Modular Learning System – Supply Chain

Management

Mock Exam - Module 2

Specifying Requirements and Planning Supply

Candidate Registration No

Time – 2 Hours Total Marks - 200

1
Section A ( Total 60 Marks )
This section has a total of 25 questions. The first fifteen questions are worth of 2
marks each and the last ten questions are worth 3 marks each.

Read each question carefully, because some questions have only one correct answer
while other questions may have more than one correct answer. In the case of
questions with multiple correct answers, you will lose marks if you enter an answer
which does not apply. However, the minimum mark for any question will be zero, and
will never be negative.

Sub Section A.1 ( 30 Marks )

1. “The Risk of NOT correctly specifying product and services are often balanced out by the flexibility
of not being bound by such specifications”

2. Which of the following purchases items required by a furniture factory is a capital requirement for
that company? ( Only one correct answer possible )

a) Timber
b) Forklift Trucks.
c) Spare Parts for Tools
d) Paint
e) None of the above answer in this list is correct

3. “Purchase requisitions for maintenance, repair and operations (MRO) purposes are generally
classified as non-productions purchases”

4. Which of the following aspects of a purchase can be specified?

( One or more correct answers possible)

a) Quantity
b) Supplier Service and Responsiveness
c) Delivery Requirements
d) Required product or service
f) None of the above answer in this list is correct

5. “ The concept of ‘implicit quality’ is usually an insufficient form of product specification”

2
6. Which of the following statements about branded products are correct?
( One or More correct answers possible )

a) Branded Products are generally more expensive than unbranded products.

b) There are rarely two or more competing brands of a particular type of product
c) The same branded products will always have the same price across all distribution channels.
d) Association with a recognized brand name may help to differentiate your company products
e) None of the above answer in this list is correct

7. What is a trademark ? ( Only one correct answer possible )

a) The brand used by a particular individual tradesperson or craftsperson when finishing a hand-
made item.
b) An abbreviated form of a composition specification that indicates the main ingredients or
components of an item.
c) A seal used by government regulators to indicate that a product has been approved for sale for
a particular purpose.
d) A distinctive symbol, picture or word written in a certain style that a supplier uses to identify its
product.
e) None of the above answer in this list is correct

8. Which one of the following types of specification should be used when innovation is valued by the
purchaser? ( Only One correct answer possible )

a) Brand Name
b) Technical Specification
c) Supplier Code
d) Performance Specification
e) None of the above answers in this list is correct

9. “In most situations Purchasers should use external standards instead of internally-developed
specifications whenever possible”

10. Which of the following are examples of dependent demand?

( One or more correct answers possible )

a) Warehouse space rented by a company in Vietnam that manufactures shoes for export to USA
b) A new headquarters building for a software company
c) Typists, chairs purchased by a law firm
d) A high-definition plasma television for a company’s boardroom
e) None of the above answer in this list is correct
3
11. Which of the followings are forms of demand forecasting that are based on expert opinion
( One or more correct answers possible )

a) Market Testing
b) Scenario Analysis
c) Causal methods
d) Delphi Technique
e) None of the above answer in this list is correct

12. “It is quite common for purchasers to specify delivery as soon as possible” and for suppliers to
quote delivery with a tolerance, such as 10-14 weeks”. These are useful practices for dealing with
the uncertainty that can be involved in international transportation”

13. Which of the following are good practices for specifying requirements
(One or more correct answers possible )

a) Involve purchasing & Supply at an early stage.

b) The process should always be initiated by purchasing & Supply
c) It should be a cross functional process
d) Keep suppliers out of the specification process
e) None of the above answer in this list is correct

14. Which of the followings is NOT a factor to consider when establishing priorities for the review of
purchase specifications? (Only One correct answer possible )

a) How long has the current specification been in use?

b) It is a new specification?
c) Did the buyer fill in the correct documentation to request the review?
d) How quickly is the technology for the item changing?
e) None of the above answer in this list is correct

15. “One of the purposes of the formal requisition and authorization process is to notify the finance
function of an upcoming financial commitment”

4
Sub Section A.2 ( 30 Marks )
1. Which of the following gives the best definition of “Operational Requirements”?
( Only one correct answer possible )

a) Those items used only as materials or components of the goods or service sold by the company,
and for internal consumption
b) Those items needed to keep the organization running on a day –to-day basis.
c) Those items not consumed in the day-to-day running of the origination
d) Those items used only for internal consumptions and not as materials or components of the
goods or service sold by the company
e) None of the above answers in this list is correct.

2. “If the purchaser uses specification that do not prescribe how an item is to be made and the
product does not perform as required, then the purchase will generally be responsible for any
failure”

3. The Concept of “Implicit Quality” means that … ( Only one correct answer possible )

a) It is never necessary for the purchaser to specify the quality of purchase requirements.
b) If any purchase item is not of a high enough standard, the supplier gives a money back offer.
c) The purchase item in question has been purchased from a recognized brand or trade name.
d) When you buy a simple item whose function is generally understood, you can expect it to
perform that function.
e) None of the above answers in this list is correct.

4. Indicate the most appropriate type of product specification to use in each of the following
situations ( Each Answer may be used only once)

A. When the purchase item is of a complex nature 1. Sample

B. When there is a need to differentiate a product 2. Brand Name
C. When it is difficult to describe the purchase item 3. Technical Specification

5. Which of the following is a formula for multiple linear regression ( Only one correct answer possible )

a) Y = c ln(X) + b
b) R squared = 1 – (SSE / SST)
c) D = a – (b1 x P) – (b2 x t )
d) D = a – ( b x P)
e) None of the above answer in this list is correct
5
6. “ The purchasing & Supply function should encourage users to always look for the “best Available”
when they are developing purchase specifications”

7. Select the word that best fits the blank space in the following statement
“ An Item’s …………………. Value is related to the desirability of owning that item”
( Only one correct answer possible)

a) Exchange
b) Esteem
c) Reuse
d) Loss
e) None of the above answer in this list is correct

8. If statistical demand forecasts are like driving a car using only the rear-view mirror because they are
based on past date, then deterministic overrides are like
( Only one correct answer possible )

a) Bumps in the road, causing variations in progress

b) Road signs up ahead, warnig the driver of something that is coming up
c) An unexpected bend, causing the driver to go off the road
d) Stop signs, telling the driver to abandon the use of forecasting altogether
e) None of the above answers in the list is correct

9. When budgeting for operation requirements, when is it appropriate to use the current price of an
item ( One or More correct answers possible )

a) The buyer has the expertise to predict what is likely to happen to supply market trends.
b) When the item has a high purchase value
c) When the item has a low purchase value
d) When prices have not yet been fixed by agreement
e) None of the above answers in this list is correct.

10. In basic manual system for requisitioning and authorization, which of the following is a kay
document for instructing the purchasing & Supply function to make a purchase?
( Only one correct answer possible)

a) Bill of materials.
b) Demand forecast
c) Operational budget
6
 d) Profit and Loss account
e) None of the above answer in this list is correct

Section B ( Total 90 Marks )

This section has a total of four questions, all of which have sub-questions. The first two questions are
worth 15 marks each and the last two are worth 30 marks each.

Subsection B.1- 1 ( 15 Marks )

You have been asked to prepare a presentation for your company on the VA / VE approach. Please
answer the following questions.

1. Which of the following gives the best description of the VA/ VE approach
( Only one correct answer possible )
a) It is a structured approach to determining which type of product specification used be used for
a given product.
b) It is a structured approach to prioritizing the areas where most effort should be spent in
developing or renewing specifications.
c) It is a structured approach to budgeting for the cost of product requirements over a particular
period.
d) It is a structured problem- solving approach for developing an optimal solution to a particular
product design requirement.
e) None of the above answer I this list is correct.

2. Place the following phases of the Structured AV/VE approach in the correct order

a) Function Analysis
b) Preparation
c) Speculation
d) Implementation
e) Development
f) Information
g) Evaluation

3. Which definition of value does the VA /VE approach use ( Only one correct Answer Possible)

a) Value = Budget Cost – Actual Cost

b) Value = Output – Input
c) Value = Functions / Cost
d) Value = Budget / Actual Cost
e) None of the above answers in this list is correct
7
4. “ The VA/ VE approach is best carried out at the production stage”

Subsection B.1- 2 (15 Marks )

Please answer the following questions

1. The 80/20 rule means that … ( One or more correct answers possible )

a) About 80% of purchase items cost more than they were budgeted while only 20% cost less than
the budgeted expenditure.
b) About 80% of problems in purchasing & Supply will disappear on their own whereas 20% will
not
c) About 20% of purchase items take up about 80% of expenditure
d) About 80% of purchase items take up about 20% of expenditure
e) None of the above answers in the list is correct

2. With which of the following is the 80/20 rule strongly associated

( Only one correct answer possible )

a) The VA /VE approach

b) Economist Vilfredo Pareto
c) Management Guru Michael Porter
d) Time Series forecasting methods
e) None of the above answers in the list is correct

3. Which of the following should be done when conducting an analysis of purchase expenditure?
( One or more correct answers possible )

a) Add up all of the expenditure for a given item, even if they are to be split amongst different
suppliers.
b) Include only the expenditures on purchase items for which the purchasing & Supply function
controls the expenditure
c) Grouped related items, even if not identical, that are likely to be purchase from a single supplier
d) Ignore expenditures incurred by individuals, such as travel and related expenses.
e) None of the above answers in the list is correct.

4. “When analyzing purchase expenditure, it is better to use historical purchasing data than to base
the analysis on planned expenditure in the coming year, because the latter is uncertain”

8
5. “Once all expenditures have been identified, the items should be sorted in order of expenditure
from highest to lowest”

Subsection B.2- 1 ( 30 Marks )

Please answer the following questions about forecasting technique

1. Which of the following give the general formula for making a demand forecast for new period using
this method of forecasting ( One or more correct answers possible )

a) New forecast = Past Forecast + alpha x ( Past Forecast Error )

b) New forecast = Actual demand – alpha x ( Past Forecast )
c) New forecast = Alpha + ( Past Forecast – Actual Demand )
d) New forecast = Past forecast + Alpha x ( actual Demand – Past Forecast )
e) None of the above answers in this list correct.

2. The value of alpha in moving exponentially weighted forecasts should be …

( Only one correct answer possible )

a) Any number between Zero and Ten

b) Greater than Zero and less than One
c) Less than Zero and Greater than Minus one
d) Any positive number
e) Now of the above answer in this list is correct.

3. The higher the value for Alpha, the more notice is taken of ( One or more correct answer possible )

a) Past Forecast Errors.

b) Past Demand
c) Expert Opinion
d) Recent Demand
e) None of the above answer in this list is correct

4. Which of the following is the most accurate definition of ‘Bias’ in forecasting?

( Only one correct answer possible )

a) Plotting of trend, seasonal and cyclical demand patterns.

b) Manual alteration of computer- generated forecasts
c) Persistent under – or over – forecasting
d) Combination of expert opinion with statistically – based forecasts
e) None of the above answer in this list is correct.

9
5. “ Bias can occur no matter which statistically –based forecasting methods is used”

6. “ High values of alpha will produce more stable projections”

7. How will raisign the value of alpha affect bias ? ( Only one correct answer possible )

a) It will reduce bias

b) It will have no effect on bias
c) It depends n the nature of bias
d) It will increase bias
e) None of the above answers in this list is correct.

8. “It is easier to recalculate projections for each period using the moving exponentially weighted
forecast method than using the moving weighted average methods”

Subsection B.2- 2 ( 30 Marks )

Below extracts are given from several product specifications used by Auto Suggestion, A company that
manufactures a wide rate of components for the automotive industry.

 Coated mirror glass, Thickness 7mm, Thickness tolerance +/- 1%.....

 Vulcanising System agent containing sulfur as a vulcaniser, and Zinc Carbonate and Sulfenamide
as accelerators, Chemical formula given below….
 Personal Computers, “Dell Latitude” withi Intel Pentium 500 MHz chips …..
 Forklift Trucks with 2 Tonne carrying capacity
 Disc Brakes, UNSPSC 2517 1708 ….
 Operator chairs suitable for working 8 – 10 hours at a high bench….
 20 bales of cotton cloth identical in colour to the piece of cloth enclosed with this order….
 Coil springs, Diameter 75mm x Free Length 150mm, Loaded Length 50mm, Load rate 300 Kgs

Please answer the following questions.

1. Match each product with the type of product specification being used for it.
( Each answer may be used more than once )

A. Coated Mirror Glass 1. Functional Specifications

B. Vulcanising System Agent 2. Technical Specifications
C. Personal Computers 3. Supplier / Industry Code Specifications
D. Forklift Trucks 4. Brand Name
E. Disc Brakes 5. Sample

10
 F. Operator Chairs 6. Composition Specifications
G. Cotton Cloth
H. Coil Springs

2. For which of the following products dot the specification carry risk that they might limit the
number of suppliers able to supply ( One or more correct answer possible )

A. Forklift Trucks
B. Coil Springs
C. Personal Computers
D. Operator Chairs
E. Coated Mirror Glass
F. Disc Brakes
G. None of the above answers in this list is correct.

3. For which of the following products are the specification based on what is to be achieved rather
than on how it is to be achieved ? ( One or more correct answers possible )

A. Forklift Trucks
B. Vulcanising System Agent
C. Operator Chairs
D. Coil springs.
E. None of the above answers in this list is correct.

4. Which of the following is a good reason for using the type of specifications given for personal
computer ( Only one correct answer possible )

A. The buyer is prepared to accept the risk of the design not resulting in the required
performance.
B. Because quality is more important than cost.
C. Because it is difficult to access the quality prier to purchase
D. Because cost is more important than technical performance.
E. None of the above answers in this list is correct.

5. Which type of specification should be used when it is difficult to assess quality prior to purchase
( Only one correct answer possible )

F. Technical Specification
A. Supplier / Industry Code
11
 B. Composition Specification
C. Sample
D. None of the above answers in this list is correct.

Section C ( Total 50 Marks )

This section is worth of 50 marks. The answer(s) must be given in the space provided in this
paper. Read the question carefully before answering. In the case of sub- questions, number
each of your answer accordingly.

It is important not only to understand the difference between various types of product specifications,
but also to know when to use each one. Please answer the following questions.

1. Identify an items purchased by your origanzations ( or one that you are familiar with ) for which
you believe performance product specifications should be used. Give an example of how you
might specify performance for the items. ( 10 Marks )

2. Explain why you think performance specification is suitable for the purchase item you identified in
the previous questions ( 15 Marks )

3. Identify an item purchased by your organization ( or one that you are familiar with ) for which you
believe technical product specification should be used. Describe the technical Characteristics that
you would define in the specification, and give examples of how these characteristics might be
defined for the item ( 10 Marks )

4. Explain why you think technical specification is suitable for the purchase item you identify in the
previous question ( 15 Marks )

12