the price being driven down as suppliers compete. The key aspect of a reverse auction is the competitive bidding process initiated by the buyer among prequalified suppliers, with the goal of lowering the price. Option B accurately describes this process, emphasizing that it involves a limited number of prequalified suppliers, which is a common practice to ensure quality and manageability in the bidding process.

Question 10

Which of the following better explains 'Buying Centre'?

Accepted Answer

A buying centre encompasses all individuals and groups involved in the purchasing decision-making process, who also share common goals and the risks associated with these decisions. This definition captures the collaborative and risk-sharing aspects of the buying centre concept.

Question 11

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

Accepted Answer

A fixed price contract is where the contractor agrees to work for a predetermined or fixed price. The contractor is responsible for completing the project within the fixed price and any additional costs incurred will be borne by the contractor.

Question 12

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

Accepted Answer

Purchasing cost reductions are generally considered sustainable because they result from strategic changes such as specification changes, supplier changes, or eliminating unnecessary quality requirements, which can provide long-term savings. Option A incorrectly states that these reductions are not sustainable.

Question 13

Which of the following explains 'Acceptance Test'?

Accepted Answer

Acceptance testing can be performed at the supplier's site, the buyer's site, or both, and it checks for both functional and technical requirements of the equipment purchased.

Question 14

Which of the following better explains 'Bottleneck Products'?

Accepted Answer

Bottleneck products refer to items that are vulnerable with regard to their supply and can only be obtained from one supplier, regardless of their value. Option D fits this definition.

Question 15

Which of the following better explains 'Buying Process'?

Accepted Answer

Option A provides a more comprehensive explanation of the buying process as it covers all the major steps involved in the process such as determining purchasing needs, selecting suppliers, arriving at a proper price, specifying terms and conditions, issuing the contract or order, and following up for proper delivery and payment. Option B, C, and D miss out on some crucial steps involved in the overall buying process.

Question 16

Which of the following better explains 'Advance Payments'?

Accepted Answer

Advance payments are payments made to a contractor ahead of the actual delivery of their work. This is done to provide funding for the contractor to begin work before completion and delivery.

Question 17

Which of the following better explains 'Competitive Bidding'?

Accepted Answer

Competitive bidding involves a buyer requesting bids from multiple suppliers to ensure fair competition and obtain the best terms.

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?

Accepted Answer

The answer of Which of the following best explains a...

Question 19

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

Accepted Answer

The bidders short list is a list of suppliers who meet the buyer's prequalification criteria and will be requested to submit a detailed bid. Option B and C are incorrect as they mention future bids or exclusion from submitting a first proposal, which is not mentioned in the definition of a shortlist. Option D mentions an outline proposal instead of a detailed bid. Hence, option A is the best choice.

Question 20

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

Accepted Answer

Battle of forms refers to a situation in which a supplier and a buyer each have their own standard terms and conditions that they want to apply to a commercial transaction. The dispute arises when both parties attempt to incorporate their own terms into the contract, resulting in conflicting terms. Therefore, option C is the most accurate description.

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