2.3.2b Procurement, supplier relationships and logistics Quiz: Pearson Edexcel Business, Unit 8

The 20 questions

1. What is procurement in a business?

   • The process of recording the business's sales and profits each month for the accounts team
   • The process of training staff to use the new machines on the production line each year
   • The process of selling finished products to customers at the highest price the market will bear
   • The process of finding, selecting and buying the goods and services a business needs

2. Which factors does a business consider when building a relationship with a supplier?

   • Only whether the supplier advertises on television each year
   • Only the distance between the supplier and the head office
   • Quality, delivery, availability, cost and trust
   • Only the supplier's name and the colour of its logo

3. A supplier is cheap but often delivers late. Which factor of supplier relationships is most affected?

   • Delivery reliability
   • Brand awareness of the business
   • Number of employees in the business
   • Profit margin on finished goods

4. Which is an effect of poor logistics and supply decisions on customer satisfaction?

   • Customers always pay less for products that were delivered on time
   • Customers prefer products to be delivered late so they can wait longer
   • Customers are unaffected if the business has a large logo on its vans
   • Late or missing deliveries can make customers switch to a competitor

5. A business's reputation falls after a supplier provides faulty components. Which element of procurement has failed?

   • Cost of staff training
   • Quality of inputs
   • Level of director pay
   • Speed of marketing

6. Logistics includes which activities?

   • Recruiting and training the staff who work in the sales department each year
   • Designing the logo and packaging of a product so that it stands out on the shop shelf
   • Moving, storing and delivering goods from suppliers to production and to customers
   • Setting the interest rate that the business pays on its bank loans and overdrafts

7. A business pays £4,800 per year to a supplier that offers a 5% discount on orders above £20,000. A new order of £24,000 qualifies. What discount is received, in pounds?

   • £480
   • £960
   • £1,200
   • £2,400

8. Why might a business prefer a supplier that is located close to its factory?

   • Local suppliers cannot be replaced, so the business is locked in permanently
   • Close suppliers never make mistakes or deliver faulty goods
   • Local suppliers always have the lowest possible prices for every product
   • Shorter delivery times and lower transport costs help keep stock moving

9. Which describes a supplier relationship built on trust?

   • Both parties share information and rely on each other to keep promises
   • The supplier is chosen only because it offers the lowest price on the day
   • The business checks every delivery and assumes the supplier is always dishonest
   • The business pays a supplier only after every product has been sold to a customer

10. Which is a trade-off a business may face when choosing a supplier?

    • A more expensive supplier always provides worse quality than a cheaper one
    • Choosing any supplier removes all risks from the business's supply chain
    • A cheaper supplier may offer lower quality or less reliable delivery
    • A cheap supplier always makes the business more reputable with customers

11. A business orders 400 units with a supplier that takes 3 days to deliver. Stock is used at 50 units per day. Which is the best reason to reorder early?

    • Stock will run out before a new delivery arrives if the order is placed late
    • Stock used at 50 units a day means the business needs no stock for three days
    • Reordering early avoids the need for any quality checks on the goods
    • The supplier will raise its prices if the order is placed on time

12. Which relationship is an example of a long-term supplier relationship?

    • A business buys once from a supplier and then never returns to it for further orders
    • A business changes supplier every week in order to chase the lowest available price
    • A business buys from whichever supplier is cheapest on each individual order it places
    • A business and supplier agree a contract for regular deliveries over several years

13. What is the impact of logistics decisions on costs?

    • Logistics decisions only affect the cost of the business's advertising budget
    • Logistics decisions have no effect on costs because they are only about marketing
    • Logistics decisions reduce costs in every case because they are always cheaper
    • Transport and storage choices affect the total cost of getting products to customers

14. A business's logistics are unreliable and customers receive orders late. Which effect on the business is most likely?

    • An immediate rise in profits because customers wait for the product
    • Reduced customer satisfaction and possible damage to its reputation
    • Higher demand because customers want to order again to get it on time
    • Lower costs because the business stops paying for transport

15. A business chooses a supplier with a higher price but guaranteed availability. What is the main reason?

    • To secure the lowest possible price per unit of stock bought each month
    • To remove the need to hold any stock at all in the business's warehouse
    • To avoid shortages that would stop production or disappoint customers
    • To make sure the supplier pays the business for each order that is placed

16. Which is a supplier risk a business should plan for?

    • The supplier never changes its prices during any period of years
    • The supplier goes out of business and cannot deliver the goods needed
    • The supplier offers free stock for life to every customer it has
    • The supplier always delivers exactly on time for every single order

17. What does 'availability' mean in a supplier relationship?

    • The supplier can provide the goods a business needs when they are needed
    • The supplier has agreed to accept payment in a different currency each month
    • The supplier is able to advertise its products on a national television channel
    • The supplier's offices are open to the public on every day of the year

18. A business has two suppliers. Supplier X costs £5 per unit and is 98% reliable. Supplier Y costs £4.50 per unit and is 85% reliable. What is the strongest reason to choose Supplier X?

    • Its price is higher, so it must have better quality by definition
    • Its higher reliability reduces the risk of stopping production
    • Its price is higher, so the business earns more profit on each unit
    • Its reliability figure means it charges less for each delivery

19. Explain why a business might keep more than one supplier for the same input.

    • To reduce the risk of supply stopping if one supplier fails or is late
    • To make sure that every supplier raises its price at the same time
    • To remove the need to communicate with any supplier about deliveries
    • To give each supplier the same amount of business in every single year

20. Which is a benefit of a business holding buffer stock for a store that sells umbrellas in a rainy season?

    • It ensures that umbrellas never go out of fashion with customers
    • It removes the need to forecast demand for the umbrellas at all
    • It means the umbrellas never need to be paid for by the business
    • It can meet a sudden surge in demand without running out of stock

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