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Test L5M5 Vce Free, PDF L5M5 VCE

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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q34-Q39):

NEW QUESTION # 34
McKesson is a leading healthcare company specializing in wholesale medical supplies and equipment, pharmaceutical distribution, and healthcare technology solutions. Recently, public hospitals placed an urgent request for medical supplies. Which of the following is NOT a method for identifying urgent orders?

  • A. Develop a standardized order policy to manage urgent requests, including appropriate cost allocation
  • B. Establish economic order quantities (EOQ) based on profit margins
  • C. Assess supply chain capability
  • D. Identify strategically important customers and leverage goodwill for commercial renegotiations

Answer: B

Explanation:
The correct answer is Option B. A company should establish a minimum order quantity (MOQ) rather than an economic order quantity (EOQ) based on profit margin. MOQ is the minimum order amount set by a supplier or retailer, whereas EOQ determines the optimal order quantity to meet customer demand while minimizing holding and ordering costs.

Reference: LO-1.4; Page 113; Demand Management and the need for urgent orders


NEW QUESTION # 35
In the power dominance model, which factor is most likely to strengthen the buyers' power relative to suppliers?

  • A. High switching costs for buyers
  • B. A small number of suppliers for a large number of buyers
  • C. Low price sensitivity among buyers
  • D. High availability of substitute products

Answer: D

Explanation:
Choice D is the correct answer. When numerous substitute products are available, buyers can easily switch suppliers if dissatisfied, increasing their bargaining power in negotiations.
Incorrect answer:
Choice A- This typically increases supplier power, as a limited number of suppliers can dictate terms to a larger pool of buyers.
Choice B- This would decrease the power of buyers, as they would be less likely to change suppliers due to the costs involved.
Choice C- If buyers are not sensitive to price, they are less likely to negotiate strongly or switch suppliers based on cost, which decreases their bargaining power.
Reference:
LO-1.4; Page 127-128; Responsible use of power relationships


NEW QUESTION # 36
Which of the following are tools that can be used by procurement professionals to evaluate the sustainability risk of contracts, their relative linkages, complexity and also help to identify potential improvements?
1. Macro environmental audit
2. Supplier preferencing
3. Portfolio analysis
4. Supply chain mapping

  • A. 2 and 4 only
  • B. 1 and 3 only
  • C. 1 and 2 only
  • D. 3 and 4 only

Answer: D

Explanation:
Option 3- Portfolio analysis (e.g., Kraljic Matrix) categorizes purchases based on risk and value. It highlights complexity and prioritizes contracts needing attention but is less focused on sustainability unless explicitly incorporated into criteria.
Option 4- Supply chain mapping provides a visual representation of the supply chain, identifying sources of risk, including sustainability challenges. This is a direct and practical tool for assessing the complexity of contracts, linkages, and areas for improvement.
The most relevant tools for assessing sustainability risks and complexities in contracts are portfolio analysis and supply chain mapping. Therefore, the correct answer is Choice C.
Incorrect answer:
Option 1- This tool involves assessing external factors such as political, economic, social, technological, legal, and environmental (PESTLE) influences on procurement activities. It helps identify sustainability risks associated with external conditions, but it is not contract-specific.
Option 2- Supplier preferencing evaluates how suppliers perceive a buyer's business, determining whether the buyer is a core, strategic, nuisance, or exploitable customer. While useful for relationship management, it does not directly assess sustainability risks or contract linkages.
Reference:
LO-2.1; Page 155-163; Assess methods to achieve ESG standards to secure ethical and sustainable supply chains


NEW QUESTION # 37
A Fair Trade-certified coffee cooperative located in a rural area is undergoing an audit to assess its compliance with Fair Trade standards. During the audit, several non-compliance issues are identified, requiring immediate corrective action to align with International Labour Organization (ILO) standards.
For each identified breach, match the corresponding Fair Trade Principle with the most relevant ILO Standard by selecting the appropriate option and placing it in the table below.
Breach 1: Workers in the coffee processing plant are exposed to prolonged noise levels during their shifts. However, many employees do not have or are not using proper hearing protection, raising serious concerns about potential hearing damage.
Breach 2: A significant number of workers, particularly local laborers, receive wages below the living wage threshold. This has resulted in financial hardship for their families, despite the cooperative's Fair Trade certification.
Breach 3: The cooperative is engaged in environmentally harmful waste disposal practices, frequently dumping waste into nearby streams. This has led to increasing concerns among local communities and environmental advocacy groups regarding the negative impact on the local ecosystem.
Breach 4: The cooperative exhibits gender-based employment disparities, where women are not appointed to certain roles, particularly managerial and supervisory positions. Additionally, the required uniforms for these roles fail to accommodate women, further restricting their opportunities due to health and safety regulations.

  • A. Respect to the environment: Employers must adopt practices that reduce environmental impact and ensure that the working environment does not harm the local ecosystem
  • B. Good working conditions: Workers must be provided with a safe working environment that meets all health and safety standards, including protective equipment
  • C. No discrimination, gender equity, freedom of association: Employers must ensure gender equality in hiring practices and provide equal opportunities for all workers, regardless of gender.
  • D. Fair Payment: Workers must receive fair wages that meet the minimum living wage requirements.

Answer: A,B,C,D

Explanation:

Good Working Conditions → A) Workers must be provided with a safe working environment that meets all health and safety standards, including protective equipment. The Fair-Trade principle of good working conditions emphasizes that workers should have access to a safe, healthy, and supportive work environment. ILO Principle A aligns with this by requiring safety measures such as protective equipment to ensure worker well-being. Fair Payment → C) Workers must receive fair wages that meet the minimum living wage requirements.


NEW QUESTION # 38
Which of the following scenarios best illustrate instances of bribery?

  • A. During the audit of a luxury goods distributor, the auditor was asked to take a pen home as a gift. After checking organizational policy, the auditor accepted the gift
  • B. A buying organization excludes certain bidders from a high-value tender on the basis that these bidders have not detailed what environmental protection measures they would take
  • C. Upon landing at Dhaka Airport, the customs official informs that a 'standard processing fee' of $20 is required to allow entry into the country upon which a receipt for payment will be given
  • D. A supplier has just sent the procurement official her invoice for approval. Included in her expenses is a large round sum figure for 'client entertainment' without any price breakdown

Answer: D

Explanation:
Choice B- 'Commercial organisations' commit an offence if they, or any person associated with them, bribes another person intending to obtain or retain business or a business advantage. The purpose of the expenditure is key, not necessarily the amount or what is being purchased. The extent to which the expenditure is incidental is also a factor. An itemised invoice providing a breakdown of the expense will be useful, along with further enquiries of the supplier. As there is no price breakdown, it is a valid reason to suspect the expense and is a form of bribe.
Incorrect answer:
Choice A- It is an offence to bribe another person or to be bribed. As per Bribery Act 2010, failing to prevent a bribe being paid to obtain or retain business or a business advantage is an offence. In this situation, the policy regarding acceptance of gifts was ahered to and is not bribery.
Choice C- Bribing a foreign official is an offence under the Bribery Act 2010. It is important to determine whether the fee is genuine or not; it should be accompanied with official notices and a receipt for payment. As the official informs it is a "standard processing fee" with documentary eveidence like a money receipt, it is not a case of bribery.
Choice D- As the requirement for the buying organisation was to detail environtmetal protection measures for a tender, the buying organisation has the right to reject bidders on this basis. This is not a form of bribery in any way.
Reference:
LO-1.1; Page 47-48; Issues impacting ethical and sustainable procurement and supply: modern slavery, bribery, corruption, fraud and human rights infringements


NEW QUESTION # 39
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