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CIPS Supplier Relationships Sample Questions (Q25-Q30):

NEW QUESTION # 25
'tail spend' is a common category used in procurement and describes a category of items. What characteristics do theses items have?

• A. Low value, high volume
• B. Low value, low volume
• C. High value, high volume
• D. High value, low volume

Answer: A Explanation:
Tail spend items are low value, high volume. P. 132
NEW QUESTION # 26
Pablo has run an open- competition to secure a new contract for a supplier of paper for his Birthday Card making company. He has received 10 submissions from various suppliers and needs to put a team together to evaluate the bids. What type of team should Pablo consider?

• A. A team of procurement experts
• B. A cross-functional team
• C. A team composed of internal stakeholders
• D. A team composed of internal and external stakeholders

Answer: B Explanation:
Pablo should use a 'cross-functional team'. CIPS love 'cross-functional teams' and refer to them frequently throughout the study guide. A cross-functional team is people from different departments who come together for a purpose, such as to evaluate a tender. The benefit of using a cross-functional team is that you get people with different experiences and knowledge. So in this example a Cross-Functional team could compose of people from various departments such as procurement, logistics, manufacturing and legal. P.76
NEW QUESTION # 27
Cigarettes and alcohol are often described as having an 'inelastic price'. What does this mean?

• A. Changes in price will not affect how much of the item is bought
• B. The product is subject to high rates of tax
• C. The product is subject to age restrictions
• D. Changes in price will greatly affect how much of the item is bought

Answer: A Explanation:
A product with an 'inelastic price' means that consumption doesn't really depend on how much it costs. So you could increase the price of alcohol and cigarettes and people would tend to still buy them. A product with an elastic price means that a change in price would have a large affect on the number of people who bought the item. See p.95 for more details on price elasticity.
NEW QUESTION # 28
Red Ltd and Blue Ltd have had a disagreement over a high value project they have been partnering on. They have been unable to resolve the issues inhouse and Red Ltd has suggested Mediation as an option. Is this a good option?

• A. No- it would be better to solve the disagreement in-house
• B. Yes- mediation involves a neutral third party and gets both parties to attempt to reach a compromise
• C. No- mediation could have a negative impact on the companies' reputation
• D. Yes- mediation means the buyer and supplier agree to accept a third party's decision which will solve the disagreement issues

Answer: B Explanation:
The correct answer is 'Yes- mediation involves a neutral third party and gets both parties to attempt to reach a compromise'. Be careful not to confuse mediation with arbitration - arbitration is when the buyer and supplier agree to accept a third party's decision which will solve the disagreement issues. See p.112 for more information on solving disputes
NEW QUESTION # 29
Which of the following are considered part of the '5 Rights of Procurement'? Select THREE.

• A. quality
• B. time
• C. focus
• D. place
• E. cost

Answer: A,B,D Explanation:
The 5 Rights of procurement are; place, quality, quantity, time, price. (Price and Cost are not the same thing). See p.38
NEW QUESTION # 30
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