CPIM Practice Exam

What does the term 'Purchasing' denote in industry and management?

1. The function of procuring materials, supplies, and services.

2. The process of selling goods and services.

3. The management of inventory levels.

4. The regulation of supplier contracts.

The correct answer is: The function of procuring materials, supplies, and services.

'Purchasing' in industry and management primarily refers to the function of procuring materials, supplies, and services needed for production or operations. This encompasses identifying requirements, selecting suppliers, negotiating terms, issuing purchase orders, and receiving goods or services. This definition highlights the proactive nature of purchasing, which involves making strategic decisions to ensure that an organization has the necessary resources at the right time and at the best possible cost. The other choices focus on different aspects of supply chain management and operations. For instance, selling goods and services relates to sales and marketing functions, which are distinct from purchasing. Managing inventory levels concerns the control and oversight of stock on hand, which is part of supply chain management but does not directly describe purchasing activities. Regulating supplier contracts involves legal and compliance issues, focusing more on the contractual obligations between parties rather than the act of purchasing itself. Thus, the first choice accurately captures the essence of purchasing within the context of industry and management.