Which of the following would you use to determine the outcome of a competitive tender? Select TWO.
Answer(s): D,E
Price and Quality are the two considerations when marking a competitive tender. Location, distribution and reputation may be considered for SOME tenders, but these would be sub- categories that fall under 'quality questions.
Pre-qualification of suppliers is used to determine if the suppliers meet the basic requirements of the buying organisation. Which of the following is assessed at the pre-qualification stage?
Answer(s): C
The correct answer is financial stability (this is done by using all of those lovely ratios in chapter 1.3) and capacity and capability (which are part of Carter's 10 Cs). At PQQ stage you're looking purely at whether the supplier is good or bad (to put it simply). You don't give them details of your requirement yet, so they're not providing a quote / pricing structure / price schedule at this point in time. That would be at the next stage, IF they pass PQQ, when you issue the tender competition.
When conducting a competitive tender, is it appropriate to use a supplier's credit rating as a criteria for pre-section?
Answer(s): B
The correct answer is 'yes- because a low credit rating would indicate the supplier is financially un- stable'.The two options beginning with no should automatically be discounted. The other option is incor-rect because credit ratings are private and would therefore not affect reputation.
Which of the following financial ratios would indicate a supplier's potential exposure risk to a steep rise in inflation?
Answer(s): D
The correct answer is 'gearing ratio'.Gearing measures how much of a company's funding is based on long-term debt or loans- this would be affected by a steep rise in inflation. If a company has a mortgage on their offices or facto-ry and they need to remortgage and inflation has gone up a lot- they'll be paying a lot more on their mortgage. This will severely effect the gearing ratio as they'll have more outgoings than incoming. Gross profit margin COULD be affected by inflation, for example if you've got hyper-inflation and the country goes into recession and people stop buying your product. However, this answer isn't al-ways right and depends on many factors- the industry, the product, the company etc, so for the purpose of CIPS should be discounted. There are many industries which are immune to inflation.
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