460 Exam 2: Chapters 6-9, 14

The inability to store services:

means timing is critical to successful service acquisition.

When sourcing offshore, a buyer:

must have extensive knowledge and analysis of the country.

About 70 percent of the opportunity for value improvement lies in:

need identification and specification.

"C" items in ABC analysis are:

often managed by the supplier

A material requirements planning (MRP) system:

requires explosion of the bill of material as the basis of planning

A request for quotation that asks for a "brand or equal":

shifts responsibility for establishing equality or superiority to the bidder.

Which of the following would be a situation that discouraged countertrade?

well-developed domestic economy.

Given the following data, what is the reorder point (ROP) quantity? (Assume 5 days in a work week) Safety stock = 40 units Fixed order quantity = 500 units Replenishment lead time = 10 days Demand = 100 units per week

240

You are the purchasing manager and you buy a raw material having the following information: Annual demand = 2000 units Fixed order quantity = 200 units Order cost = $100 / order Inventory carrying cost = 25% Per unit purchase cost = $10 / unit Safety stock = 20 On average, what is the dollar value of inventory that you will have for this material?

$1,200

Given the following data: Revenues = $200MM; COGS = 60% of revenues; Cost of carrying inventory = $2.4MM; carrying cost percentage = 20%. What is the value of the inventory turns for this company? [Some helpful info: Cost of carrying inventory = Inventory $ * carrying cost percentage]

10

In a 2 bin kanban system, the demand is 10 per day, lead time is 8 days, and you want to build in a 3 day safety stock. What is the kanban quantity? (How much will each bin hold?)

110

Using the data in question number 10 (above); when the first bin is empty you will place an order for the kanban quantity; how much (quantity) will remain in the second bin when the ordered material arrives?

30

What type of inventory is held to account for seasonal demand variations?

Anticipation

You are a six sigma project manager. Your project is to improve the quality at a drill press. Through statistical analysis, you have identified the operators and the setup process as the "vital few", these would be classified as _______________.

CTQ's

CPFR stands for:

Collaborative Planning, Forecasting and Replenishment

The current view of the quality-cost trade-off is best described as:

High quality results in the lowest cost to a corporation

The governing convention on shipping terms and responsibilities involved in international transportation is called:

INCOTERMS (International Commercial Terms).

For a bike manufacturer (which sells no service parts), three (3) purchased parts (rim, tire, nuts) put together as a "wheel assembly" is an example of what type of inventory?

WIP

Determination of the "best buy" is based on:

a balance of requirements of marketing, engineering, operations, and supply

Supply chain risks include:

a, b, and c

Total quality management (TQM) tools include:

a, b, and c

When selecting freight carriers, buyers are most concerned with:

ability to deliver on-time with no damages.

Compared to domestic sourcing, when sourcing offshore more lead time may be needed because of:

all of the above

A transportation strategy should include consideration of:

all of the above.

The role and responsibilities of supply may contribute to the containment of the cost of poor quality by addressing:

all of the above.

The selection of the FOB point is important to the purchaser, for it determines:

all of the above.

Repetitive requirements should be purchased by:

an acquisition process or system

When one condition of a countertrade agreement is that government and/or military-related exports be purchased, this is called:

an offset arrangement

A reduction in set-up costs and time impacts:

cycle inventories

Over the past two decades, logistics costs as a percent of the U.S. gross domestic product (GDP) have:

declined due to deregulation, technology investment, and e-commerce.

The best type of inspection to use is:

dependent on the nature of the purchase.

JIT requires:

frequent deliveries of relatively small quantities.

In international buying, the type of entity that normally assists in locating suppliers and handling documentation is a(n):

import broker.

Intermodal transportation has increased due in large part to:

increased reliability from technological and operational improvements.

A third party logistics (3PL) services provider:

is a company that is separate from the buyer's and supplier's organizations.

A process is capable when:

it averages a set number of standard deviations within the specifications.

A document which is drawn by the buyer's bank at the buyer's request, and guarantees that the bank will pay the agreed-on amount when all prescribed conditions, such as satisfactory delivery, have been completed, is called a:

letter of credit.

When dealing with an international supplier, a knowledgeable buyer:

may decide to deal in international currency options.

Standardization:

means agreement on definite sizes, design, and quality

One of the advantages of integrated carriers (truck-air) like UPS and Federal Express is that they:

own their own aircraft

"A" items in ABC analysis are:

particularly critical in financial terms

Capacity requirements planning (CRP):

performs for manufacturing resources what MRP does for materials

Physical telecommunication routes are:

practically unlimited because there are few land or sea restraints to laying cable.

A sampling technique in which every element in the population has an equal chance of being selected is called:

random sampling

An internal failure cost is:

scrap and rework costs.

A sampling technique that is based on the cumulative effect of information that every additional item in the sample adds as it is inspected is called:

sequential sampling

When sourcing internationally:

the buyer should learn about the culture, customs, norms, taboos, and history of the supplier's country.

Supply's growing involvement in the acquisition of services may be explained by:

the high dollars spent on services and the opportunities to reduce costs.

An advantage of buying by performance or function over other specification methods is that it provides:

the opportunity for the potential supplier to establish how to make the most suitable product

Organizations operating under a just-in-time system, prefer to ship by:

truck

Early supply involvement can be accomplished by:

using cross-functional teams on new product development.

When using the EOQ model, increasing the cost of placing an individual order and decreasing the cost of carrying inventory(eg. 12% to 10%), will generally result in:

Larger order quantities

When software is delivered to users by an application service provider (ASP) where the software is housed in one location from which multiple users access it, this is known as:

On-demand delivery.

Nuts and bolts (hardware) procured from a local JIT vendor, and stored in point-of-use Kanbans on the factory floor, are an example of what type of inventory?

RM

A company buys 10,000 unique items and has a total annual purchase volume of $10 million. A part with a unit cost of one dollar ($1.00) and an annual volume of 1,000,000 units would be classified as:

A item

The United Nations Convention for the International Sale of Goods (CISG):

is automatically applied if both nations have adopted the CISG, unless another body of law is agreed upon in the contract.

When buying with a performance or function specification:

it may be difficult to compare quotations and the supplier may include a risk allowance in the price.