MCQs on Purchase Management

1.  Whenever a department needs an item, it is officially brought to the notice of the purchasing department by filing a purchase requisition from. The next step is 

A. Exact quantity of material to be purchased and its specification is decided 

B. Prepare a list of suppliers who deal with the business of the articles to be purchasing and are reliable

C. Pen the quotations at prescribed time on the prescribed date

D. Prepare a comparative statement of the, terms and conditions mentioned in the quotation and then           analyze them.

Answer A

2.  The important functions of purchase departments are __________________________. 

A. preparation of purchasing budget 

B. track pending purchase order 

C. issue and follow up purchase order  

D. all of these

Answer D

3.  Which of the following is/are the assumptions of Economic order quantity (EOQ)?

A.  There are no bulk purchase discounts for making orders in large sizes. All units purchased for each         item of material cost the same unit price.

B.  The order lead time (the time between placing an order and receiving delivery from the supplier) is        constant and known.

C.  Annual demand and consumption for the inventory item is constant throughout the year.

D.  All of the above

Answer D

4.  The order quantity or purchase quantity that minimize the total annual cost of ordering the item plus holding it in store is called the economic order quantity or EOQ.

A. True

B. False

Answer A

5.  The EOQ can be calculated using a:

A. Table

B. Graph

C. Formula

D.    All of the above

Answer D

6.  Supply lead time. This is the period of time between placing a new order with a supplier and receiving the delivery of the purchased items. The length of this supply lead time might be uncertain and might be several days, weeks or even months.

A. The above is statement is correct

B. The above statement is incorrect

Answer A

7. Reorder level is the level of inventory at which a new order for the item should be placed with the supplier.

A. True

B. False

Answer A

8.  There are four methods of government procurement. Which is not one of these methods?

A. Assistance

B. Sealed bidding

C. Competitive proposals

D. Acquisition

Answer D

9.  Which is not a consideration in a make or buy decision?

A. Cost factors

B. Sales volume

C. Existence of sufficient administrative / technical personnel

D. Political and social factors with the organization

Answer B

10.  The Bid Evaluation process is characterized by all of the following activities except?

A. Evaluation of suppliers financial resources

B. Ability to comply with technical specifications

C. Delivery schedule and cost factors

D. Competitors method of sourcing

Answer D

11.  __________ is a written order directing the contractor to make changes according to the provisions of the contract documents.

A. Change order / purchase order amendment

B. Contract order modifications

C. Contractor claim

D. Owner directive

Answer A

Inventory Management MCQ Multiple Choice Questions with Answers

 

1.  The costs associated with inventory is/are

A.  Purchase price of the inventory

B.  Re-order costs

C.  Inventory holding costs, Shortage costs

D.  All of the above

Answer D

2.  In ABC analysis which inventory is classified into category ‘A’ items? 

A.  Annual consumption cost is around 15-25% 

B.  Annual consumption cost is around 70-80% 

C.  Annual consumption cost is around 5-10%

D.  Annual consumption cost is around 50%

Answer B

3.  Shortage costs of inventory include

A.  Lost profit on sale

B.  Future loss of profit due to loss of customer goodwill

C.  Costs due to production stoppage due to shortage of raw materials

D.  All of the above

Answer D

4.  Cycle inventory helps in

A.  Finding out the amount of stock required during a finite period in order to move the materials from one location to another

B.  Taking advantage of economies of scale and reducing cost within the supply chain

C.  Taking care of any special event that does not occur on a regular basis

D.  All of the above

Answer B

5.  Re-order costs are the costs of making orders to purchase a quantity of a material item from a supplier. They include costs such as:

A.  The cost of delivery of the purchased items, if these are paid for by the buyer

B.  The costs associated with placing an order, such as the costs of telephone calls

C.  Costs associated with checking the inventory after delivery from the supplier

D.  All of the above

Answer D

6.  Inventory holding costs include:

A.  Cost of capital tied up

B.  Insurance costs

C.  Cost of warehousing, obsolescence, deterioration and theft

D.  All of the above

Answer D

7.  Buffer/safety inventory – the basic level of inventory kept for emergencies. A buffer is required because both demand and lead time will fluctuate and predictions can only be based on best estimates.

A.  The above statement is correct

B.  The above statement is incorrect

Answer A

8.  The inventory which is dependent on alternative modes of transportation is known as

A.  Safety inventory

B.  Pipeline inventory

C.  Cycle inventory

D.  Seasonal inventory

Answer B

9.  In ABC analysis which inventory is classified into category ‘B’ items? 

A.  Annual consumption cost is around 15-25%

B.  Annual consumption cost is around 70-80%

C.  Annual consumption cost is around 5-10%

D.  Annual consumption cost is around 50%

Answer A

10.  The best strategy of minimizing the amount of safety inventory to be kept in a store without hurting the level of customer service is

A.  Minimizing the cycle service level

B.  Reducing the supply lead time

C.  Minimizing the uncertainty inherent in supply

D.  Minimizing the uncertainty inherent in demand

Answer C