1. You currently make a part on old equipment at a cost of $20 / unit. The annual fixed cost for thisequipment is $50,000. You have found an outside supplier who will make the part for $15 / unit ifyou will pay their annual fixed costs of $200,000 / year (see table).

Alternative	Fixed Cost	Variable Cost
Buy	$200,000 per year	$15 per unit
Make	$50,000 per year	$20 per unit

How much does the company save for the year by selecting the low-cost option for annual requirements of 40,000 units?

	a.	$50,000
	b.	$300,000
	c.	$40,000
	d.	$150,000

2. Following Risks are listed in the Risk Register:

Risk 1 (Threat); Probability = 25%, Impact = $100,000, Listed in the shortlist

Risk 2 (Threat); Probability = 30%, Impact = $5,000, Listed in the watchlist

Risk 3 (Opportunity); Probability = 20%, Impact = $70,000, Listed in the shortlist

Risk 4 (Threat); Probability = 10%, Impact = $10,000, Listed in the watchlist

Risk 5 (Threat); Probability = 15%, Impact = $20,000, Listed in the shortlist

Calculate the contingency reserve should be added according to these Risks.

	a.	$42,000
	b.	$2,500
	c.	$10,500
	d.	$14,000

3. Which of the following options is not true about contracts?

	a.	Contracts can be either written or verbal
	b.	Any changes should be issued in a formal written format
	c.	Procurement manager can make changes in the signed contracts without creating anychange orders
	d.	Everything written in a contract has to be done

4. In a certain country working more than 8 hours a day is illegal. In thecontract it says that daily workinghours is 9 hours a day. What is the best action to do?

	a.	Escalate to top management and ask what to do
	b.	Ask your customer if you should work 8 hours or 9 hours each day
	c.	You should follow the law and work 8 hours only.
	d.	The contract is binding and you should work 9 hours each day.

5. Which of the following contracts is most appropriate for a project with well-defined scope which will be executed in five years with uncertainties about inflation rates?

	a.	Fixed price with economic price adjustments (FPEPA)
	b.	Cost plus fixed fee (CPFF)
	c.	Time and material (T&M)
	d.	Fixed price incentive fee (FPIF)

6. You are not sure about whether to prepare a fixed price incentive fee (FPIF) or fixed price award fee(FPAF) type of contract. What is the main difference between these two contract types?

	a.	For both types, incentive and award are judged objectively but FPAF contract isprepared faster.
	b.	The award is judged objectively but the incentive is judged in a subjective manner
	c.	The award is judged in a subjective manner, but the incentive is judged objectively
	d.	For both of the contract types, incentive and award are judged subjectively but FPIFcontract is complete faster

7. If it is a ..................... contract, an additional limited fee is given if a predefined performance criterion is met subjectively.

	a.	Fixed price incentive fee
	b.	Fixed price award fee
	c.	Firm fixed price
	d.	Fixed price economic price adjustment

8. ..................... is more suitable for Unit Price contracts

	a.	Request for Quotation
	b.	Request for Proposal
	c.	Request for Information
	d.	Invitation for bid

9. Examples of quantitative risk analysis tools and techniques are:

	a.	Expected monetary value
	b.	Decision tree analysis
	c.	Simulation
	d.	Sensitivity analysis
	e.	All of the above

10. Which of the following applies to the concept of BATNA in Negotiations?

	a.	It provides an alternative if negotiations fall through.
	b.	It provides negotiating power.
	c.	It determines your reservation point (the worst price you are willing to accept).
	d.	All of the above.

11. Risks responses must be planned for all identified risks.

True

False