Purchasing & Procurement Flashcards
7 cards from real CLT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Purchasing & Procurement flashcards as text
What is value analysis in procurement?
Answer: A systematic review of purchased products to find less costly substitutes without sacrificing function
Value analysis examines the function of purchased items to identify ways to achieve the same or better performance at a lower total cost.
What does 'FOB Origin' mean in shipping and procurement terms?
Answer: The buyer assumes ownership and responsibility for freight costs at the point of origin
FOB (Free On Board) Origin means the buyer assumes title and transportation risk as soon as goods leave the seller's facility and is responsible for all freight costs.
What is a standing order in procurement?
Answer: A recurring order for the same goods at regular intervals with pre-set terms
A standing order automates the recurring purchase of regularly consumed items at predetermined quantities and intervals, reducing administrative workload.
What is the primary purpose of receiving inspection in procurement?
Answer: To verify that incoming shipments match the purchase order in quantity, quality, and condition
Receiving inspection confirms that delivered goods match PO specifications in terms of item identity, quantity, quality standards, and physical condition.
What does procurement cycle time measure?
Answer: The total elapsed time from identifying a need to having the goods available for use
Procurement cycle time measures the end-to-end efficiency of the purchasing process, from recognizing a need through requisition, ordering, receiving, and inspection.
What is Vendor-Managed Inventory (VMI)?
Answer: An arrangement where the supplier monitors inventory levels and replenishes stock automatically
In VMI, the supplier takes responsibility for maintaining agreed inventory levels at the buyer's location, using shared data to trigger replenishment as needed.
What is a back-order in procurement?
Answer: An unfilled customer or internal order due to insufficient stock on hand
A back-order occurs when demand exceeds available stock, creating an unfilled order that will be fulfilled once inventory is replenished from the supplier.