Chapter 2 - graded

d. Purchase order costs

Total Cost of Ownership does NOT consider which of the following factors? a. Freight costs b. Payment terms c. Tooling costs d. Purchase order costs

a. True

A reason for making items instead of buying them would include better quality control. a. True b. False

d. Office supplies

Blanket or open-end purchase orders are suitable for buying a. Custom built components b. Computers c. Heavy equipment d. Office supplies

a. True

Decentralized purchasing is the practice where individual, local purchasing departments throughout a single corporation make their own, individual purchasing decisions to fulfill their individual local needs. a. True b. False

c. Request for proposal

When a product is purchased which is complicated or highly technical a ______________may be issued instead of a request for quotation. a. Contract for sale b. Sales order c. Request for proposal d. Purchase order

a. Lower shipping rates due to lower tariffs

Which of the following NOT a reason firms are expanding their supply bases to include foreign suppliers? a. Lower shipping rates due to lower tariffs b. Overseas supplier holding the patent to the product c. Lower product cost d. Better product quality

d. Kaizen blitz

Which of the following is NOT a form of countertrade? a. Barter b. Offset c. Counterpurchase d. Kaizen blitz

b. There could be supplier interruptions due to political instability

Which of the following is a reason that single sourcing is considered risky/bad? a. It could establish close relationships with the supplier b. There could be supplier interruptions due to political instability c. Larger orders make quantity discounts more likely d. Decreases the item to item quality variability of items purchased

d. Specialization

Which of the following is an advantage of a centralized purchasing department? a. More frequent shipments b. Closer contact between buyer and user c. Less bureaucracy d. Specialization

c. Select the most cost-effective supplier

Firms can use total cost analysis to: a. Show how many times a firm's inventory is utilized and replaced over an accounting period b. See how efficiently management is using its total assets to generate profits c. Select the most cost-effective supplier d. Brainstorm and isolate the causes of a problem

a. 800 units

Given the following make-buy information, what would be the break-even point? Make Option Buy Option Fixed Costs $5,500 $1,500 Variable Costs $4 $9 a. 800 units b. 1,200 units c. 1,708 units d. 460 units

a. Ratio of cost of goods sold over average inventory cost

Inventory Turnover can be calculated by: a. Ratio of cost of goods sold over average inventory cost b. Ratio of average inventory cost over cost of goods sold c. Ratio of inventory days in stock over average inventory cost d. Ratio of average inventory cost over inventory days in stock

c. P-card

Petty cash is being phased out in favor of: a. Hard cash b. Score-carding c. P-card d. A blank check

d. Ensure the highest quality raw materials are purchased

The primary goals of purchasing include all EXCEPT: a. Improve the quality of finished goods produced b. Maximize customer satisfaction c. Secure materials at the lowest cost d. Ensure the highest quality raw materials are purchased

c. Supplier B

The total cost of ownership for Supplier A is $2,670,000. The total cost of ownership for Supplier B is $1,750,000. The total cost of ownership for Supplier C is $2,990,000. Using Total Cost Analysis, it will be more cost-effective to use a. Supplier A b. Supplier C c. Supplier B d. Cannot be determined.

a. Profit-Leverage Effect

Which of the following refers to the measurement of the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged? a. Profit-Leverage Effect b. Direct Offset c. Break-Even Analysis d. Leveraging Purchase Volume

c. Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.

Which of the following statements is FALSE? a. If a firm lacks the technology to make a required component they will need to consider buying/outsourcing. b. Electronic procurement systems can aid a company in saving both time and money. c. Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions. d. More than 50% of each sales dollar typically goes towards covering supply chain costs.

d. A firm lacks the technology or expertise to produce an item

Which of the following would be a good reason to outsource (buy) versus making? a. To utilize existing capacity within a company's own firm b. To have more direct control over the design and production of an end item c. No competent supplier presently produces the needed item d. A firm lacks the technology or expertise to produce an item

a. Traveling requisition

Which type of requisition is used for materials and standard parts that are requested on a recurring basis? a. Traveling requisition b. Open requisition c. Blanket requisition d. Recyclable requisition (Cyc-Rec)

b. Federal Acquisition Regulation

While most public procurement is focused on goals like those of purchasing departments in the private sector, U.S. federal government purchases must comply with the: a. Services and Materials Acquisition Act b. Federal Acquisition Regulation c. Federal Code of Conduct for Procurement d. Fair Standards and Equitable Purchases Act