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 Economic Order Quantity (EOQ)?
Answer: The formula that determines the optimal order size to minimize total inventory costs
EOQ is the optimal order quantity that minimizes the combined total of ordering costs and inventory holding costs, balancing these two competing factors.
What is a Request for Proposal (RFP) in procurement?
Answer: A document soliciting detailed proposals from suppliers for goods or services
An RFP is a formal document sent to potential suppliers requesting detailed proposals including price, approach, and qualifications for fulfilling a specific requirement.
What does 'sole source' procurement mean?
Answer: Purchasing from one vendor without competitive bidding when no alternatives are available or justified
Sole source procurement occurs when a purchase is made from a single supplier without competitive bidding, typically due to unique capabilities, proprietary products, or urgent need.
What is a 'three-way match' in procurement and accounts payable?
Answer: Verifying that the purchase order, receiving report, and invoice all agree before authorizing payment
The three-way match is an internal control that verifies the purchase order, receiving report, and supplier invoice all correspond before authorizing payment.
What is a vendor scorecard primarily used for in procurement?
Answer: Measuring and monitoring supplier performance over time using quantifiable metrics
A vendor scorecard tracks key performance indicators (KPIs) such as on-time delivery rate, quality defect rates, and responsiveness to systematically evaluate suppliers.
What is safety stock in the context of procurement and inventory management?
Answer: Extra inventory held to protect against stockouts caused by demand variability or supply delays
Safety stock is buffer inventory maintained above the average demand level to protect against unexpected demand spikes or supplier delivery delays.
What is a Preferred Vendor List (PVL)?
Answer: A pre-approved list of suppliers that have met qualification criteria and are authorized for purchasing
A Preferred Vendor List contains suppliers that have been vetted and approved based on criteria such as quality, pricing, reliability, and financial stability.