CIPS L4M2 Defining Business Need · Free Practice Question Easy
Question 4
For a one-off purchase that is not business-critical, which of the following is the most suitable?
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A
cost estimating
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B
open book costing
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C
strategic alliance
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D
price indices
Reveal correct answer
Correct answer: D
Explanation
A one-off puchase that isn't business critical is a low importance purchase to an organisation. It might be the cake for a person's birthday in the office. Or filling the company car up with petrol.
For this reason you're not going to spend a lot of time and effort into making the procurement. You may look at a price indice before you're buying, so you know you're not getting ripped off, or to know if now is a good time to buy, but that's about it. The other three options are more suitable for larger and strategic purchases.
Price indice is a 'normalised average' of the price typically paid for a product. They use it a lot in economics to determine inflation levels. E.g. they look at the price petrol goes up and down over the course of the year and call this CPI. You don't need to know about this aspect of price indices for the exam. Just know what one is.
Discussion
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