Question 1

Product development consists of various stages, including planning and analysis, design development, pre-production, production and maintenance. At which stages the opportunities for cost reduction will be the greatest?

1. Planning stage

2. Pre-design stage

3. Detail design stage

4. Production stage

5. Logistics support stage

Options :

A :

1 and 4 only

B : 2 and 5 only

C : 1 and 2 only

D : 2 and 3 only

Answer: C

Question 2

A procurement manager is writing a conformance specification for a non-core component. She thinks that if the requirements in specification are higher than ISO standards, her company can achieve greater cost-savings. Is the procurement manager's opinion correct?

Options :

A : No, because higher specification may incur additional costs for the buyer

B : No, because higher requirements in specification, the greater bargaining power of buying organisation

C : Yes, because optimising the specification is the only method to achieve value for money

D : Yes, because higher requirements will help buying organisation find the best supplier

Answer: A

Question 3

Housing Ltd is inviting a number of contractors to a tender for the construction of a commercial building. In the attachment to the invitation to tender, there is a document which describes the required materials and installation methods. This document is known as...?

Options :

A : Functional specification

B : Performance specification

C : Prescriptive specification

D : Drawings

Answer: C

Question 4

Given that Wilkinson Ltd operates in a market where customers are highly budget-conscious, what is the likely implication for the bargaining power of suppliers and buyers?

Options :

A : Suppliers’ bargaining power will increase, while buyers’ bargaining power will decrease.

B : There will be no significant change in the bargaining power of either suppliers or buyers.

C : Both suppliers’ and buyers’ bargaining power will decrease.

D : Suppliers’ bargaining power will decrease, while buyers’ bargaining power will increase.

Answer: D

Question 5

CUFL is an umbrella manufacturer in China. Its procurement department often requests cost breakdown from the supplier. After receiving documents and analyzing the detailed costs, they find that all the cost components and the profit look reasonable. What should CUFL procurement manager do next to achieve better price? Select TWO that apply.

Options :

A : Price analysis

B : Cost estimating

C : Value engineering

D :

Competitive assessment

E : Quality Function Deployment

Answer: A,C