Procurement

RFQ stands for

• Request for questions
• Request for quality
• Request for quantity
• Request for quotation

Which of the following terms is an expression by one party of its compliance to certain terms in the contract provided that the other party expresses its compliance to the identical terms?

• Offer
• Bargain
• Proposal
• Excahange

Which of the following activities occurs during Plan Procurements?

Record keeping is a act of keeping of the history of person or organisation

• False
• True

The buyer pays the supplier for allowable performance costs plus a predetermined percentage based on total costs

When is a 'Single Tender' an appropriate procurement route?

• Short programs
• Public body client
• Specialist works
• Projects under £50k

Using only words from the vocabulary list:"You can even ?????? that you are looking for a specific person for the job."

• advertise

The buyer pays the supplier for allowable performance costs plus a predetermined fee and an incentive bonus

Human want are

• Limited
• Options d is correct
• Unlimited
• Both a and c

Needs recognition is a first step in consumer in buying behaviour is also called

• Review of request
• Both a and c
• Problem identification
• None of the above

In some cases, contract termination refers to:

• Contract closure by mutual agreement
• Contract closure by delivery of goods and services
• Contract closure by successful performance
• Certification of receipt of final payment

Budget constraints are not considered when making make-or-buy decisions

• True
• False

Administrative lead time is the interval between initiation of the procurement process and signing of contract and placing the order.

• True
• False

A cost-reimbursable contract with a fixed fee is explained as

• provides the contractor with a profit that is determined at the beginning of the contract and does not change.
• pays the contractor for costs plus a percentage, such as 5% of total allowable costs.
• used to encourage performance in areas critical to the project, where the contract attempts to motivate contractors to reduce project costs.
• reimbursing the contractor for all allowable costs plus a fee that is based on performance criteria

What website will you go to to certify the GCPC bank statement?

• US Bank

Used to solicit proposals from prospective sellers

What is the minimum number of quotation to be prepared?

• 3
• 2
• 1
• 4

Which of the following is an input to contract closeout?

• The contract file
• Contract documentation
• The procurement audit
• Formal acceptance

PROJECT PROCUREMENT deals with the _________or purchasing of goods and services

• acquisition

Sellers are always external to the company performing the project.

• True
• False

Which of the following is the BEST thing for a project manager to do in the Conduct Procurements process of procurement management?

• Evaluate risks
• _Select a contract type
• Update the project schedule
• Answer sellers' questions about procurement documents

Match the correct definition to "negotiation"

• people telling each other their opinions
• discussing something with someone to reach an agreement
• the act of flying an aircraft
• the situation in which people have the same opinion

An explanation of the fixed-price contract with price adjustment is defined as:

• used for unusually long projects that span years.
• a contract type that provides an incentive for performing above the established baseline in the contract, such as for completing the work on an important milestone.
• the organisation agrees to pay the contractor for the cost of performing the service or providing the goods

What are some roles you can expect to see/interact with in regards to the GCPC program?

PhilGEPS stands for _______________________________.

• Philippine Government Electronic Procurement System

The type of contract that includes performance incentives is called:

• FP-EPA
• FFP
• FPIF
• CPFF

Means acquiring goods and/or services from an outside source

What all is needed to gain access to iProcurement? Select all that apply.

IBISWorld is most useful to a Procurement Department using the strategic approach at which three consecutive stages in the process?

• Plan approach to market & evaluation; Negotiate & award contract; Manage contract & relationship
• Identify needs & analyse the market; Specify requirements; Plan approach to market & evaluation
• Manage contract & relationship; Specify requirements; Initiate project
• Initiate project; Manage contract & relationship; Negotiate & award contract

If Ritma Premier wanted to do goods receiving, which system(s) should be used?

• WMS
• AX
• None of them
• Both of them

Contract closeout is a process that involves:

• Customer satisfaction analysis and final payment
• Administrative closeout and archiving records
• Final contractor payment and lessons learned
• Product verification and administrative closeout

Using only words from the vocabulary list: "Follow the instructions recommended by the ??????."

• manufacturer

The procurement process is same for all business

• False
• True

A cost-reimbursable contract with an incentive fee is explained as

• provides the contractor with a profit that is determined at the beginning of the contract and does not change.
• pays the contractor for costs plus a percentage, such as 5% of total allowable costs.
• used to encourage performance in areas critical to the project, where the contract attempts to motivate contractors to reduce project costs.
• reimbursing the contractor for all allowable costs plus a fee that is based on performance criteria

The buyer pays the supplier for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs

Formal acceptance of goods and services:

• EXP
• LIQ/DISB
• CMT
• INT
• OBL

Solicitation planning is documenting product requirements and identifying potential sources

• True
• False

Who is responsible for certifiying the cardholder's statement every month?

• AO
• CH
• APC
• HQMC

Define Supply management or supply-chain management as:

• describes the process of buying, learning the need, supplier selection, price negotiation and then following up to ensure timely delivery.
• covers a broader array of processes, including purchasing, stores, traffic, receiving and inspection.
• often used to refer to the department’s efforts to improve procurement.
• is the management of materials.

Requirements for inspection and acceptance are defined in the:

• Contract
• Procurement management plan
• Overall project plan
• Specifications

Acquiring goods and services for a project from outside the performing organization

PROCUREMENT MANAGEMENT involves the sequence of ___________ that creates, manages and fulfils contracts

• activities

What is the current GCPC micropurchase threshold?

• $10,000

Define materials management as:

• describes the process of buying, learning the need, supplier selection, price negotiation and then following up to ensure timely delivery.
• covers a broader array of processes, including purchasing, stores, traffic, receiving and inspection.
• often used to refer to the department’s efforts to improve procurement.
• the management of materials.

________ administration is the managing of the relationship with the vendor.

• Contract

A cost-reimbursable contract with award fee is explained as

• provides the contractor with a profit that is determined at the beginning of the contract and does not change.
• pays the contractor for costs plus a percentage, such as 5% of total allowable costs.
• used to encourage performance in areas critical to the project, where the contract attempts to motivate contractors to reduce project costs.
• reimbursing the contractor for all allowable costs plus a fee that is based on performance criteria

Choose the correct word to match the definition: "something that has been added to a book, speech, or document"

• fiscal
• per diem
• addendum
• equal

Contract closeout and administrative closure are similar in that they both require:

• That someone other than the project manager manage the activities involved
• Verification that no errors occurred at any time while the work was being performed
• That a WBS was prepared
• Verification that the work was completed satisfactorily

Principles of procurement should include

Is a document prepared by sellers providing pricing for standard items that have been clearly defined by the buyer

Define procurement as:

• describes the process of buying, learning the need, supplier selection, price negotiation and then following up to ensure timely delivery.
• covers a broader array of processes, including purchasing, stores, traffic, receiving and inspection.
• is often used to refer to the department’s efforts to improve procurement.
• is the management of materials.

One of the functions and responsibilitie of the HoPE is the creation of TWG.

• TRUE
• FALSE

What is one of the KEY objectives during contract negotiations?

• Obtain a fair and reasonable price
• Negotiate a price under the seller's estimate
• Ensure that all project risks are thoroughly delineated
• Ensure that an effective communications management plan is established

What is a key advantage of 'Two-Stage Tendering'?

• Cost Certainty
• Overlapping design and build programs
• Single point of responsibility
• Early appointment of a contractor to contribute buildability knowledge

In procurement management The _________ can be seen as a contractor, subcontractor, vendor or supplier

• seller

Why is ‘Assessment Criteria’ important when tendering?

• Understanding whether you qualify as a party looking to submit a tender
• Providing equality and visibility of standards that invited tenders are being judged against
• An opportunity for tendering parties to provide feedback and comments
• Allows those overseeing the tendering process to highlight any discrepancies

During solicitation planning, the project team is responsible for:

• Determining the make or buy decision
• Developing the procurement documents
• Specifying the schedule perimeters in the form of delivery dates

Give one example for direct procurement

• Raw materials

Project procurement management is defined as

• the process of purchasing the products necessary for meeting the needs of the project scope
• Establishing physical and virtual workplace environment
• type of contract used for the project will be determined by the resource categories and project conditions

A procurement contract will include terms and conditions, and may incorporate other items that the buyer specifies to establish what the seller is to provide or perform.

• True
• False

Which common Procurement Department issue matches the following description:"Because there is no one else providing procurement research, much of the research companies do themselves tends not to be formalized; each person researching gets information from different sources and operates on different assumptions. Often the research that people do use is authored by suppliers and is therefore not independent."

• More with less
• Centralized knowledge
• Credibility
• Best price/save money

Which one of these is an advantage of going to a 'Design and Build'?

• No need to employ a full design team
• Achieving maximum quality
• Single point of responsibility
• Offers the client minimum risk

According to the Latham Report, which of the following would be inappropriate if the objective was to achieve an 'Early Completion'?

• Traditional
• Design and Build
• Construction Management
• Self-Build

The guaranteed profit type of contract for a third party supplier is the fixed cost contract.

• True
• False

Which of the following activities is an important element of effective contract administration?

• Holding a bidders conference
• Establishing the appropriate contract type
• Implementing a contract change control system
• Developing a statement of work

At this stage, payment has been made to DFAS.

• OBL
• EXP
• LIQ/DISB
• INT
• CMT

Procurement can be defined as the process of acquiring

• Goods
• Procurement process
• Goods and services
• Service

What innovations have been introduced by NEC Contracts to the construction industry?

• A collaborative approach to construction and contracts devoid of heavy legal language
• Flexibility and efficiency of administration
• Easy integration of letters of intent and clause amendments
• Use for projects under £100k

What is the first step in the standard bidding procedure for Goods, Infrastructure Projects, and Consulting Services

• Pre procurement Conference

For a trade purchase process in AX system, please fill in the blank as listed below:PO -> Receipt List -> ______ ->Pending Invoice -> Invoice

• Packing

In a procurement context, what does "TCO" stand for?

• Total Cost of Order
• Total Costs Ongoing
• Total Cost of Ownership
• Total Cost Optimization

What is ‘Contractor’s Design Portion’ (CDP)?

• A portion of the work is absent of any design information.
• A portion of the work that requires the novation of the design team to the Contractor.
• A portion of the work that the Contractor is responsible for the design of.
• A portion of the work that the Contractor is required to gain third-party design advice about.

Using only words from the vocabulary list:"In the ?????? 1908-9 its income almost tripled, from £7,546 to £21,214."

• fiscal year

The Plan Procurements process includes consideration of the risks involved with each make-or-buy decision.

• True
• False

Which of the following are included in IBISWorld's Value Proposition for the Procurement product? Select all three that apply.

IBISWorld reports mainly focus on which type of procurement?

• Direct
• Indirect
• Multi-direct
• All of the above

Used to solicit quotes or bids from prospective suppliers

What are the documents that required for a new vendor to be created in the AX system?

• I) New Vendor Form
• II) Company Registration Certificate
• III) A proof of bank account number
• IV) Acknowledgement of Anti-Corruption Letter
• All of I,II, III, IV

Which statement below provides the best description of the procurement process?

• Working with manufacturers and service providers to customize products for the end-market.
• Controlling the movement, storage and distribution of materials.
• The action of evaluating, purchasing and integrating a product or service from a business by a business.
• Purchasing or buying products to maintain a company’s inventory

The terms purchasing, procurement, supply, supply-chain and materials are not closely linked

• True
• False

Which term describes the failure by either the buyer or seller to perform part or all of the duties of the contract?

• Termination of the contract
• Partial performance
• Breach of contract
• Contract waiver

All items, supplies, and materials except general support services, Consulting Services and Infrastructure Projects

• TRUE
• FALSE

What is the Republic Act # which is also known as the "Philippine Government Procurement Law?"

• R.A 9184
• R. A 1984
• R.A 1894
• R.A 1948

What is the role of the 'Employer's Agent' on Design and Build projects?

• To act as an agent on behalf of the client, with some powers during construction comparable to a 'Contract Administrator.'
• To lead the coordination of the design on behalf of the employer
• To oversee the health and safety, building control, and other legislative processes on the employer's behalf
• There is no 'Employer's Agent' on Design and Build projects.

Where would you expect the client to state and capture their priority mix (Quality, Cost, Time, and Risk?)

• RIBA Stages 0-1 - Strategic Definition / Preparation and Briefing
• RIBA Stage 2 - Concept Design
• RIBA Stage 4 - Technical Design
• RIBA Stage 5 - Manufacturing and Construction

An explanation of the a cost-reimbursable contract, with price adjustment is defined as:

• used for unusually long projects that span years.
• a contract type that provides an incentive for performing above the established baseline in the contract, such as for completing the work on an important milestone.
• the organisation agrees to pay the contractor for the cost of performing the service or providing the goods

Which two systems of procurement will generally have the greatest focus on TCO?

With which type of contract is the seller MOST concerned about project scope?

• Fixed price
• Cost plus fixed fee
• Time and material
• Purchase order

Procurement is big business. In 2013, US firms spent how much on the procurement of goods and services?

• $23 trillion
• $2.3 trillion
• $23 billion
• $2.3 billion

Who prepares the Purchase Request?

• End User
• Principal
• School Liquidator
• Canvasser

IBISWorld helps Procurement Departments obtain cost savings at the crucial initial phases of the buying process. IBISWorld's Procurement Research can also help companies obtain cost savings by:

• Providing frequently updated list prices for thousands of products
• Providing consumer reviews of products
• Providing ten-year forecasts of price movements
• Saving time in training new and existing staff

The store you would use for intra-departmental or intra-service transfer of funds for a good or service.

• GPC
• MIPR/IGT
• ToT
• Miscellaneous

In the below situation, which one is required to issue a MRN in order to proceed for purchasing?

• Reorder of a trade item
• Disposal of a product
• Buying stationery, office printing, warehouse packaging material
• Air ticket booking

Requirements for formal acceptance and closure of the contract are usually defined in the:

• Proposal
• Statement of Work
• Contract
• Procurement audit report

Involve payment to the seller for direct and indirect costs

What are the four core deliverables of a Procurement Department?

A legally binding agreement between the govt and vendor:

• CMT
• OBL
• EXP
• LIQ/DISB
• INT

Identification of a requirement (no reservation of funds):

• INT
• CMT
• OBL
• EXP
• LIQ/DISB

Match the correct definition to "drop shipment"

• the manufacturer sends products directly to the buyer at the request of another business
• items falling of a ship used for international deliveries
• the write someone a letter while being on a ship
• to move on a lower deck of a boat

Complete this sentence: Any organization with a large indirect spend covering numerous categories is going to be a ___________.

• Viable prospect
• Waste of time
• Guaranteed client
• Unsuitable prospect

Which is not part of the Scope and Coverage of RA 9184

• Private Institutions
• SUCs
• NGAs
• GOCCs

Choose the correct word to match the definition: "items for sale, or possessions that can be moved"

• goods
• items
• things
• stuff

Activites not included in the coverage of RA 9184

• Direct financial or material assistance given to beneficiaries
• Acquisition of real property which shall be governed by R.A. No. 10752
• Foreign Grants covered by R.A. No. 8182, as amended by R.A. No. 8555
• Public-Private projects covered by R.A. No. 6957, as amended by R.A. No. 7718
• All of the Above

“Outlining the things to be done and the methods of doing them to accomplish the purpose set” [Luther Gulick]

• Planning

____________ planning determines what to procure and when

• Procurement

Which of the following situation is required to get suppliers' comparison?

• Admin requests to buy a new coffee machine that cost RM5,000
• Warehouse requests to repair forklift
• Technician requests to buy machine spare parts that cost RM100

Some purchases include items that contain or transmit data/information. What website/organization would you need to get an authorization from to procure these items?

• ITPRAS

Which is not part of the governing principles of procurement?

• Accountability
• Public Monitoring
• Liability
• Streamlined Process

WMS system comprise of the following for Procurement, except:

• Batch No, Manufacturing Date, Expiry Date
• Inbound Order / Outbound Order / Site Transfer
• Purchase order
• Count Adjustment

You are executing a project for a client when they contact you to say they are terminating the contract for convenience. Because of this, the project is now in:

• Negotiation
• Execution
• Closure
• Procurement audit

What is the main purpose of the procurement audit?

• Validate that costs charged to the contract are valid and correct
• Loosely review the project
• Identify the successes to transfer to other procurements
• Acknowledge substantial completion

A _________ _________ assessment helps to identify and evaluate the vendor options available, and enables you to make more informed decisions for supplier selection (the answer is two words)

• supplier market

What types of clients are ‘Public Finance Initiatives’ most appropriate for?

• Small Private Clients
• Large Private Clients
• Small Public Bodies
• Large Public Bodies

Is the cost at which the contractor assumes total responsibility for each additional dollar of contract cost

What are the important elements for selecting a non-trade supplier?

• I) Cost & Quality
• II) Delivery & Location
• III) Flexibility, Lead Time & Payment
• All of I, II, III

Require the buyer to pay the seller a predetermined amount per unit of service

The process of monitoring contract performance, making payments, and awarding contract modifications occurs during:

• Contract administration
• The award phase
• The closeout phase
• Contract resolution

By concentrating more effort on the earlier stages of the procurement process, organizations can realize more value from their efforts - for example, more robust relationships with suppliers or superior contract terms. This is known as what kind of approach?

• Tactical Approach
• Traditional Approach
• Procurement Approach
• Strategic Approach

Close Procurements is different from Close Project or Phase in that Close Procurements:

• Occurs before Close Project or Phase
• Is the only one to involve the customer
• Includes the return of property
• May be done more than once for each contract

Members of the TWG conduct the bid evaluation process.

• TRUE
• FALSE

The company Heinz purchases tomatoes as input material for its production of ketchup. This is an example of what kind of procurement?

• Indirect
• Direct
• Multi-direct
• None of the above

Three - way match is the process of comparing purchase order

• True
• False

Which term describes those costs in a contract that are associated with two or more project but are not traceable to each of them individually?

• Variable
• Direct
• Indirect
• Semivariable

Contract type selection is dependent on the degree of risk or uncertainty facing the project manager. From the perspective of the buyer, preferred contract type in a low risk situation is:

• Firm fixed price
• Fixed price incentive
• Cost-plus fixed fee
• Cost-plus-a-percentage-of-cost

Define Usage purchasing as:

• describes the process of buying, learning the need, supplier selection, price negotiation and then following up to ensure timely delivery.
• covers a broader array of processes, including purchasing, stores, traffic, receiving and inspection.
• is often used to refer to the department’s efforts to improve procurement.
• is the management of materials.

Who actually executes the GCPC purchases and is therefore responsible for the safeguarding of the GCPC?

• CH

Which of the following CAN you purchase with your GCPC?

• Cash advance
• Fuel/Oil
• Fireworks
• Unit patches
• Uniform items

In project procurement management, the performance data file consists of:

• The project WBS
• Cost information
• Invoice and payment records
• Cost, schedule, and quality information

Which of the following two positions are most likely to describe tactical roles?

• Materials Coordinator and Purchasing Supervisor
• Purchasing Supervisor and Procurement Director
• Chief Procurement Officer and VP Strategic Sourcing
• Buyer and Director Supply Chain Management

A ___________ becomes a key input to many of the processes within the project, and specifies the rules and agreements for the project.

• contract

An explanation of the fixed-price with incentive fee with price adjustment is defined as:

• used for unusually long projects that span years.
• a contract type that provides an incentive for performing above the established baseline in the contract, such as for completing the work on an important milestone.
• the organisation agrees to pay the contractor for the cost of performing the service or providing the goods

There are two main types of lead time:

• Administrative and action lead time
• Legislative and reactionable lead time
• Corrective and Preventative lead time
• Action and Auctionable lead time

Hybrid of both fixed price and cost reimbursable contracts, often used by consultants

Why commercial procurement/offline requisition is least preferred. _Select all that apply:

A make-or-buy analysis is a general management technique used to determine whether particular work can be best accomplished by the project team or must be purchased from outside sources

• True
• False

In WMS purchasing module, what is the data that imported from AX?

• Purchase Order
• Receipt List
• Packing List
• Invoice

Is a mutually binding agreement that obligates the seller to provide the specified products or services and obligates the buyer to pay for them

From who would you and your supply shop request a GCPC? This person also manages your area overall GCPC program.

• APC

Type of contract were it involves a fixed total price for a well-defined product or service

What is the purpose of a 'Specification' in a Traditional Contract?

• A responsibility matrix of all individuals during the construction phase
• Defined the scope of work within the architect's appointment
• A shortlist of potential sub-contractors
• Descriptions of products, materials, and work required by a contract

Non-binding reservation of funds for a purchase:

• CMT
• OBL
• EXP
• LIQ/DISB
• INT

The terms purchasing, procurement, supply, supply-chain and materials are all closely linked

• True
• False

A team is in the Plan Procurements process. Which of the following are they working on?

• Proposals received
• Procurement contract award
• Creation of a request for proposal
• Procurement audit

A contract is an agreement made between two or more parties that is enforceable by law.

• True
• False

What are the two most important traits when involved with tendering?

• Fairness and Competition
• Peace and Quiet
• Integrity and Impartiality
• Respect and Honesty

•Those expenditures that are not supportive of the objectives and mission of the agency relative to the nature of its operation.

• Extravagant
• Excessive
• Unnecessary
• Unconsionable

A cost-reimbursable contract with a percentage fee is explained as

• provides the contractor with a profit that is determined at the beginning of the contract and does not change.
• pays the contractor for costs plus a percentage, such as 5% of total allowable costs.
• used to encourage performance in areas critical to the project, where the contract attempts to motivate contractors to reduce project costs.
• reimbursing the contractor for all allowable costs plus a fee that is based on performance criteria

Which term is not a common name for a procurement document that solicits an offer from prospective sellers?

• Invitation for bid
• Request for information
• Request for quotation
• Invitation for negotiation

What is your role in regards to the GCPC program? I.e. the first line of defense in inproper use of the card.

• CH
• AO
• APC
• CEO
• All of these

Procurement professionals are generally experts in the products and services they are buying.

• True
• False

Goods and services are the output of _________ system

• Economic
• Agriculture
• Financial
• None of the above

Is a description of the work required for the procurement

System that provides electronic creation and retention of requisition documents.

• DAI
• iProcurement
• PRBuilder
• WAWF

Using only words from the vocabulary list:"There was a consensual ?????? to stop the fight."

• agreement

In the UK, what is the alternative to what was formerly used for Public Procurement (OJEU)?

• Search a Bid (SAB)
• Find a Tender (FTS)
• Look for Work (LFW)
• Procure a Pro (PAP)

Many companies have a lawyer on staff to manage the procurement management.

• True
• False

Principle activities of procurement management are:

Source selection criteria are an output of which process?

• Plan quality
• Plan Risk Response
• Plan Procurements
• Estimate Costs

Match the correct definition to "acquisition"

• to move to a different place or into a different position
• a person that you have met but don't know well
• to reach or arrive at a particular place
• the process of getting something

The _________-price contract is a legal agreement between the organisation and an entity to provide goods or services to the project at an agreed-on price.

• fixed

What is the primary difference between a 'Lump-Sum' and 'Cost-Reimbursement' Procurement route?

• Approach to cost and program
• The complexity of the works being undertaken
• Opportunities available for claiming additional fees
• Minor book-keeping differences

What materials do you need to choose between different products?

When you want to do a stock transfer from MJ to YP, which module should you use in WMS?

• MJ site - Transfer from Store
• MJ site - Transfer to Store
• YP site - Transfer to Store
• MJ site - Site Transfer

Ending a contract before the objectives have been met by either mutual agreement or breach is called:

• Partial completion
• Closeout
• Cessation
• Termination

Teaming agreements are not legal documents, they are formulated between team members only

• True
• False

An example of the contract price in a cost plus fixed fee (CPFF) contract is:

• $10,000 plus fee
• Costs, whatever they are, plus, $10,000 as fee
• $10,000
• $150 per hour

Using only words from the vocabulary list: "Well, if the ?????? doesn't pay, I'll have to pay for it myself."

• insurance

Action lead time is the delay between the placing of a contractual order and receipt of the supplies purchased

• True
• False

In what situation a count adjustment is issued?

• I) Change Bin No. due to product damaged found
• II) Stock write off
• III) Stock shortage or surplus
• All of I, II, III

The store you would use to conduct a micro purchase.

• GPC
• MIPR/IGT
• ACSA
• Contract

In the context of procurement, research and best practices show that the bulk of savings opportunities are available in the final phases of the buying process. True or False?

• True
• False

When might you want a 'Schedule of Rates'?

• For early cost development on projects
• In the absence of a bill of quantities to understand the cost-reimbursable rates of staff, labor, and plant when tendering
• When acquiring several quotes for the provision of services to demonstrate best value practices.
• When reviewing the costs associated with the services provided by Local Planning Authorities

How much is the capitalization threshold of a procured tangible item per unit?

• 25,000.00
• 20,000.00
• 15, 000.00
• 10,000.00

_Feedback about my seminar

General management technique used to determine whether an organization should make or perform a particular product or service inside the organization or buy from someone else