Practice Exam 2

The purchasing function is one of the most value-enhancing functions in any organization, and therefore, it is not necessary to periodically monitor the purchasing function's performance against a set of standards or industry benchmarks.

False

✓ Which Statistical Tool of Six Sigma is used to determine the frequency of a specific problem?

Check Sheet

✓ Which one of the following is NOT a reason for buying or outsourcing?

Due to a lack (i.e., shortage) of procurement personnel

✓ Which one of the following is NOT one of the 12 steps in the basic Purchasing Process?

Expediting

The Profit-Leverage Effect states that a decrease in purchasing expenditures will directly decrease profit.

False

✓ Strategic Sourcing is the process of identifying a company that provides a needed good or service

False

✓ The concept of Distributive Negotiations refers to both sides work together to maximize the outcome or create a win-win result.

False

✓ Which manufacturing process can be characterized as creating a custom product for each customer?

Job Shop Production Process

✓ In which item category would the sourcing strategies of consolidating volumes as a negotiation tool, using the competitive marketplace to reduce costs, and automating supplier interfaces to minimize process related costs, be appropriate?

Leverage Items

✓ Which one of the following Manufacturing Strategies has the shortest (i.e., fastest) Customer Delivery Cycle?

Make-to-Stock

✓ Which one of the following is NOT an element of Lean Manufacturing?

Mass Customization

What company originated the concept of Six Sigma?

Motorola

✓ The process commonly utilized in continuous improvement is known as?

Plan, Do, Check, Act

✓ The e-Procurement process has many advantages. Which one of those listed below is NOT one of these advantages?

Segmentation

Which of the following is NOT one of the "Seven Tools of Quality Control"

Small Batch Scheduling

✓ In which item category would the sourcing strategies of ensuring availability of supply, focusing on relationship building, encouraging process integration and innovation, frequent communications, and establishing mutually agreeable supplier performance criteria, be appropriate?

Strategic Items

"Rationalizing the supplier base" would mean that the purchasing firm is attempting to reduce the number of suppliers in its supplier network.

True

A LEAN system is also known as a pull system.

True

Pain and Gain Share contract provisions are associated with supplier rewards and recognition programs.

True

The primary design objective of a LEAN layout is to reduce wasted movements of workers and/or materials.

True

✓ Outsourcing allows the company that is outsourcing a product, to concentrate on core capabilities and reduce staffing levels.

True

✓ Which of the following is True?

VMI stand for Vendor-Managed Inventory

✓ An outsourcing program can result in all of the following positive outcomes, except?

Decreased need for supplier management

Award-winning suppliers serve as role models for other suppliers and may therefore be exempt from audits and certification programs.

False

✓ Costs incurred in the process of establishing specifications for incoming materials, processes, products, and services, are categorized as which of the following?

Prevention Costs

✓ The quality management philosophy that focuses on improving the overall quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes, is known as?

Six Sigma

✓ Which of the following would be a good reason to outsource (buy) versus make an item?

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

✓ Which manufacturing strategy is described as a manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent?

Assemble to Order

The sourcing strategies including; maintaining safety and/or strategic stocks, developing contingency plans, strengthening relationships, and searching for alternatives, are appropriate for which item category?

Bottleneck Items

A purchase order is legally binding once issued by the buyer.

False

LEAN and Six Sigma are essentially two terms that mean the same thing.

False

✓ LEAN is a disciplined, statistical-based, data-driven methodology for identifying and removing the causes of defects and minimizing variability in manufacturing and in business processes

False

✓ Products with short product life cycles, volatile demand, high-profit margins, and relatively little competition, are known as Functional Products.

False

✓ The process to evaluate a supplier's capabilities, and their capacity to supply a product or service to the buyer, is known as Supplier Certification.

False

✓ When a company utilizes a "make to stock" strategy, the company is also said to be using a "pull" business model

False

✓ While paperless transactions are now possible through e-procurement and Web-based services, these would NOT be considered sustainable business practices.

False

✓ Which of the following is NOT one of the Seven Tools of Quality Control?

Hysterical Charts

✓ All of the following are included in the eight wastes EXCEPT?

Overspending

✓ Which quality expert is credited with introducing the concepts of zero defects?

Philip Crosby

✓ What is the term for an internal document that defines the need for goods and/or services?

Purchase Requisition

✓ Performance Measures should be S.M.A.R.T. which is an acronym that means?

Specific, Measurable, Achievable, Relevant, Time-oriented

Managing a firm's external resources in ways that support the long-term goals of the firm can be referred to as?

Strategic Sourcing

✓ The sum of all costs associated with every activity in the supply stream of a product, is referred to as?

Total Cost of Ownership

✓ In-sourcing is defined as reverting to in-house production when external quality, delivery, and services do not meet expectations.

True

✓ One of the main reasons to consider purchasing from an international global source is the opportunity to improve quality, cost, and delivery performance

True

✓ The Weighted-Criteria Evaluation System is typically used to select a supplier or to evaluate the performance of a supplier?

True

✓ A proposal or quotation submitted in response to a solicitation from a contracting authority is known as what?

Bid

✓ The term used to describe a debt secured by a bidder for the purpose of providing a guarantee that the successful bidder will accept the contract once awarded, is known as?

Bid Bond

✓ In which sourcing category would an item typically be classified, if it is considered to be low value, high risk, and there are a small number of alternative suppliers?

Bottleneck

✓ Which of the following is NOT one of the keys to successful strategic partnerships?

Building independent objectives

✓ Benefits derived from implementing an e-procurement system include all of the following EXCEPT?

Decentralizing Purchasing

✓ The best supplier candidates for Supplier Relationship Management (SRM) include all of the following EXCEPT?

Developmental suppliers that need to make improvements

A 4PL, commonly referred to as a lead logistics provider, is a trucking company that also provides tracking services.

False

✓ A strong supplier partnership requires that both buyer and supplier adopt a strong tactical perspective.

False

✓ ISO 14000 is a widely accepted management and quality certification standard

False

✓ The role of workers in Lean is to create the cultural change needed for Lean to succeed

False

Which of the following is NOT one of the primary goals of Purchasing?

Increase the Supplier base

✓ Benefits of implementing an effective supplier certification program include all of the following EXCEPT?

Increasing the supplier base

LEAN manufacturing emphasizes all of the following EXCEPT:?

Large batch sizes

✓ Buying materials and components from suppliers instead of making them in your company-owned operations, is known as?

Outsourcing

✓ In which sourcing category would an item typically be classified, if it is considered to be high value, high risk, and there are few suppliers, but they are excellent?

Strategic

✓ If you understand the Total Cost of Ownership (TCO) then you know:

That you need to consider all the related costs over the life of the product.

✓ Intermittent Production Processes are used to produce a large variety of products with different processing requirements in lower volumes

True

✓ Successful supplier relationships involve equal decision-making control between both the buyer and the supplier.

True

✓ Return on Assets

Net Income / Total Assets

Duties, taxes, or customs imposed by the host country for imported or exported goods, are known as Tariffs.

True

✓ An effective supplier certification program may increase the time spent on incoming inspections.

False

✓ LEAN is an operating philosophy or mindset that attempts to minimize the impact of supply variability and flaws in forecasting through the use of safety stock inventories.

False

✓ Products with low profit margin, relatively stable demand, and high levels of competition, are known as Innovative Products.

False

✓ The purchasing tool described as "A detailed capabilities document used to determine a supplier's capability and interest in the production of a product or service" is called a Request for Proposal (RFP)

True

✓ Through collaborative negotiations both side work together to maximize the outcome or create a win-win result

True

✓ Waste encompasses wait times, inventories, material and people movement, processing steps, variability, any other non-value adding activity

True

✓ The goal of a good supplier performance evaluation system is to provide metrics that are:

Understandable, easy to measure, and focused on real value-added results

✓ The following term refers to an act that creates the greatest good for the greatest number of people?

Utilitarianism

✓ A key supplier's activities to help the buyer's company reduce cost, improve quality and reduce new product development time beginning with the initial design phase, are known as?

Value Engineering

What is the term that is often used for the acquisition of services?

Contracting

✓ Which tool of quality control is used to study how a process changes over time?

Control Chart

Which one of the following is among the most important elements of the LEAN manufacturing philosophy?

Waste reduction and continuous improvement

✓ A Supplier Code of Conduct is intended to inform suppliers of ethical sourcing expectations and is typically a condition for becoming an approved supplier.

True

✓ Backward Vertical Integration refers to a company acquiring one or more of their sources of supply.

True

✓ Which element of Lean is described as a system based on making little changes on a regular basis, anywhere changes can be made, to reduce process, delivery, and quality problems?

Continuous Improvement

✓ Attempts to take into account the public consequences of organizational buying, or to bring about positive social change through organizational buying behavior.

Ethical Sourcing

A LEAN system is also known as a push system.

False

✓ Which general sourcing category comprises commodity items where many alternatives of supply exist, and supply risk is low. Spend is high and there are potential procurement savings?

Leverage

✓ The inventory control tool that does not require direct line of sight to read the tag on a product(s), is known as

Radio Frequency Identification

✓ An organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections can be referred to as?

Supplier Certification