CPIM Practice Exam

When is a purchase order typically issued?

1. After vendor negotiation

2. Before delivery of goods

3. After receiving a request for quote

4. To initiate supplier audits

The correct answer is: After receiving a request for quote

A purchase order is typically issued after receiving a request for quote. This process involves several key steps that lead to the decision to make a purchase. Initially, a request for quote (RFQ) is sent to various suppliers to gather pricing, availability, and terms for the desired items or services. Once these quotes are evaluated, a decision can be made regarding which supplier offers the best value or terms. After this evaluation, the organization will issue a purchase order to formally initiate the transaction, detailing the specific goods or services to be obtained, quantities, pricing, and terms of delivery. The other scenarios presented, such as issuing a purchase order after vendor negotiation or before delivery of goods, relate to different stages in the procurement process but do not align with the standard sequencing of issuer documentation following an RFQ. Similarly, issuing a purchase order to initiate supplier audits is not a common practice as purchase orders are not tied to audit activities, which typically occur independently of the purchasing process.