Purchasing Process Quiz

What is the primary function of the purchasing process in a business environment?

• To increase profit margins

• To acquire goods and services needed to achieve organizational goals

• To replace inventory with alternative items

• To maintain a relationship with competitors

What is a major distinction between procurement and purchasing?

• Procurement includes additional activities like expediting and logistics

• Purchasing focuses solely on employee management

• Procurement excludes activities like sourcing suppliers

• Purchasing is broader in scope than procurement

Which of the following is NOT one of the objectives of purchasing?

• Maintaining uninterrupted materials flow

• Maximizing inventory levels

• Developing reliable supplier relationships

• Buying materials at competitive prices

What does the term 'forward buying' primarily involve?

• Speculating on price increases to make a profit

• Committing to future purchases based on anticipated needs

• Maintaining zero inventory

• Making payments after receiving goods

What type of purchasing involves setting up agreements to supply specific items at pre-determined prices over a period?

• Reciprocity

• Blanket Orders

• Speculative Buying

• Zero Stock Buying

In vendor management, what is the purpose of a Vendor Management System (VMS)?

• To replace vendors with internal suppliers

• To automate and manage staffing services and procurement processes

• To exclusively manage vendor payments

• To eliminate competitive tendering

What is the primary goal of vendor development?

• To negotiate lower wages for suppliers

• To replace existing vendors with international suppliers

• To develop cost-effective and reliable alternative sources of supply

• To prioritize profitability over quality

What is the term used for calculating costs associated with money paid before goods are received?

• Freight Charges

• Vendor Rating

• Cost of Money

• Manufacturing Lead Time

Which pricing strategy aims to maximize sales through high-volume purchases at a lower price?

• Prestige Pricing

• Profitability Pricing

• Competitive Pricing

• Volume Pricing

What is a key characteristic of 'zero stock buying'?

• Purchasing materials in bulk to avoid shortages

• Holding inventory exclusively at the buyer's premises

• Ensuring materials are delivered only when required

• Relying entirely on speculative purchasing