424 Final Test Questions

True or False: Center-led (hybrid) purchasing structure combines a decentralized approach for purchases common to several business units and centralized approach to unique requirements.

False

True or False: Purchasing is much less than simply buying goods and services.

False

True or False: Suppliers prefer contracts with no buy-back agreement.

False

True or False: TCO should be used for small purchases.

False

True or False: For a leverage product, competitive bidding should be promoted.

True

True or False: Functional strategy increases market share.

True

True or False: Opportunity cost should be calculated in TCO.

True

Blanket purchase orders: a) Are used for recurring purchases b) Are a spot buy c) Are a Specialized Product Purchase d) Have closed delivery dates

a) Are used for recurring purchases

Which of the following is NOT a constraint that needs to be put into excel? a) Every warehouse needs to be utilized b) Demand at each warehouse must be met c) Supplier capacity must be met d) Shipping quantities must be integers and non-negative

a) Every warehouse needs to be utilized

What costs are associated with forward buying? a) Inventory holding costs b) Purchase costs c) End-of-life costs d) Stockout costs

a) Inventory holding costs

Which purchasing objective is most critical? a) Supply continuity b) Low prices c) Achieving the" five rights" d) Supporting organizational goals and objectives

a) Supply continuity

What do we want to minimize? a) Total sourcing cost b) Units shipped out of the warehouses c) The cost of transportation d) The headache of trying to come up with more incorrect answers

a) Total sourcing cost

All of the following are preferred for competitive bidding EXCEPT: a) Volume is low b) Marketplace is competitive c) No preferred supplier d) Clear specifications for the product

a) Volume is low

Which product provides the most value and most supply risk? a) Bottleneck b) Routine c) Critical d) Leverage

c) Critical

In optimization,__________ are related to certain parameters (shipping costs and cost of goods) to calculate an objective function to be optimized (total sourcing cost). a) Dependant Variables b) Independent Variables c) Decision Variables d) Constant Variables

c) Decision Variables

Which of the following is a characteristic of Pull Supply Chain Management? a) High Inventories b) Poor Communication c) Low Inventories d) Forecasting

c) Low Inventories

Select the option that is NOT a supply chain flow a) Information Flow b) Product Flow c) People Flow d) Process Flow e) Cash Flow

c) People Flow

Which of these is not an important document for received purchase products? a) Material packing slip b) Bill of Lading c) Purchase requisition form d) Discrepancy report

c) Purchase requisition form

Which type of contract allows distributors to receive a full refund for a limited number of unsold goods? a) Buyback b) Revenue-sharing c) Quantity-flexibility d) Sales rebate

c) Quantity-flexibility

An (A) __________ is a periodic review (typically annually) of a firm's entire set purchases a) Assumption b) Data aggregation c) Spend Analysis

c) Spend Analysis

Which of the following include the stock out costs? a) Cost of emergency shipments b) Substitution to less profitable items c) Cost of customer loyalty loss d) All of the above

d) All of the above

_____ measures, rates, or ranks ongoing supplier performance a) Report Card b) Purchase Requisition Form c) Supplier Performance Management Card d) Answers A and C

d) Answers A and C

Referencing the Portfolio Analysis Matrix, low value products that are high in supply risk are referred to as: a) Routine b) Leverage c) Critical d) Bottleneck

d) Bottleneck

Which of the following is NOT a risk of buyback contracts? a) Results in a surplus inventory for the supplier b) Requires the supplier to have an effective reverse logistics c) Buyer may have an incentive to push similar items that are not under buy-back d) Buybacks have a complicated supply chain to return products to supplier

d) Buybacks have a complicated supply chain to return products to supplier

Which of these increases profits the least amount? a) Decrease COGS b) Increase Sales c) Decrease Overhead d) Increase Salesforce

d) Increase Salesforce

All of the following are barriers to global sourcing except a) Currency fluctuations b) Resistance to change c) Longer lead times d) Labor required

d) Labor required

All of the following are part of "The Five Rights" except: a) Right quantity b) Right time c) Right price d) Right people

d) Right people

Which of the following is not an advantage of centralized purchasing a) Able to leverage purchase volumes b) Reduce duplication of purchases c) Development of specialized expertise d) Speed and responsiveness

d) Speed and responsiveness

Which one of these costs is NOT associated with forward buying a) Warehouse storage expense b) The cost of tying up money in inventory c) Insurance cost d) Stockout costs

d) Stockout costs

Which of these is not included in TCO? a) Usage costs b) End of life costs c) Acquisition costs d) Strategic costs

d) Strategic costs

Which of the following is NOT an Inventory Related Cost? a) Holding Cost b) Order Cost c) Stock- Out Cost d) Transportation Cost

d) Transportation Cost

Which of the following is not one of the 6 steps for the spend analysis process? a. Cleanse the data b. Aggregate the data c. Find the number of suppliers by category d. All of the above are part of the 6 steps for the spend analysis process

d. All of the above

You should use forward buying when a) When the price of the product will go up b) When the future availability of the product is not limited c) When manufacturers offer discounts for a short period d) Both A and B e) Both A and C

e) Both A and C

When should Hand to mouth purchasing not be used? A. Price Goes down B. Emergency C. Getting goods used occasionally and not taken into stock D. Goods used frequently that are taken into stock

D. Goods used frequently that are taken into stock

If a company has seasonal demand, would they want to use Push or Pull?

Push SCM

What 3 methods can be used in ABC analysis inventory stratification?

Sales method, GMROII Method, Hits Method

Which program did Campbell Soup utilize to increase the number of purchases? a) "Spend and win" program b) "Bill and hold" Program c) "Buy and wait" Program d) "Refer and save" Program

b) "Bill and hold" Program

When using hand to mouth strategy for Jan-June and the forward buying strategy for July-Dec how many orders would you be placing for the year a) 12 b) 7 c) 6 d) 1

b) 7

A company uses a unique screw critical to a product manufacturing process that only a select few manufactures can make. What type of product is this? a) Leverage product b) Bottleneck product c) Routine d) Critical

b) Bottleneck product

In order to reduce time to market, it is important to... a) Make your workers take less breaks b) Communicate with suppliers about requirements c) Lower COGS d) Increase overhead expenses

b) Communicate with suppliers about requirements

Using the rank sum method, which is considered the least important? a) Quality (r=1) b) Cost (r=4) c) Technical Capability (r=3) d) Delivery Performance (r=2)

b) Cost (r=4)

Is it easier to: a) Increase sales by 5% b) Decrease COGS by 8.3% c) Decrease overhead by 20% d) Both increasing sales and decreasing COGS are equal

b) Decrease COGS by 8.3%

Hand-to-mouth is prefered when prices are: a) Increasing b) Decreasing c) Unchanging d) Unpredictable

b) Decreasing

Which of the following describes a "push system"? a) Low Inventories b) High Inventories c) Waste reduction d) Better communication

b) High Inventories

Which of the following is NOT an inventory related costs? a) Ordering cost b) Set up cost c) Holding cost d) Stock-out cost

b) Set up cost

The leverage effect of purchasing refers to: a) Increase safety stock requirements b) Small reduction on COGS that leads to significant improvement in profitability c) Large reductions in one area to reduce safety stock d) The effect of increased order variability within the supply chain

b) Small reduction on COGS that leads to significant improvement in profitability

Which of the following is NOT a step that provides guidance on "how" to pick the right supplier? a) Step 3: Determine appropriate sourcing strategy b) Step 2: Identify key sourcing requirement c) Step 7: Select supplier and reach agreement d) Step 5: Limit supplier in selection pool

b) Step 2: Identify key sourcing requirement