CIPS L3M1 PROCUREMENT
AND SUPPLY
ENVIRONMENTS
PRACTICE EXAM 60
QUESTIONS
Question 1: A packaging supplier proposes a redesign that cuts waste sent to land�ll by 30% without reducing product protection. Which external consideration is being improved most directly?
Choices:
1) Environmental performance 2) Market entry barriers 3) Exchange-rate certainty 4) Political stability
Correct Answer: Environmental performance
Explanation: Reducing waste and land�ll is an environmental improvement and may also lower disposal costs and support sustainability objectives.Page 1
Question 2: A procurement manager works for an organisation funded mainly by
membership fees and donations. It exists to promote a social cause and has no private shareholders. Which sector is the best �t?
Choices:
1) Private equity sector 2) Extractive sector 3) Third sector 4) Central banking sector
Correct Answer: Third sector
Explanation: An organisation pursuing a social purpose without private shareholders, and funded through memberships or donations, is characteristic of the not-for-pro�t or third sector.
Question 3: A company buying glass bottles learns that customers are rapidly
switching to aluminium cans for the same use. Which of Porter's forces is illustrated?
Choices:
1) Supplier integration 2) Threat of substitutes 3) Rivalry caused only by in�ation 4) Buyer concentration
Correct Answer: Threat of substitutes
Explanation: A substitute is an alternative product or service that satis�es a similar need.Growing use of cans instead of bottles increases the threat of substitutes.Page 2
Question 4: After supplier selection, which document normally communicates the
buyer's formal instruction to supply speci�ed goods or services at agreed terms?
Choices:
1) Goods-return note 2) Requisition 3) Purchase order 4) Supplier statement
Correct Answer: Purchase order
Explanation: A purchase order is issued by the buyer to the supplier and records the authorised requirement, such as description, quantity, price, delivery, and applicable terms.Question 5: A self-employed buyer runs a business alone, keeps the pro�ts after tax, and is personally liable for business debts. Which form of private-sector organisation is this?
Choices:
1) Public corporation 2) Limited company 3) Sole trader 4) Charitable trust
Correct Answer: Sole trader
Explanation: A sole trader is owned by one individual and normally has unlimited personal liability for the business's debts.Page 3