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Principles Of Purchasing B(Pscm 210) Question Paper

Principles Of Purchasing B(Pscm 210)

Course:Accounting, Finance& Investments

Institution: Kenya Methodist University question papers

Exam Year:2012

TIME: 2 HOURS
Instructions:
Answer question one and any other two questions
Question One
Distinguish between purchasing and procurement.
(4mks)
Briefly describe two remedies available to the buyers if a supplier breaches a condition of contract.
(6mks)
List the five areas that buyers should follow that are mentioned as guidance in the CIPs ethical code.
(5mks)
Explain five advantages of standardization.
(10mks)
The buyer must understand whether a supplier employs any unethical practice. Name five unethical practices. (5mks)

Question Two
Explain two ways in which a buyer can measure a supplier’s delivery performance.
(6mks)
The total cost of ownership is made up of various costs. The cost equation consists of four costs one of which is purchase price. Explain two of the other costs.
(6mks)
Suggest four reasons why suppliers might offer a high price.
(4mks)
Identify four reasons why holding stock increases an organization’s costs.
(4mks)

Question Three
You have applied for the position of supply chain manager and after an initial interview you have been shortlisted to attend a final selection day at the company. The company are facing increased purchase costs, increase in inventory and lower margins due to increased competition for their finished products. The company has identified the lack of standardization as being an important factor and therefore want the new supply chain manager to implement standardization.
Required:
Define the term standardization.
(2mks)
Describe four costs that this company may be incurring through a lack of standardization.
(8mks)
Describe three possible causes for the lack of standardization by this company.
(6mks)
(i) Identify who should be involved in a standardization programme. (2mks)
ii) Give a reason why they should be involved. (2mks)

Question Four
You are the chief buyer and have been asked to explain the basis of contract information to a group of Junior buyers.
A contract requires that the parties reach agreement. In order for a contract to be legally binding, a number of elements are required. Name five of these essential elements.
(5mks)
Provide a brief explanation of the importance of each of these elements.
(15mks)

Question Five
The ability of a buyer within an organization to obtain the best value for money is often dependent on the specification provided by the user. There are various ways in which specifications can be provided
Explain what is meant by the term "brand name" when used in a request for quotation.
(2mks)
Briefly explain three disadvantages in a buyer in using brand names when requesting quotations.
(6mks)
Briefly explain two advantages to a buyer in using brand names when requesting quotations.
(6mks)
(i) Explain the meaning of the term ’functional specifications’.
(2mks)
ii) Explain two advantages for a buyer in using a functional specification when requesting quotes. (6mks)

Principles Of Purchasing B(Pscm 210) Question Paper

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