Certified Professional Public Buyer (CPPB) Practice Test

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What type of market condition would likely prompt a spot bid?

A. stable market with consistent prices
B. political turmoil in the area from which a commodity is purchased
C. abundant availability of substitutes
D. predictable supply chain conditions

The correct answer is: B. political turmoil in the area from which a commodity is purchased

A spot bid is typically utilized in scenarios where immediate procurement is necessary, often due to fluctuations in market conditions that can impact availability or cost. In the context of political turmoil, such instability can disrupt the supply chain and lead to uncertainty regarding commodity availability. As a result, buyers may engage in spot bidding to secure necessary goods quickly before prices rise or supplies dwindle further due to ongoing unrest. In contrast, stable markets with consistent prices generally do not necessitate immediate purchasing decisions since the conditions are predictable. An abundance of substitutes may lead to a preference for negotiations over spot bids, as buyers can afford to seek out alternatives rather than make quick purchases. Lastly, predictable supply chain conditions allow organizations to plan ahead, minimizing the need for urgent procurement through spot bids. Therefore, the presence of political turmoil serves as a compelling reason to opt for spot bids to safeguard against potential adverse impacts on supply and pricing.