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CPP Exam| Study Questions with Complete Solutions
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CPPB Exam - Domain VI - StrategicProcurement Planning Quizzes &
Correct Verified Answers
forecast data include: - ✔✔new orders
production
employment
supplier deliveries
inventories
Purchasing Manager's Index (PMI)
forecasting techniques & strategies include: - ✔✔fixed period
moving average
weighted moving average
mean absolute deviation (MAD)
economic ordering quantity (EOQ)
Economic Order Quanity (EOQ) - ✔✔ideal order quantity a company should purchase for its
inventory given a set cost of production, a certain demand rate, and other variables. This is done to
minimize inventory holding costs and order-related costs.
The equation for EOQ also takes into account inventory holding costs such as storage, ordering costs and
shortage costs. The formula assumes that demand, ordering, and holding costs all remain constant.
The Formula for Economic Order Quantity Is:
, Q=
H
2DS (read as q=square root of 2DS over H)
where:
Q=EOQ units
D=Demand in units (typically on an annual basis)
S=Order cost (per purchase order)
H=Holding costs (per unit, per year)
when evaluating market factors, procurement professional should": - ✔✔-know market
conditions -determine how competitive the current supply market is
-provide accurate info to enduser to assist in forecasting accurate costs and schedules
-assist enduser in selecting appropriate solicitation method and time
stable market - ✔✔off-the-shelf commodities are produced representing a reasonable and
competitive marketplace (example - office supplies)
forces of supply/demand determine price in long run, and can buy in volume to reduce costs
unstable market - ✔✔short-run fluctuations
requires considerations of:
-timing
-international political situations
-weather & growing conditions
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