L4M4

Review 48 L4M4 practice questions with answer explanations and community insights.

Question 1

A business may be faced with the challenge of deciding whether to source some of its requirements from external suppliers or whether to make them internally. There are many factors that need to be considered before arriving at such a decision.Which of the following factors is likely to justify the decision to make the requirements internally?

  1. The other suppliers are using older technology
  2. The availability of in-house competencies and capacity to carry out the production
  3. External suppliers are likely to be overcharging
  4. External sourcing involves cumbersome tendering procedures

Question 2

A buyer has been tasked with placing an order for steel from another country and using Incoterms for the delivery. The buyer’s organization has an in-house transportation and export clearance department. During negotiations, the buyer has been able to achieve a 25% cost reduction, due to the buyer accepting responsibility to arrange the loading, transportation and export clearance.Which Incoterm has been agreed?

  1. EXW – Ex Works
  2. FCA – Free Carrier
  3. CIP – Carriage and Insurance Paid
  4. FOB – Free on Board

Question 3

Tariffs and import duties imposed on a buying organization for goods purchased from an international supplier provide benefit to __________.

  1. the supplying organization as they receive additional payment
  2. the domestic industry through reduced competition
  3. local competitors through lower prices
  4. consumers by having access to lower priced goods

Question 4

A restricted tender process involves supplier selection.This process focuses on which of the following?1. Production capacity2. Decommissioning costs3. Total life cost4. Financial stability

  1. 1 and 2 only
  2. 1 and 3 only
  3. 1 and 4 only
  4. 2 and 4 only

Question 5

An international supplier of shirts provides four different prices for each garment depending on the Incoterm selected by the buyer.Which Incoterm would support achieving the lowest unit price per garment?

  1. EXW
  2. DAP
  3. DDP
  4. CPT
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