[UPDATED 2023] Free CIPS L4M2 Exam Questions Self-Assess Preparation [Q10-Q31]

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[UPDATED 2023] Free CIPS L4M2 Exam Questions Self-Assess Preparation

L4M2 Free Sample Questions to Practice One Year Update

Preparing for the L4M2 exam requires a significant amount of study and practice. CIPS offers a variety of study materials, including textbooks, e-learning modules, and practice exams. Candidates should also seek out opportunities to gain practical experience in procurement and supply chain management, as this will help them to better understand the concepts covered in the exam.

CIPS L4M2 (Defining Business Needs) Exam is a certification exam designed for procurement and supply chain professionals who are seeking to enhance their knowledge and skills in defining business needs. L4M2 exam is part of the Chartered Institute of Procurement and Supply (CIPS) Level 4 Diploma in Procurement and Supply program, which is a globally recognized qualification for procurement professionals. L4M2 exam covers various topics, such as understanding business requirements, identifying stakeholders, and developing a business case, among others.

NEW QUESTION 10
Which of the following factors might prompt an organisation to procure an alternative product? Select THREE that apply:

Brand loyalty

Relative value to money between options

Buying organisation’s propensities to change

Easy access to distribution channel

Threat of retaliation

Switching cost

NEW QUESTION 11
Which of the following agencies can produce a technical standard?

House of Lords

Marketing department

BSI

Department of State

NEW QUESTION 12
Daytona Ltd is developing a new product which is more environmental friendly. Though the objectives are set, the project team has no idea on which functions will be customers’ favourites. Which of the following will help them decide the ‘should-have’ functions of the new product?

Kano model

Taguchi method

Thomas-Kilmann model

Six Sigma

NEW QUESTION 13
Which of the following specific markets is most likely to have the lowest entry barrier?

Retail

Manufacturing

Financial

Agriculture

Services

NEW QUESTION 14
Which of the following are the fair and reasonable comparators in price analysis? Select TWO that apply:

Pricing formula

Price indices

Strike price

Cost driver

Competitive bidding

NEW QUESTION 15
Sabic is a petrochemical manufacturer. It wants to digitalise its operation and is looking for new IT system. The procurement manager approaches this matter with a through-life specification. He supposes that stating “good quality” in the specification will be enough for quality standard section. Is the procurement manager’s thought appropriate?

Yes, because the specification should be concise.

No, because “good quality” is an in-house jargon that suppliers are not familiar with

Yes, because IT sector has its own standard of quality, therefore, suppliers may deliver good quality without any further Explanation:

No, because “good quality” is very ambiguous for suppliers to identify Sabic’s re-quirement

NEW QUESTION 16
What does the acronym RAQSCI stand for?

Relationship, Ability, Quality, Service, Cost, Innovation

Regulatory, Availability, Quality, Service, Cost, Innovation

Regulatory, Availability, Quantity, Sustainability, Inventory

Regulatory, Ability, Quality, Service, Cost, Inventory

Relationship, Availability, Quantity, Sustainability, Cost, Innovation

NEW QUESTION 17
To improve the productivity, Plantation Ltd is planning to purchase a tractor, which it has never bought before. The project must be quick to catch up with the next growing season. Leanne, a jun-ior procurement staff at the company, assumes that she could skip market analysis stage to save time. Is this assumption reasonable?

No, the company assesses supplier’s performance solely based on market analysis

Yes, Leanne just needs to purchase the tractor from her friend’s company

No, market analysis will inform the company of the pricing as well as latest technology trends

Yes, the company has extensive experience in purchasing tractor

NEW QUESTION 18
Company A sells a product for $100. The total unit variable costs are $60. Fixed costs as in its ac-count are $20,000. How many products does the company have to sell to achieve break-even point?

600

550

400

500

NEW QUESTION 19
Buyers are more powerful than the supplier when they are purchasing from monopoly market. Is this statement true?

False, the buyer will be unable to track and manage supplier’s performance

False, buyer will lack negotiating power on cost if the supplier has a monopoly in the market

True, suppliers in monopoly market produce homogenous products

True, in monopoly market, buyer’s switching costs from the incumbent supplier to an-other are relatively low

NEW QUESTION 20
This is the information on an organisation’s activities over the past year
* Sale were $5,000,000. The value of accounts receivable was $450,000 at the start of the year and $525,000 at the end of the year
* The value of direct costs was $2,500,000 and 75% of this was bought on credit
* Indirect costs were $3,000,000 and 25% of this was bought on credit
* During the year the organization spent $1,500,000 on new assets and sold $150,000 of old assets. $1,000,000 of the spend on assets was funded by a bank loan
* The organization declared a dividend of $200,000 at the end of the year but this was not paid for another two months
* Opening balance was $175,000
Which of the following is the bank balance of that organization at the end of the year?

$1,675,000

$1,875,000

$1,700,000

$2,025,000

NEW QUESTION 21
Which type of specification is less time-consuming to develop?

Outcome-based specification

Design specification

Conformance specification

Technical drawings

NEW QUESTION 22
Which of the following might be consequences of over-specification? Select TWO that apply:

Reducing motion waste

Higher cost due to inessential features

Limiting competition in supply market

Lack of essential features

Better contract management

NEW QUESTION 23
Which of the following may allow suppliers free to choose the materials, manufacturing process or delivery process?

Performance specification

Design specification

Technical specifications

Conformance specification

NEW QUESTION 24
Interserve is a construction contractor in UK. When receiving a huge and complex project, Inter-serve’s procurement manager assesses the risks by quantifying them and recommends other stake-holders to plan mitigating actions. Is the procurement manager’s action justified?

No, because no risks can be quantified, therefore the procurement manager’s action is impossible.

Yes, because procurement manager needs to assess the risks to prioritise and mitigate any potential risks

Yes, because all the risks should be quantified and eliminated completely before they happen

No, because embedding the risk into pricing will decrease the company’s competitiveness

Assessing the risks by quantifying them should be done. Even with qualitative risk assessment, quantifying is still important since risks need to be prioritised.
Risk assessment can be qualitative or quantitative. Perform qualitative and perform quantitative risk analysis are two processes within the project risk management knowledge area, in the planning process group. While qualitative risk analysis should generally be performed on all risks, for all projects, quantitative risk analysis has a more limited use, based on the type of project, the project risks, and the availability of data to use to conduct the quantitative analysis.
Qualitative Risk Analysis
A qualitative risk analysis prioritises the identified project risks using a pre-defined rating scale. Risks will be scored based on their probability or likelihood of occurring and the impact on project objectives should they occur.
Probability/likelihood is commonly ranked on a zero to one scale (for example, .3 equating to a 30% probability of the risk event occurring).
The impact scale is organizationally defined (for example, a one to five scale, with five being the highest impact on project objectives – such as budget, schedule, or quality).
A qualitative risk analysis will also include the appropriate categorization of the risks, either source-based or effect-based.
Quantitative Risk Analysis
A quantitative risk analysis is a further analysis of the highest priority risks during a which a numerical or quantitative rating is assigned in order to develop a probabilistic analysis of the project.
A quantitative analysis:
– Quantifies the possible outcomes for the project and assesses the probability of achieving specific project objectives
– Provides a quantitative approach to making decisions when there is uncertainty
– Creates realistic and achievable cost, schedule or scope targets
In order to conduct a quantitative risk analysis, you will need high-quality data, a well-developed project model, and a prioritized lists of project risks (usually from performing a qualitative risk analysis).
Reference:
LO 3, AC 3.3

NEW QUESTION 25
Which of the following can directly affect labour variance? Select TWO that apply:

Wage rate per hour

Inflation

Company’s budget

Overhead expenditure

Overtime

NEW QUESTION 26
Despite of better improvement rates than other types of benchmarking, functional benchmarking still has downsides. Which of the following is most likely to be a disadvantage of functional benchmarking?

Legal issues regarding intellectual property

Unfair competition

Difference of corporate cultures across companies

Benchmarking can only be undertaken within an industry

NEW QUESTION 27
A procurement manager is writing a conformance specification for a non-core component. She thinks that if the requirements in specification are higher than ISO standards, her company can achieve greater cost-savings. Is the procurement manager’s opinion correct?

No, because higher specification may incur additional costs for the buyer

No, because higher requirements in specification, the greater bargaining power of buying organisation

Yes, because optimising the specification is the only method to achieve value for money

Yes, because higher requirements will help buying organisation find the best supplier

NEW QUESTION 28
A charity is reviewing their spend and budget after an operation in flooded areas. They realise that the operators save money against the budgeting plan. This saving is known as…?

Negative budget

Positive variance

Negative variance

Positive budget

NEW QUESTION 29
Which of the following are the focuses of ISO 14001:2015?

1. Life cycle
2. Process
3. Capacity
4. Information security
2 and 4 only

1 and 2 only

2 and 3 only

3 and 4 only

ISO 14001:2015 specifies the requirements for an environmental management system that an or-ganization can use to enhance its environmental performance. ISO 14001:2015 is intended for use by an organization seeking to manage its environmental responsibilities in a systematic manner that contributes to the environmental pillar of sustainability.
ISO 14001:2015 helps an organization achieve the intended outcomes of its environmental man-agement system, which provide value for the environment, the organization itself and interested parties. Consistent with the organization’s environmental policy, the intended outcomes of an environmental management system include:
* enhancement of environmental performance;
* fulfilment of compliance obligations;
* achievement of environmental objectives.
ISO 14001:2015 is applicable to any organization, regardless of size, type and nature, and applies to the environmental aspects of its activities, products and services that the organization determines it can either control or influence considering a life cycle perspective. ISO 14001:2015 does not state specific environmental performance criteria.
ISO 14001:2015 can be used in whole or in part to systematically improve environmental manage-ment. Claims of conformity to ISO 14001:2015, however, are not acceptable unless all its require-ments are incorporated into an organization’s environmental management system and fulfilled without exclusion.
In conclusion, ISO 14001:2015 focuses on: management system (including roles, leadership and processes) and the life cycle of product or service. Life cycle is defined as “consecutive and inter-linked stages of a product (or service) system, from raw material acquisition or generation from natural resources to final disposal. […] The life cycle stages include acquisition of raw materials, design, production, transportation/ delivery, use, end-of-life treatment and final disposal.” The answer is process and life cycle.
Reference:
– ISO 14001:2015 Environmental management systems – Requirements with guidance for use LO 3, AC 3.1

NEW QUESTION 30
GSC Ltd is a manufacturer of car parts. To accommodate growing demands of electric cars, the company is developing a new component which requires different type of steel. The project team estimates that the component will be ready for production in 1.5 years. Until then, they need to keep the production busy.
After checking the inventory records, the production team sees that the company has 3 months of stock. The lead time for each batch is two months. Which of the following should be a priority ac-tion of the company?

Create new specification to new supplier

Standardise the specification

Create new specification to current supplier

Make a call-off order to current supplier

NEW QUESTION 31
One of the disadvantages of using standards in specification is that…

Standards lengthen the time to produce a specification

Standards tend to be rigid and they often don’t encourage innovation

Standards don’t allow the buyers to add health and safety requirements into the specification

Standards tend to be inaccurate and ambiguous, causing confusion among suppliers

Real exam questions are provided for CIPS Level 4 Diploma in Procurement and Supply tests, which can make sure you 100% pass: https://www.dumpleader.com/L4M2_exam.html

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