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NEW QUESTION # 113
What is a risk of pre-warning a supplier that you will conduct an audit of their facilities?
Answer: C
Explanation:
A risk of pre-planning an audit is the supplier has time to prepare for it. It's a good thing in that they can get their paperwork in order but the downside is they can overprepare so you don't get a realis-tic representation of what they're doing. One way they can do this is coaching staff in what to say to the auditors.
NEW QUESTION # 114
Economic indices track a market's stability and health. One of these indices is the Consumer Price Index (CPI). Which of the following are aspects of the Consumer Price Index? Select TWO that apply.
Answer: D,E
Explanation:
The Consumer Price Index (CPI) measures the average change over time in the prices paid by consumers for a market basket of goods and services. It reflects price variations in specific geographical locations and tracks the weighted average prices of selected commodities, providing insights into inflation and cost of living.
Exact Extract from Study Guide:
"The Consumer Price Index (CPI) tracks variations in prices for a range of consumer goods and services over time, in a particular geographic location."
NEW QUESTION # 115
A buyer is only interested in working with suppliers who have strong Environmental and Social Governance practices. It is therefore using ethical criteria as supplier selection stage to determine which suppliers to work with. Which of the following statements is true?
Answer: C
Explanation:
A supplier who follows the CIPS Code of Conduct is more likely to meet the buyer's needs is the correct answer.
The other options are wrong:
1) Compliance with Codes of Conduct from professional bodies is optional. E.g. CIPS - no organi-sation is forced to comply with CIPS.
2) Unethical behaviour is not impossible to detect, it may be difficult but with correct due diligence and things like audits it's completely possible
3) ISO 14001 is quality management so is irelevent.
NEW QUESTION # 116
Which of the following information can facilitate international imports and exports?
* Product quality statistics
* Certificate of origin
* Purchase order
* Supplier financial position
Answer: D
Explanation:
International trade relies on proper documentation. A certificate of origin (2) confirms where goods are produced, often required for customs clearance and to determine tariffs. A purchase order (3) provides formal buyer intent and agreement of terms, forming the basis for customs and logistics processes. Product quality statistics (1) and supplier financial position (4) are relevant for supplier selection and monitoring but not directly for import/export processes. Responsible sourcing requires procurement professionals to ensure correct documentation is used to avoid delays, penalties, or breaches of trade regulations.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - documentation in international sourcing.
NEW QUESTION # 117
Which of the following financial ratios would indicate a supplier's potential exposure risk to a steep rise in inflation?
Answer: A
Explanation:
The correct answer is 'gearing ratio'.
Gearing measures how much of a company's funding is based on long-term debt or loans- this would be affected by a steep rise in inflation. If a company has a mortgage on their offices or facto-ry and they need to remortgage and inflation has gone up a lot- they'll be paying a lot more on their mortgage. This will severely effect the gearing ratio as they'll have more outgoings than incoming.
Gross profit margin COULD be affected by inflation, for example if you've got hyper-inflation and the country goes into recession and people stop buying your product. However, this answer isn't al-ways right and depends on many factors- the industry, the product, the company etc, so for the purpose of CIPS should be discounted.
There are many industries which are immune to inflation.
NEW QUESTION # 118
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