Which of the following is categorised as fixed cost?

• A.Additional pallet hires due to higher demand in year-end season
• B.Land rental paid in advance
• C.Governments taxes
• D.Raw materials for next year production

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An oil refinery plant imports much of its crude oil from overseas. A procurement manager in the refinery suggests that fixing the crude oil contract price for 36 monthswould be beneficial for the company. Would this be a right thing to do?

• A.Yes, financial budgeting task would be a lot easier with fixed pricing arrangement
• B.No, fixed price should be only applied to contracts that last 60 months or longer
• C.No, the refinery would not be able to reap the benefits from falling commodity price and currency rates
• D.Yes, the supplier would bear the risk when the material price increased

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A procurement professional is preparing for a negotiation of purchasing non-critical commodity products. He knows that the product can be easily replaced by other substitutes in the market. The negotiation for these products is typified by which of the following?

• A.The buyer should focus on wider costs and risk elements
• B.The approach must be collaborative
• C.There will be only limited negotiation
• D.There will be regular structured negotiations

Correct Answer: C

Explanation
With non-critical commodity products, the relationship will be transactional. Buyer should not spend too much time and effort into the negotiation.
Table Description automatically generated

LO 1, AC 1.4

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At which stage in a negotiation would questions be asked to obtain missing information?

• A.The bargaining stage
• B.The proposing stage
• C.The opening stage
• D.The testing stage

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Which of the following should be done by the procurement team at the closing stage of a negotiation? Select TWO that apply.

• A.Gloat publicly about the deal
• B.Seek agreement in principle if TOP does not have the final authority
• C.Tell TOP that they could have got a better deal
• D.Accept ambiguity or uncertainty
• E.Leave the meeting as soon as possible

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