GSC 5650: Exam 2 Review Questions
A buy decision is also called reshoring. TRUE OR FALSE
False
If you are involved in an integrative negotiation, you focus on value creation and avoid value claiming at all costs.
False
Moving to a wholly owned subsidiary is always the best option and allows you to retain control and reduce costs. TRUE OR FALSE
False
Your primary goal as a purchasing agent is to try to ensure an interrupted flow of supply. TRUE OR FALSE
False
Dual or Multi-Sourcing Risk Implication
If your primary supplier suffers a disruption, you have a backup supplier.
Inventory Pooling Risk Implication
Inventory can reduce the costs of a supply disruption. To reduce your inventory investment, you may pool safety stock with firms, including rivals in your own industry.
To effectively align buying strategies, a supply manager must understand the overall goals of the business. TRUE OR FALSE
TRUE
Cost modeling helps you as a purchasing agent choose the supplier with the right capabilites. TRUE OR FALSE
True
FMEA allows us to brainstorm about what can go wrong and then thinking about possible ways to prevent a failure from happening. TRUE OR FALSE
True
There is a lot of volatility in pricing even in more common categories such as lumber. TRUE OR FALSE
True
To assess a supplier's financial health you need to look at more than its bottom line. TRUE OR FALSE
True
Total cost of ownership models require some brainstorming with other functional areas. TRUE OR FALSE
True
You might need to negotiate even in the case of mundane situations, such as your favorite band coming to town. a. true b. false
a
All are reason for outsourcing except: a. Internal capabilities b. High internal capacity c. Accessing qualified personnel d. Capital Investment and innovation e. Taking out cost f. All of the above
b
All suppliers should be treated equal in regards to financial assessment. a. true. b. false
b
As you negotiate with a supplier, you attempt to drive down price by pointing out an undesirable characteristic of her product. This is an example of which negotiation tactic? a. The 90/10 rule b. The ding tactic c. The limited quality tactic d. The power of quality e. Playing hard ball
b
At the end of the day, as a supply professional you will negotiate for two basic reasons: to claim value your company, and to lower price. a. true b. false
b
Delaying the final production of a product to a point that is as late as possible is referred to as what? a. Near-sourcing b. Postponement c. Supplier segmentation d. Hedging e. Part standardization
b
Defining the company's competitive position has guidelines that include which of the following? a. Value proposition b. Strategic positioning c. Role of purchasing d. Role of category e. All of the above f. A & D only
e.
If there is $625,000 spread over suppliers with a spend of less than $50,000 how much is that as a percent of the total category spend of $2,500,000? a. 1% b. 5% c. 15% d. 20% e. 25%
e.
Which is usually not part of an FMEA? a. Severity b. Detectability c. Likelihood d. Potential effects e. None of the above; that is, they are all part of an FMEA
e.
Which of the following are activities that companies will outsource? a. Call center services b. Accounting c. Manufacturing d. Payroll processing e. All of the above f. None of the above
e.
What are the three statistics that might provide insight into the quality of an offshoring location. a. Leading Exporters, FDI Destinations, & AT Kearney's global Offshoring Location Index b. FDI Destinations, CIA World Factbook, OECD Data c. AT Kearney's global Offshoring Location Index, Leading Exporters, & CIA World Factbook d. OECD Data, Leading Exporters, & CIA World Factbook e. None of the above
a
If the best supplier is located outside of your home country, the decision to buy overseas is known as outsourcing. TRUE OR FALSE
False
If you are unable to make an apples-to-apples comparison, then competitive bidding is a better option than negotiation True or False
False
In a negotiation, the RV is used to calculate BATNA. True or False
False
Negotiations often lead to a decreased understanding of a supplier—and as a result, less cooperation. True or False
False
Strategic level cost modeling helps a supply manager make a selection between two suppliers of the same material. TRUE OR FALSE
False
Suppliers can only be segmented in one way. TRUE OR FALSE
False
The balance sheet shows the difference between what a company owns and owners equity. True or False
False
The key to alignment is to understand the goals or mission of the organization that you work for, then look at the goals of the operations area. TRUE OR FALSE
False
Threats can help you move the negotiation forward whether you are ready to end the negotiation or not True or False
False
To understand the demand side of the business all you need to do is talk to marketing and sales. TRUE OR FALSE
False
You need a computer with high speed and high RAM in order to perform cost modeling. TRUE OR FALSE
False
What criteria should be included in Stage 3 of the outsourcing/offshoring process? a. Capabilities, costs, & location attractiveness b. Costs, supplier uniqueness, & ability to measure progress c. Location attractiveness, supplier uniqueness & costs d. Unique machinery, costs, & supplier standards, e. None of the above
a
A negotiation that is arm's length, adversarial, and even confrontational is called a . . .? a. Hard place negotiation b. Hard stop negotiation c. Integrative negotiation d. Pareto negotiation e. Distributive negotiation
e
A purchaser needs to be able to ... ? a. Understand a supplier's financial documents b. Assess the quality of the financial numbers c. Understand the capabilities a supplier has for preparing financial documents d. Assess "window dressing" that shows overly optimistic numbers e. All of the above f. Only A & B
e
A risk heat map usually has the following two axes? a. Risk severity and risk magnitude b. Risk rank and risk exposure c. Risk probability and risk likelihood d. Risk impact and risk exposure e. Risk likelihood and risk impact
e
Depreciation ... ? a. Is accrued over time b. Impacts the valuation of assets c. Impacts profit d. Influences overall tax burden e. All of the above f. Only A & C
e
If you are confident about the _____, it is generally best to make the first offer. a. Timeframe b. Supplier's responsiveness c. Shifting focus d. Reflexive point e. ZOPA
e
If, during the negotiation, you discover information that substantially changes the negotiation landscape, you should . . .? a. Ask the supplier for additional concessions b. Recalculate your ZOPA c. Ask to have your legal counsel present d. Ask for an even lower price e. Pause the negotiation
e
In order to perform cost modeling what do you need to understand? a. Data triangulation b. Total cost of ownership c. Key drivers d. Cost elements e. All the above f. None of the above
e
New product development activities can impact which of the following? a. Income statement b. Balance sheet c. Profit d. COGS e. All of the above f. Only C& D
e
Profitability ratios include ... ? a. Return on assets b. Return on equity c. Profit margin d. Operating profit margin e. All of the above f. Only C& D
e
Supplier terms add additional cost elements to the total cost of ownership. These terms include which of the following? a. Warehousing and materials costs b. Payment terms c. Delivery frequency d. Transportation costs e. Only B&C f. Only A & D g. none of the above
e
The nature of the item and process includes an assessment of which of the following? a. Complexity b. Types of materials c. Labor content d. Production processes e. All of the above f. None of the above
e
What is hedging? a. Segmenting suppliers based on risk b. Ensuring careful contract language c. It is comparable to near-sourcing d. Waiting to customize a product until the last minute e. The purchase of future contracts
e
What is the key to pursuing interests? a. Probe b. Explore possibilities c. Use anchors d. Set a deadline e. Both A& B
e
What is true about cash? a. Cash helps run a business not profits b. Running out of cash can make a profitable business go bankrupt c. There is a delay in the receipt of cash from the sale of products d. Depreciation is a non-cash expense e. All of the above are true
e
When considering implementation in Stage 4 of the of the outsourcing/offshoring process, what issues should you consider? a. How to communicate expectations and monitor performance? b. What level of intensity should the relationship be? c. How will continuous improvement be driven? d. Who will be on the team? e. All of the above f. Only A, B, & C
e
Which is the first step to a Multi-criteria analysis? a. Evaluate options b. Set weights c. Define scoring system d. Calculate results e. Decide on criteria
e
Which is the following is a tactic that you would use to move a negotiation toward an integrative negotiation? a. Pursue interests b. Explore possibilities c. Build trust d. Share benefits e. All of the above
e
Which of the following activities can be outsourced? a. Purchasing b. Payment collections c. Risk management d. Design of products e. All of the above f. Only B, C, & D
e
Which of the following are among the top three exporter countries? a. Philippines b. United States c. Mexico d. Germany e. B and D only f. A and C only Bookmark question for later
e
Which of the following are common negotiation outcome mistakes? a. Leave money on the table b. The winner's curse c. Failing to ask d. Lack clear objectives e. Only A, B, & C
e
Which of the following are common negotiations process mistakes? a. Rely on assumptions b. Don't understand counterpart c. Don't invest time d. Lack of convincing positions e. All of the above
e
Which of the following do you need to evaluate in Stage 2 of the outsourcing/offshoring process? a. Are you giving the supplier too much power? b. Are you able assess supplier performance readily? c. Are there interdependent processes that need to be done together? d. Is there unique machinery that your supplier will need to acquire if you outsource? e. All of the above f. Only A & C
e
What is inventory pooling? a. Establishing designated safety stock with others in the industry b. Delaying product differentiation to a point as late as possible c. Sourcing from geographically diverse suppliers d. Standardizing parts as much as possible e. Developing multiple products that can supply the same item
a
Which is the third step to a Multi-criteria analysis? a. Define scoring system b. Evaluate options c. Calculate results d. Decide on criteria e. Set weights
a
Which of the following are two types of offshoring? a. Offshore production, Global sourcing b. Insourcing, Offshore production c. Global sourcing, Outsourcing d. Insourcing, Outsourcing e. None of the above
a
What does Aldi's sourcing strategy mean for you as a decision maker? a. Everything you do needs to lower the cost of purchased goods--without sacrificing quality. b. Everything you do has established standards to assure that every product brought for sales is fresh, socially responsible, and safe. c. You need to scan the market to spot emerging trends and to keep the right product and brands on the self. d. All of the above e. None of the above
a.
What is the downside to subcontracting? a. The loss of some control over the production process. b. The hassle of getting the business up and running. c. The high levels of technological support that is needed. d. All of the above e. Only A & C
a.
What is the supplier's overhead as a percent of labor given the following information? Labor $2.00 Material $3.00 Overhead $3.00 Cost $8.00 SGA $0.80 Total Cost $8.80 Profit $0.88 Price $9.68 a. 150% b. 200% c. 100% d. 125% e. 0%
a.
Understanding a suppliers cost structure is possible once you understand some basic pricing tools. TRUE OR FALSE
True
You might need to negotiate personal situations like what movie to watch. True or False
True
When conducting a category analysis, the nature of the item and process includes assessing which of the following questions? a. How complex is the item you are assessing? b. Can you forecast a need for the item? c. What is your company's purchase history for the item? d. What is it that your company needs? e. All of the above f. None of the above
a.
If the situation requires it then you need to have enough ____ to reverse an outsourcing and/or location change decisions a. guts b. glory c.. game d. giggles e. greem
a
In a buyer-supplier negotiation, what is the top of the ZOPA formed by? a. The buyer's RV b. The supplier's RV c. The buyer's target d. The supplier's target e. None of the above
a
In which step of the risk management process do you classify risks from trivial to severe? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk exposure e. Risk monitoring
a
Integrative negotiations are also sometimes referred to as: a. Win-win b. Win-lose c. Win-win-win d. 3D negotiations e. None of the above
a
Intellectual property is a critical issue in all countries. a. True b. False
a
Interest and taxes don't have anything to do with the quality of your operating decisions a. true b. false
a
Just-in-time is related to which other principle? a. Lean production b. Outsourcing c. Globalization d. Greater competition e. More complex supply chains
a
LEGO's outsourcing issues were driven by the goal of _____________ the supply chain but ended up adding ______________________ to the supply chain as they outsourced to Flextronics. a. Simplifying, complexity b. Developing new products, the same products c. Entering new countries, local suppliers d. Improved cash cycle, significant costs e. More fun for purchasing, lots of headaches
a
Modern purchasing organizations are fully involved in the make versus buy analysis. a. true b. false
a
One of the two basic reason why supply manager negotiate is to...? a. Expand value for the buying company and the supplier, if possible. b. To drive down price to as low of a level as possible. c. To increase competition for commodity-like spend. d. All of the above e. None of the above
a
One of the two basic reasons why supply managers negotiate is to . . .? a. Expand value for the buying company and the supplier, if possible b. To drive down price to as low of a level as possible c. To increase competition for commodity-like spend d. All of the above e. None of the above
a
Operating profit tells you how well your company is being managed. a. true b. false
a
Success in life depends on your ability to negotiate well. a. true b. false
a
Supply management negotiations tend to be more formalized than personal negotiations. a. true b. false
a
Supply managers are responsible for ensuring that they get the best products and services from their suppliers. a. true b. false
a
Supply managers negotiate for many reasons a. true b. false
a
The ceiling of the ZOPA is formed by . . .? a. Your RV b. The supplier's BATNA c. The supplier's target value d. Your BATNA e. The supplier's BATNA
a
The make or buy decision often comes along ad-hoc and unstructured a. true b. false
a
The most obvious focus of a negotiation is the price that you will pay to a supplier. a. true b. false
a
The term BATNA stands for . . .? a. Best Alternative to a Negotiated Agreement b. Best Altercation to No Avail c. Better At True Negotiation Attitude d. Better Alternative to Negotiating an Agreement e. None of the Above
a
To asses a supplier's financial health you need to look at a more than its bottom line. a. true b. false
a
To which supply chain design issue does the mantra faster, better, cheaper refer to? a. Increasing customer demands b. Increasing clockspeeds c. Greater levels of outsourcing d. Globalization e. Lean production
a
Activity ratios: a. Focus on utilizing liabilities to generate sales b. Include collection of receivables c. Include profitability d. Focus on utilizing assets to increase bonuses e. None of the above
b
As you negotiate with a supplier, you attempt to drive down price by pointing out an undesirable characteristics of her product. This is an example of which negotiation tactic? a. the 90/10 rule b. The ding tactic c. The limited quality tactic d. The power of quality e. Playing hard ball
b
Being able to manage the supply side of a business to better meet the demands of business a. easy b. challenging c. cumbersome d. automated e. all of the above f. none of the above
b
Calculate the supplier score given the following parameters: Criteria. Weight Score Weighted Score Price 25% 100 25 Quality 30% 50 15 Lead time 30%. 80 24 Delivery 15% 10 15 Total weighted score a. 40 b. 79 c. 64 d. 100 e. You have no clue
b
External spend, as a fraction of total cost, has increased for most companies. Which risk does this impact the most? a. Inventory risk b. Quality risk c. Transit loss risk d. Risk of natural disasters e. Economics risks
b
Given the following financials and a 365-day year, what is the cash-to-cash cycle? Sales: $50,002 Cost of Goods Sold: $42,068 Beginning Inventory: $1,051 Ending Inventory: $1,301 Receivables: $6,493 Payables: $11,293 a. 98.0 b. -40.4 c. 3.2 d. 52.6 e. None of the above
b
In a negotiation, the RV is used to calculate BATNA a. True b. False
b
Liabilities = assets + owner's equity a. true b. false
b
Location attractiveness is not influenced by what? a. Language, cultural proximity b. Difficulty in performance measurement c. Labor quality d. Labor cost savings e. All of the above influence location attractiveness
b
Reputational impact is a relatively easy concept to quantify True or False
b
Risk probability addresses which of the following questions? a. How are we doing? b. How likely is the risk? c. How severe is the impact? d. What can go wrong? e. How acceptable is the risk?
b
The ZOPA is formed by . . .? a. Your BATNA and the other party's BATNA b. Your RV and the other party's RV c. Your target value and the other party's target value d. All of the above e. None of the above
b
The balance sheet ... ? a. Includes gross profit. b. Shows what you own and owe. c. Includes COGS. d. Includes sales/revenue. e. None of the above f. Only C& D
b
The balance sheet shows the difference between what a company owns and owners equity a. true b. false
b
Thomas Friedman's best-selling book The World is Flat was primarily concerned with what? a. Sustainability b. Globalization c. Innovation d. Global warming e. International conflict
b
What are some key strategic considerations to include for certain locations? a. access to customers b. access to innovation c. flexibility d. total cost e. all of the above f. none of the above
b
What is the use of a 'limited time offer' in a negotiation an example of? a. The ding tactic b. Investment in time c. Limited authority d. Ultimatums e. The power of silence
b
Which is the fourth step to a Multi-criteria analysis? b. Evaluate options e. Decide on criteria d. Define scoring system c. Calculate results a. Set weights
b
Which is the second step to a Multi-criteria analysis? a. Calculate results b. Set weights c. Evaluate options d. Decide on criteria e. Define scoring system
b
Which is usually the first step in a risk management process? a. Risk measurement b. Risk identification c. Risk mitigation d. Risk evaluation e. Risk assessment
b
Why is part standardization able to reduce risk? a. You are able to monitor quality much better b. You increase the supply options you can turn to when a disruption occurs c. Standardized parts are easier describe in an RFP/RFQ d. Standardized parts are likely much preferred by your customers e. Standardized parts can be purchased in bulk
b
You have to write a check to pay for depreciation at the end of the year a. true b. false
b
A risk acceptance pyramid classifies risks into which categories? a. Catastrophic, critical, marginal, and negligible b. Unacceptable (Can't Live With), tolerable, and acceptable c. Extremely rare, rare, infrequent, and often d. Good, better, and best e. High risk, medium risk, and low risk
b.
Being able to manage the supply side of a business to better meet the demands of the business is ___________________. a. easy b. challenging c. cumbersome d. an anomaly e. All of the above f. None of the above
b.
Being able to manage the supply side of a business to better meet the demands of the business is ___________________. a. easy b. challenging c. cumbersome d. an anomaly e. All of the above f. None of the above
b.
If you are expected to reduce spend by 5% on a category where 2,500,000 is spent each year, what is the amount you must save? a. $100,000 b. $125,000 c. $150,000 d. $225,000 e. $250,000
b.
In which phase of the risk management process is supply chain process mapping is especially useful? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk exposure e. Risk monitoring
b.
Risk severity and risk probability can be graphically depicted using what? a. Risk acceptance pyramid b. Heat map c. Risk mitigation graph d. Supplier segmentation pyramid e. Risk management plot
b.
What are the other options that a company could choose besides the make vs. buy decision? a. Buy or rent b. Automate or eliminate c. Sell or buy d. Eliminate or buy e. None of the above
b.
What does a maverick buyer do? a. Rides horses b. Does not incorporate the purchasing department c. Lives on a ranch d. Has an assigned level of spend e. All of the above f. None of the above
b.
Asking questions or making statements such as "Can you explain that to me again?", "I'm not sure I understand," and "Why can't I do this?", with the hopes of wearing down the other party and gaining a concession, is an example of which negotiation tactic? a. The power of talk b. The power of the question c. Playing dumb d. Questioning assumptions e. The gift of gab
c
Declining performance caused Xerox to ... ? a. Falsify all accounting records b. Bury money in the back parking lot c. Book service revenues earlier d. Fire its accountants e. None of the above
c
Liquidity ratios ... ? a. Assess the long-term growth of a supplier. b. Are calculated with data from the income statement c. Assess whether a supplier can pay its bills when due d. Considers the amount of inventory a supplier has. e. None of the above
c
Negotiations that involve both value creation and value claiming are referred to as . . .? a. Inter-organizational negotiations b. Ambassador negotiations c. Integrative negotiations d. Delta negotiations e. Demise negotiations
c
Sales minus cost is equal to what? a. cogs b. gross profit c. net profit d.interest and taxes e. none of the above
c
Sales minus costs is equal to . . .? a. COGS b. Gross profit c. Net profit d. Interest and Taxes e. None of the above
c
Suppliers can be segmented in many ways except by: a. Commodity b. Business unit c. Size of business d. Technological evolution e. All of the above f. None of the above
c
The balance sheet helps you answer particular questions about your supplier. Which of the following is not one of these questions? a. what assumptions is the supplier making b. do total assets outweigh total liabilities? c. How much money is the supplier making? d. Can the supplier pay its bills? e. All of the above are found on the balance sheet
c
The example of EDS back in 2003, when they won a $4 billion deal to manage voice, video, networking, etc., but didn't realize it had signed on to integrate or replace thousands of legacy and custom applications is an example of this? a. Overlooking resistance to change b. Inaccurate cost analysis c. Poorly documented processes d. Hollowing out the company e. All of the above f. None of the above
c
The term "expanding the pie" refers to: a. Value proposition b. Value claiming c. Value creation d. Value evaluation e. Value math
c
Under which of he following circumstances is competitive bidding a better option than negotiating? a. There is a small dollar volume, making negotiating a less attractive option b. There are unclear specifications, where negotiating would be confusing to the supplier c. There are an adequate number of suppliers that want to compete for your business d. Suppliers are unwilling to bid e. There is a very short timeframe, making negotiations less attractive
c
What astonishing announcement did Adidas make in June of 2016? a. They were going out of business b. They were entering the computer business c. They reshored shoe manufacturing to Germany d. They reshored shoe manufacturing to China e. Their cost of goods sold decreased 30%
c
What astonishing announcement did adidas make in June 2016? a. they were going out of business b. They were entering the computer business c. They reshored shoe manufacturing to Germany d. They reshored shoe manufacturing to China e. Their cost of goods decreased 30%
c
What does hallowing out of corporations mean? a. Too much has been reshored b. To much flesh and not enough bone c. Lots of bones but not enough flesh d. outsourcing of core competencies e. none of the above
c
What does the term " expanding the pie" refer to? a. Value proposition b. value claiming c. value creation d. value evaluation e. value math
c
What is true about the "line" on the income statement? a. The line refers to net profit. b. Top management pays a lot of attention to items "below the line." c. COGS vary with sales and influence gross profit. d. Demoted costs allow for investment opportunities e. None of the above are true
c
Which of the following are costs that are challenging to quantify? a. Ocean Transportation b. Duties c. Support costs d. Tariffs e. All of the above f. None of the above
c
Which of the following are key criteria to where we should outsource? a. Attractiveness of the people that live in the region. b. Infrastructure and the ability to move around the town c. Capabilities to perform the actual work d. Competencies of the local government e. None of the above.
c
Which of the following is your best approach to creating value in a negotiation? a. Negotiating to pay a higher price to the supplier b. Negotiating to pay a lower price to the supplier c. Introducing more than one issue into the negotiation d. All of the above e. None of the above
c
Which of the following statements is false? a. There is a high level of apathy toward supply risk management b. Most companies do not quantify risks when outsourcing production c. Companies are well versed in supply chain risk management d. Risk management is a challenging domain in need of more attention e. Many companies do not have a risk management plan in place
c
You are negotiating with a supplier, and the supplier makes a very aggressive first offer. The best strategy is to . . .? a. Focus on the supplier's offer and ask the supplier to justify the offer. b. Readjust your planned initial offer by making a more moderate and reasonable offer. c. Tell the supplier that it appears that you are looking at the deal in different ways, and give the supplier an opportunity to make a more reasonable offer. d. Stand up and threaten to leave the table. e. All of the above are excellent responses to a very aggressive first offer by the supplier.
c
You can acquire services from Dun & Bradstreet to help do a better job with which of the following? a. Hedging b. Near-sourcing c. Supplier monitoring d. Postponement e. Contract language f. All of the above
c
Beyond total supply, as a purchaing agent, what else do you need to track? a. capacities b. optimization models c. capabilities d. cost drivers e. all of the above f. Only A & C
c.
If a company spends $5 million annually on its goods and services, what percent of the total spend is $400,000? a. 1% b. 5% c. 8% d. 10% e. 15%
c.
The risk priority number is the product of which of the following? a. Severity and likelihood of occurrence b. Detectability and likelihood of occurrence c. Likelihood of occurrence, severity, and detectability d. Likelihood of occurrence, detectability, probability of occurrence e. Risk magnitude, risk severity and detectability
c.
What of the following is an objective of lean production? a. To reduce supply disruptions b. To become more innovative c. To eliminate waste, including to strive for zero inventory d. To mitigate the risk of global sourcing e. To aim for greater diversification
c.
Which is usually the last step in a risk management process? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk exposure e. Risk monitoring
c.
As a supply manager, by making an aggressive first offer, you can form a/n _______ which might help to drive down price. a. Floor b. Ceiling c. Price point d. Anchor e. Elevation point
d
As you implement continuity planning, what questions should you ask? a. How likely is each disruption? b. What are each disruption's potential impacts? c. How prepared are you to respond to each disruption? d. All of the above e. Only A & B
d
For high-technology processing you might look at a/n _____ process technology a. easy b. difficult c. cumbersome d. automated e. all of the above f. none of the above
d
In which step of the risk management process do you calculate the risk exposure value? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk exposure e. Risk monitoring
d
In which step of the risk management process do you develop a heat map? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk assessment e. Risk monitoring
d
Long lead times contribute to which risk? a. Quality risk b. Economics risks c. Risks of natural disasters d. Inventory risk e. Risk of terrorism
d
One strategy to reduce risks is to have a backup supplier in case your incumbent is not able to deliver. What is this strategy called? a. Inventory pooling b. Hedging c.Postponement d. Dual- or multi-sourcing e. Single-sourcing
d
Porsche outsources between which percentages? a. 10-20% of its components/services b. 30-40% of its components/services c. 50-60% of its components/services d. 80-90% of its components/services e. Don't have a clue!
d
Southwest Airlines is known for which risk management strategy? a. Near-sourcing b. Postponement c. Supplier segmentation d. Hedging e. Part standardization
d
The "make" decision is most clearly related to which of the following? a. outsourcing b. reshoring. c. offshoring d. insourcing e. onshoring f. all of the above g. c, d, and e only
d
The expectation that if one party makes a concession, the other party will make the next concession is called the . . .? a. Concession expectation b. Quid pro quo c. Multiple concession expectation d. Norm of reciprocity e. Serial concession pattern
d
The income statement ... ? a. Includes accounts receivable b. Includes cash flow c. Includes fixed assets d. Includes sales/revenue e. None of the above f. Only A, B, & C
d
The longer parties negotiate, the more willing they are to make concessions. The discussion mentions that roughly ___% of the concessions in a negotiation are made during the last ___% of the negotiation: a. 50/10 b. 60/40 c. 70/30 d. 80/20 e. 90/10
d
The primary reasons that the startup company had problems with their offshore web developer include all except: a. unclear specification b. delayed payment c. poor relationship management d. reasonable supplier selection criteria e. mimicking competitors
d
The strategic profit model shows that purchasers impact ... ? a. Material costs which are included in the balance sheet b. COGS which are influenced by material costs only c. Total assets which are concerned with only fixed assets d. Material costs and inventory costs which are represented on the income statement and balance sheet e. None of the above
d
The threat of leaving the negotiation table is known as what? a. The walk off b. The turnaround c. The table turn d. The walkway e. The turntable
d
There is a "line" for which some costs fall above and others fall below. What is the "line" an important determinant of? a. cogs b. operating expenses c. bonuses d. gross profit e. none of the above
d
What is one problem that might arise due to lack of detailed instructions? a. ingredients b. paperwork c. rules d. specifications e. tariffs
d
What is the "who should do it" question also called? a. Geographic location b. Production planning c. Contracting d. Make versus buy e. None of the above
d
What is the expectation that if one party makes a concession, the other party will make next concession called? a. concession expecatation b. quid pro quo c. Multiple concession expectation d. Norm of reciprocity e. Serial concession pattern
d
Which financial statement shows you how your efforts contribute to profit? a. Cash flow statement b. Balance Sheet c. 401K d. Income Statement e. None of the above
d
Which financial statement shows you how your efforts contribute to profit? a. cash flow statement b. balance sheet c. 401K d. Income statement e. None of the above
d
Which of the following is NOT a common "process" negotiating mistake? a. Don't invest time b. Don't understand counterpart c. Lack convincing positions d. Failing to ask e. None of the Above
d
Which of the following is NOT a tactic that you would use during a distributive negotiation? a. Walk away b. Set a deadline c. Point out dings d. Pursue interests e. None of the above, they are all distributive negotiation tactics.
d
Which of the following is not true of a risk management process? a. It provides a structured approach to think about risks b. It can help us to identify risk mitigation strategies c. It offers a way to quantify risks d. It can help us eradicate all risks e. It helps us in controlling risks
d
Which of the following is an example off a negotiation? a. A purchasing manager meets with a supplier to discuss the delivery of products prior to signing a contract. b. Your roommate agrees to wash the dishes if you cook meals/ c. You haggle with a street vendor about the price of a pair of shoes. d. The president of the U.s meets with the premier of China to discuss carbon emissions. e. all of the above
e
Which of the following is not contributing to an increased emphasis on risk management? a. Globalization b. Outsourcing c. Faster clockspeeds d. Increasing customer demands e. None of the above; that is, they all contribute to the increasing importance of risk management
e
Which of the following is true of disruption scanning. a. Proactive scanning is part science; that is, it is data driven b. Proactive scanning is part art, requiring that you ask "What if . . .?" c. Almost all disruptions are completely unforeseeable—that's why you do continuity planning d. All of the above e. Only A & B
e
Cash-to-cash cycle considers ... ? a. Accounts payables in days b. Accounts receivables in days c. Inventory turnover in days d. The cash flow statement e. All of the above f. Only A, B, & C
f
Conditions might change from the time your initial offshoring decision was made. What might this require you to do? a. Reassess costs b. Reassess labor c. Renegotiate with suppliers d. Find new suppliers e. Change locations f. All of the above g. None of the above
f
New product development activities can impact which of the following? a. Cash flow statement b. Profit c. COGS d. Balance sheet e. Income statement f. All of the above
f
New product development activities can impact which of the following? a. cash flow statement b. profit c. cogs d. balance sheet e. Income statement f. all of the above
f
Purchasing plays a key role in the make versus buy decision! Other functions that may play a role include which of the following? a. Top Management b. Finance/accounting c. Production management d. Production engineering e. Suppliers f. All of the above g. Only C & E
f
Supplier capabilities are influence by what? a. labor cost savings b. risk of knowledge loss c. international outsourcing experience d. critically of labor cost savings e. all of the above f. none of the above
f
What are the main areas to look at during the outsourcing decision process? a. Consider the strategic implications of outsourcing b. Evaluate cost and performance implications c. Decide who are the right decision makers d. Identify formal processes e. All of the above. f. Only A, B, & C
f
What are the strategic drivers behind outsourcing? a. Access to new markets b. Competitive pressures c. industry practice d. Business process redesign e. System redundancy f. All of the above
f
What does financial literacy mean? a. You understand assumptions and estimates of plant managers b. you can create a firm's financial statements c. You can make better decisions using financial numbers. d. You can analyze and understand decisions made by other managers. e. All of the above f. c and d only
f
What should you do if an item is not critical to competitive advantage and you are very capable of performing the task? a. Perform internally b. Invest to perform internally c. Keep internal d. Offshore e. Reshore f. None of the above; i.e., need more information
f
Which of the following accurately describes leverage ratios? a. They help to monitor the blood pressure of the supplier b. They are like a stress test c. They include debt to equity and times interest earned d. They help you determine if a supplier is exposed to too much debt e. All of the above f. Only B, C, & D
f
Which of the following is not part of the Outsourcing/Offshoring process? a. Capability Analysis b. Vulnerability Analysis c. Location Analysis d. Implementation e. All of the above, i.e. none of these are part of the process f. None of the above, i.e. all are part of the process
f
Which of the following should you ask to develop an effective negotiation plan? a. Are you claiming value? b. What are the facts? c. What are the issues? d. How strong are your positions? e. What concessions are you willing to make? f. All of the above g. Only B, C, D, and E
f
Which of the following would be a reason for insourcing? a. New technologies emerge b. New suppliers come to market c. Costs change d. Politics shift e. Only B & C f. All of the above
f
You need to be financially literate as a purchasing professional because . . .? a. You can't always trust the numbers - financial fraud b. Window dressing - accounting is an art and a science c. Assumptions and Estimates - limited data to estimate how well a company is doing. d. Suppliers might be playing with the numbers e. None of the above f. A, B, C, and D
f
You work for a company located in the United States and have decided to buy customer contact center services from a company located in India. What is this is called? a. Reshoring b. Backshoring c. In-sourcing d. Outsourcing e. Offshoring f. Offshore Outsourcing g. All of the above
f
What does looking at production processes allow you to look for? a. A donut shop b. A retail store c. A job shop d. A highly automated process e. All of the above f. C & D only None of the above
f.
What issues does the supply side include? a. Capabilities of existing suppliers b. Aggregation of supply situation d. Potential shocks or disruptions e. Governmental regulations f. All of the above g. None of the above
f.
Which of the following is not a reason that companies use to offshore? a. Access to resources b. Access to innovation c. Increased flexibility d. Access to customers e. B & C are not reasons f. None of the above—they are all reasons
f.
How can you improve your cash-to-cash cycle in a way that leads to positive and productive buyer/supplier relations? a. Use power to squeeze suppliers b. Use technology to collect sales faster c. Lean-up processes so that they are more efficient and eliminate waste d. Delay supplier payment e. All of the above f. Only C & D g. Only B & C
g
As a category specialist, you need to develop expertise on which of the following? a. Price b. Data retrieval c. Puzzles e. Availability e. All of the above f. None of the above g. A and D only
g.
Which of the following dimensions must be considered when developing your sourcing strategy for a specific commodity? a. Reshore versus offshore b. Supply base rationalization c. Supply risk management d. Supplier development e. All of the above f. None of the above g. C and D only
g.
What does an implementation planning document look at? a. Who b. What c. Where d. When e. How f. Why g. All of the above h. A, B, & D only i. None of the above
h.
what does an income statement do?
e
To compute the risk exposure value, you need which two indices? a. Risk consequence index and risk probability index b. Risk probability index and risk likelihood index c. Risk consequence index and risk severity index d. Risk severity index and risk likelihood index e. Risk magnitude index and risk scale index
a.
What is the primary outcome of disruption assessment? a. A clear understanding of all of the risks that might affect your operations b. A set of priorities to help you effectively use resources to mitigate risks c. A pretty heat map d. All of the above e. Only A & C
b.
What is the rate of change in an industry called? a. Velocity b. Clockspeed c. Efficiency d. Swiftness e. Speed
b.
What is the rule for outsourcing and offshoring decisions? a. "When" and "Where" b. "Who" then "Where" c. "What" and When" d. "Where" then "When" e. None of the above
b.
Which is the last step to a Multi-criteria analysis? a. Define scoring system b. Calculate results c. Decide on criteria d. Evaluate options e. Set weights
b.
What does hallowing out of corporations mean? a. Too much has been reshored b. Too much flesh and not enough bone c. Relinquished too much of your core capability d. Outsourcing of core competencies e. None of the above
c
Why can't you take a supplier's word for its physical fitness a. suppliers have no idea what an income statement or balance sheet is. b. suppliers don't compile financial information c. Suppliers tend to present overly optimistic data d. suppliers may lack the capability to present financials accurately e. a and b. f. c and b g none of the above
f
Why do you need to be financially literate as a purchasing professional? a. you can't always trust the numbers- financial fraud b. Window dressing - accounting is an art and a science c. Assumptions and estimates - limited data to estimate how well a company is doing. d. Suppliers might be playing with the numbers e. None of the above f. A, B, C and D
f
You can't take a supplier's word for its physical fitness because . . .? a. Suppliers have no idea what an income statement or balance sheet is. b. Suppliers don't compile financial information c. Suppliers tend to present overly optimistic data d. Suppliers may lack the capability to present financials accurately. e. A and B f. C and D g. None of the above
f
What is reserving an outsource offshore decision known as? a. Outsourcing b. Offshoring c. reshoring d. insourcing e. onshoring f. All of the above g. c, d, and e only
g
The outsourcing decision is really about who can do the job best. TRUE OR FALSE
True
Given the following financial statements for GM, what is the current ratio? (Round your answer to the nearest 100ths place value.)
0.59
Given the following financial statements for GM, the return on assets is ______ percent? (Write your answer as a percentage, rounding to the nearest 100ths place value—e.g., 5.25. Omit the percent sign in your answer.)
2.22
Given the following financial statements for GM, what is the average days in inventory? (Round your answer to the nearest whole day.)
35
Geographical Diversification Risk Implication:
By sourcing from geographically diverse regions, you have a backup when a disaster strikes, disabling suppliers in a specific region.
A complete FMEA usually does not include recommended actions to ensure that failure modes do not manifest themselves. TRUE OR FALSE
False
After completing a negotiation, you learn that your first offer was above the supplier's RV. This was probably a good first offer. True or False
False
Competitive bidding and negotiation are appropriate tools to help you achieve your cost goals for buys that are in the Routine quadrant of the Strategic Sourcing Matrix. True or False
False
Elimination implies that your process needs significantly fewer human resources. TRUE OR FALSE
False
A "shelter" service provider manages the hassles of getting the business up and running True or False
True
An action plan translates theory into practice. TRUE OR FALSE
True
FMEA usually starts by identifying the function or process that can experience a defect. TRUE OR FALSE
True
For a high labor content item you could look for suppliers in China True or False
True
For continuity planning to be effective, you have to update your mitigation/recovery plans based on what happened during and after each disruption event. TRUE OR FALSE
True
If suppliers are unwilling to bid, then negotiation is a better option than competitive bidding. True or False
True
Just because outsourcing is viable, that doesn't mean that it is your best option. TRUE OR FALSE
True
Modern purchasing organizations should be fully involved in the make versus buy analysis. TRUE or FALSE
True
Not all spend of an organization runs through supply management. (True or False)
True
Price is an important strategic consideration in the geographic decision-making process. TRUE OR FALSE
True
Purchasing typically owns the global sourcing decision. TRUE OR FALSE
True
Success in life depends on your ability to negotiate well. True or False
True
Supply management negotiations tend to be more formalized than personal negotiations. True or False
True
The first step in a cost model is to baseline and segment the spend. (True or False)
True
The goal of continuity planning is to prepare for a disruption before it strikes so that you can resume normal operation as quickly as possible. TRUE OR FALSE
True
The more control you have over price and availability, the better you can reduce risk. TRUE OR FALSE
True
Part Standardization Risk Implication
Using standard parts increases the number of supply options you can turn to when a disruption occurs.
A company that is growing sales and increasing profits can go bankrupt. a. true b. false
a
A popular destination to offshore IT services is the Philippines a. true b. false
a
An acid test is also called ... ? a. Quick ratio b. Debt-to-equity ratio c. Inventory turnover ratio d. Revenue compared to cost e. None of the above
a
Ariba is both a platform and a technological solution that can help in automation and elimination a. true b. false
a
As you negotiate with a potential employer, you ask for an additional $3.00 in annual salary. The employer asks why you want this increase, and learns that you need to begin repaying a student loan. The employer states that he cannot increase you salary, but that his company can assume your loan at 0% interest rate. IN this example, what has the employer identified. a. Interest b. position c.. demand d. reservation value e. All of the above
a
Automation is a way to take high labor content jobs and reduce the labor cost. a. true b. false
a
Cash comes from (and is used for) three types of activities. Which of the following does not represent one of those activities? a. Cash from fundraising activities b. Cash from financing activities c. Cash from investment activities d. Cash from operating activities
a
Companies are challenged in understanding their core competencies a. true b. false
a
Dell achieved a negative cash-to-cash cycle by doing which of the following? a. By selling products and collecting revenue before paying suppliers b. By increasing inventory levels c. By allowing longer payment terms to customers d. By decreasing the payment terms to suppliers e. None of the above
a
Depreciation can be used to reduce your tax burden. a. true b. false
a
Dividing suppliers into different groups based on the risk they pose to a company is referred to as what? a. Supplier segmentation b. Supplier selection c. Supplier monitoring d. Supplier auditing e. Supplier site visits f. Both A and D
a
Given the following financials and a 365-day year, what is the cash-to-cash cycle? Sales: $120,357 Cost of Goods Sold: $59,468 Beginning Inventory: $7,490 Ending Inventory: $6,317 Receivables: $16,407 Payables: $13,350 a. 10.3 b. 84.7 c. -2.8 d. 49.8 e. None of the above
a
How is the risk exposure value computed? a. Risk consequence index x Risk probability index b. Risk consequence index + Risk probability index c. Risk consequence index - Risk probability index d. Risk consequence index / Risk probability index e. 1 - (Risk consequence index + Risk probability index)
a
Which of the following is the best use of an ultimatum, based on the recommendations presented in the courseware? a. "The best that I can do is $2.25 per unit with a quality level of 99.9%. Take it or leave it." b. "The best that I can do is $2.25 per unit with a quality level of 99.9%. I will give you until 9:00 am tomorrow to decide." c. "My last offer was my best offer. Take it or leave it." d. "The best that I can do is $2.25 per unit with a quality level of 99.9%, or $2.30 per unit with a quality level of 99.95%." e. "I do not want to pay more than $2.25 per unit with a quality level of 99.9%, but I may be able to go just a little bit higher."
d
Window dressing is . . .? a. The practice of setting up mannequins at your business b. A topping for the food that you eat c. Greenwashing d. Efforts made by accountants to make a firms' financial performance look as attractive as possible—within the rules of accounting. e. None of the above
d
________ are key to making offshoring/outsourcing work. a. archiving systems b. people c. internal capacity d. unions e. forklifts
d
For high-technology processing you might look at a/n ___________process technology. a. easy b. difficult c. cumbersome d. automated e. All of the above f. None of the above
d.
Of the $50,000,000 in spend $6,500,000 is spent on travel. What percent of the total spend is on travel? a. 1% b. 5% c. 8% d. 13% e. 20%
d.
What does the strategic positioning of BMW include? a. Highest price b. Lowest price c. Fastest cars d. High Quality e. All of the above f. None of the above
d.
What is postponement? a. Segmenting suppliers based on risk b. Ensuring careful contract language c. It is comparable to near-sourcing d. Waiting to customize a product until the last minute
d.
Which of the following does risk identification address? a. How are we doing? e. How acceptable is the risk? c. How severe is the impact? d. What can go wrong? b. How likely is the risk?
d.
Which of the following is the best use of an ultimatum, based on the recommendations presented in the courseware? a. "The best that I can do is $2.25 per unit with a quality level of 99.9%. Take it or leave it." b. "The best that I can do is 2.25 per unit with a quality level of 99.99%. I will give you until 9:00 a.m tomorrow to decide." c. "My last offer was my best offer. Take it or leave it." d. "The best that I can do is 2.25 per unit with a quality level of 99.99%, or 2.30 per unit with a quality level of 99.95%. e. "I do not want to pay more than 2.25 per unit with a quality level of 99.9%, but I maybe able to go just a little bit higher.
d.
Whole Foods has a mission statement and strategic positioning similar to which company? a. Wal-Mart b. School bus company c. Aldi d. BMW e. All of the above f. None of the above
d.
You should use ______________________ to build the total cost of ownership model at the commodity (or category) level. a. excel spreadsheets b. optimization models c. pricing standards d. cost drivers e. None of the above
d.
Which of the following should be considered when sharing co-created value with the supplier? a. How each party to the negotiation values the different benefits of the relationship b. How much the relationship's success depends on your supplier's capabilities. c. Your willingness to take a more liberal approach to sharing in the short term. d. The need to state your ultimatum by inviting a selection form a limited menu. e. Only A, B, & C
e
Who is an internal customer? a. The cafeteria manager b. The production manager c. The finance manager e. The guard e. All of the above are potential customers of a supply manager
e
Why does Toyota offshore to the US? a. Toyota wants to be perceived as local. b. Production costs in the US is less expensive c. Toyota wants to produce where they sell. d. All of the above e. Only A & C
e
Which of the following is not true of a FEMA? a. FMEA stands for failure mode and effect analysis b. FMEA relies in a structured worksheet c. In FMEA, you think about possible defects and how you can mitigated or prevent them d. FMEA extends the risk management process by accounting for how well we are able to detect defects e. Since FMEA has been developed for detecting failures in process, it is difficult to apply in purchasing
e.
Which of the following risks can have an impact on your supply chain? a. Regulations b. Port congestion c. Economic instability d. Changes in economic conditions e. All of these f. Only A & C
e.
Which of the following supplier requests should raise a red flag regarding a supplier's financial health? a. Urgent re-pricing b. Check pickup c. Funding for capital expenditures d. Delay of cost reductions e. All of these f. Only A and B
e.
