CIPS L4M2 Exam Questions Instant Access - No Installation Required

Question 1

Robert is a buyer at Pickton's Farm Products (PFP), a manufacturer of food products that are sold to supermarkets. Robert will be sourcing from local farmers to supply PFP with raw materials for PFP's products. What is a major supply chain risk that Robert needs to be aware of which is specific to this market?

AThe quality of goods received by PFP may be of varying quality and need to be returned to the supplier for replacement

BA supplier may deliver an incorrect quantity of materials to PFP, leading to PFP incurring storage charges

CExtreme or unexpected weather conditions may affect the supplier's ability to supply PFP in line with quantity and timing requirements

DSuppliers to PFP may also supply other customers which they prioritise over PFP, leading to delays in PFP's production process

Answer : C

Question 2

Which of the following are characteristics of effective financial markets?

Market stability is maintained

Market volatility is encouraged

Investment is encouraged

The level of regulation is reduced

A3 and 4 only

B1 and 3 only

C2 and 4 only

D1 and 2 only

Answer : B

Question 3

When purchasing routine items such as common stationery supplies. how can the business need for

efficiency be met?

1. Including incentives and penalties in contracts

2. Introducing e-procurement solutions

3. Introducing competitive bidding

4. Vendor Managed Inventory

A1 and 2 only

B2 and 3 only

C2 and 4 only

D3 and 4 only

Answer : C

Question 4

When preparing through-life specification, which of the following requirements should procure-ment team define besides the physical asset? Select TWO that apply.

ACustomer service

BObjectives

CMarket analysis

DLogistics and installation

EAvailable substitute

Answer : A, D

Explanation

Through-life Management involves the life-cycle management of the products, services and activities required to deliver a fully integrated capability to the customer, while reducing the cost of ownership for the customer.

Diagram, table Description automatically generated

Source: Andrew Graves

With through-life management, buyer not only cares about the physical asset but also other factors like customer services and maintenance.

LO 3, AC 3.2

Question 5

Which of the following content should a performance specification feature? Select TWO that apply.

AExact details of the packaging

BOutcomes to be achieved

CDrawings of the required product

DRequired quality level

EApproved/excluded materials requirements

Answer : B, D

Question 6

Which of the following are prerequisites to run a successful bidding process? Select TWO that apply:

AThe value of the purchase must be high enough to justify the associated bidding costs of potential suppliers

BThe market contains an adequate number of suitably qualified suppliers

COnly those suppliers who have worked with the buyer in the past are allowed to bid

DBids must be submitted within twenty calendar days

EThe requirement can be met without the need for subcontracting

Answer : A, B

Detailed

A (Purchase value): A competitive bidding process is only justifiable when the cost of running it is outweighed by its potential value.

B (Qualified suppliers): Ensuring a sufficient number of capable suppliers promotes competition and delivers better results.Restricting suppliers (C) or rigid timeframes (D) can hinder the process, while subcontracting (E) is not a core consideration in most bids. Reference: CIPS Level 4, Bidding and Tendering.

Question 7

Which of the following would positively affect a buyer's company cash flow? Select TWO that apply.

AThe bank grants a loan to the buyer's company

BPayment of dividends to the company's shareholders

CA supplier reduces payment terms to payment on receipt

DA customer agrees to pay the buyer's company upon purchase

EThe buyer's company offers sales discounts and promotions

Answer : A, D

Comprehensive and Detailed Explanation (from CIPS L4M2 -- Financial Management in Procurement)

Positive cash flow arises when money flows into the business:

A . Bank loan immediate inflow of cash.

D . Customer pays upon purchase quick revenue collection, improving liquidity.

The other options either delay or reduce available cash (outflows).

Relevant L4M2 references:

''Cash flow and working capital in procurement decision-making''

''Financial metrics in business case justification''

CIPS Defining Business Needs L4M2 Exam Questions