SCM421 Test2 quick check questions

Given the following information, what is the sum of both duties and customs fees for one container? Price paid to supplier: $630 per reel (500 foot of hose per reel) 4 reels of hose fit on each pallet Pallets per container: 10 Shipping costs: $4,600 per container to the Los Angeles Port Duties: 5.3% the value of the container Customs Fees: 2.3% the value of the container Rail transportation from LA port to Intermodal rail hub in St. Louis: $1150 (per container) Transportation from Rail hub to your company's warehouse: $900 (per container) Internal warehouse charges (receiving, stocking): $220 per pallet Quality control (pressure testing, inspections): $110 per pallet Calculate the sum of both duty and customs fees for one container. a. $2485.60 b. $1915.20 c. $1335.60 d. $756.00 e. $579.60

b. $1915.20

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. -40.4

Value Chain Analysis can help you understand ... ? a. Icebergs and iceflows b. How you can--or should--work with your supply chain partners. c. Primary and support activities within your organization. d. How your decisions will affect value creation and costs within your organization. e. Only B, C, & D

b. How you can--or should--work with your supply chain partners.

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. Include collection of receivables

The goal of price analysis ... ? a. Is to understand if you are getting a bonus or getting fired from your job. b. Is to understand if you are managing well the prices you are paying in terms of market volatility. c. Is to help you understand the shape and size of a cost iceberg. d. Is to allow you to look at individual cost elements. e. None of the above

b. Is to understand if you are managing well the prices you are paying in terms of market volatility.

You are responsible for buying an item that has many capable and competent suppliers available and your spend is quite large for your company. How would this item be classified on the strategic sourcing matrix? a. Routine b. Leverage c. Critical d. Bottleneck e. It does not get classified

b. Leverage

Which of the following is not one of the four steps in the supplier selection process? a. Performance monitoring b. Negotiation c. Evaluation d. Approval e. All of the above are steps in the process

b. Negotiation

What does MRP enable you to do better? a. Sales forecasting and implementation b. Production planning and scheduling c. Consolidating accounts payable d. Marketing planning and execution e. Engineering design and blueprinting

b. Production planning and scheduling

During execution of the target costing decision the primary objective is to . . .? a. Increase revenue b. Reduce costs c. Alter product design d. Understand individual cost elements e. Negotiate with suppliers

b. Reduce costs

Which step in the process helps you determine how important each criterion is? a. Decide on criteria b. Set weights c. Define scoring system d. Evaluate options e. Calculate results

b. Set weights

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. Shows what you own and owe.

Which module in a sourcing application suite helps you keep up-to-date with supplier information? a. Spend analysis b. Supplier performance measurement and management c. Requisition management d. Contract management and compliance e. Catalog management

b. Supplier performance measurement and management

A sensitivity analysis allows you to perform a "What if . . ." analysis on a product or component cost. Which of the following is a typical "What if" scenario you should consider? a. What if the product configuration stays the same? b. What if supplier quality decreases? c. What if materials remain the same? d. All of the above e. Only A and C

b. What if supplier quality decreases?

Manufacturing overhead is calculated as: a. A percent of price b. A percent of total cost c. A percent of labor d. A component of SGA e. A percent of material costs

c. A percent of labor

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. Assess whether a supplier can pay its bills when due

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. Book service revenues earlier

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. COGS vary with sales and influence gross profit.

Which is NOT one of the benefits of an ERP system? a. Automation and efficiency b. Increased data accuracy c. Cumbersome processes d. Enhanced data analytics e. Improved visibility

c. Cumbersome processes

An item that is purchased that has many suppliers available and is of low importance to your organization should have the following selection process characteristics . . .? a. Detailed b. Thorough c. Efficient d. Interactive e. None of the above f. All of the above

c. Efficient

What does EDI stand for? a. Evaluate, Develop, Implement b. Economic Development Initiative c. Electronic Data Interchange d. Extreme Deep Invader e. Extended Destination Index

c. Electronic Data Interchange

There are many potential cost drivers. Which of the following should you exclude from your analysis? a. People b. Material c. Emotion d. Experience e. Technology

c. Emotion

Below are the market prices and historical prices three different commodity teams have been paying. Which of the purchasing teams is performing the BEST? PPI (Market) Actual (Historical) Oct-14 Oct-15 Oct-14 Oct-15 Steel 173.7 191.7 2.25 3.00 Paper 176.3 186.5 27.00 28.80 Fuel 166.8 187.6 132.75 145.00 a. Steel b. Paper c. Fuel d. None of the teams are performing well e. There is not enough information to make a determination

c. Fuel

In setting a target sales price there are a number of criteria to consider, which of the following is not one of those? a. Competitors' offerings b. Customer expectations c. How much profit you want d. How distinctive your product is e. None of the above

c. How much profit you want

Which of the following is the most difficult—and most important—step in performing a total landed cost or total cost of ownership analysis? a. Defining the timing of costs. b. Calculating the net present value of the costs. c. Identifying the relevant costs. d. Determining the price paid to the supplier. e. None of the above

c. Identifying the relevant costs.

Which is not a characteristic of a successful supplier portal? a. Enables better integration between buyer and supplier b. Serves as a central repository of important information c. Makes communication between buyer and supplier more challenging d. Can be easily accessed by authorized users from anywhere e. Materials and order management are significantly enhanced

c. Makes communication between buyer and supplier more challenging

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. There are an adequate number of suppliers that want to compete for your business

Strategic Positioning Analysis is important ... ? a. To see the iceberg. b. To know when to use a radar. c. To understand which costs are important and relevant to your firm. d. To ensure every day low pricing e. None of the above

c. To understand which costs are important and relevant to your firm.

How do Total Landed Costs differ from Total Cost of Ownership? a. Total landed costs do not consider acquisition cost. b. Total landed costs do not consider transportation cost. c. Total Costs of Ownership consider the net present value of money whereas total landed costs do not. d. Total costs only consider the entire life cycle of a product and total landed costs consider only the manufacture of the product. e. None of the above are true

c. Total Costs of Ownership consider the net present value of money whereas total landed costs do not.

3. When planning for a reverse auction, which of the following should you keep in mind? a. Suppliers that participate in reverse auctions are generally poor in terms of quality b. Reverse auctions are never able to create a long-term relationship with the supplier c. Trusted suppliers may refuse participating in the auction d. Internal adoption of reverse auctions is generally pretty easy, requiring few changes in behavior e. The number of bidders in an auction doesn't matter

c. Trusted suppliers may refuse participating in the auction

Which of the following is true about critical buys? a. You want to automate and outsource supplier selection. b. They represent 80% of the buys within the organization c. You use a cross-functional category team d. They are managed by the end user e. None of the above are true about critical buys

c. You use a cross-functional category team

A supplier sells a spare part for $99 per unit. The net profit and selling, general, and administrative expense are a total of 15% of the selling price. Direct material costs are 20% of the selling price. The ratio of direct material costs to direct labor costs is 1.25 (for every dollar of materials, it is 1.25 dollars in labor). How much manufacturing overhead is the supplier including in the selling price? a. 20% b. 15% c. 50% d. 40% e. None of the above

d. 40%

Which of the following is a benefit of a web catalogue? a. Better use of approved suppliers (i.e., less maverick buying) b. Improved buying efficiency c. Web catalogues free up time for purchasing professionals to spend on strategic projects d. All of the above e. B and C only

d. All of the above

Which of the following is NOT one of the steps in price analysis? a. Find a benchmark database b. Obtain internal data c. Convert each to percent of change so that you can compare them d. Call your supplier and discuss changes in costs e. None of the above; that is, they are all steps in price analysis

d. Call your supplier and discuss changes in costs

Cost Modeling ... ? a. Is a functional oriented process b. Is an individual oriented process c. Is for senior management use only d. Can be used by any functional areas to understand the costs of a product or process. e. None of the above

d. Can be used by any functional areas to understand the costs of a product or process.

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. Efforts made by accountants to make a firms' financial performance look as attractive as possible—within the rules of accounting.

Which step in the process asks you to fill in your comparison matrix? a. Decide on criteria b. Set weights c. Define scoring system d. Evaluate options e. Calculate results

d. Evaluate options

Cost Analysis is used to: a. Practice hardball negotiations with suppliers b. Assess only prices c. Look at the cost of labor d. Gain insight into individual cost elements that make up a product e. None of the above

d. Gain insight into individual cost elements that make up a product

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. Includes sales/revenue

ERP was an immediate outgrowth of which other technology? a. The Internet b. MRP c. EDI d. MRP II e. Sourcing suites

d. MRP II

Strategic Cost Management's most important role is to help you ... ? a. Cut costs. b. Achieve the lowest possible price. c. Determine the size of a cost iceberg. d. Manage your firm's value-creation capabilities. e. None of the above

d. Manage your firm's value-creation capabilities.

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. Material costs and inventory costs which are represented on the income statement and balance sheet

Given the following table, how would you characterize the performance of the purchasing #2 diesel fuel commodity team? OVerall PPI 32.8% Actual 40% a. Fantastic Job (i.e., deserves a promotion) b. Terrible Job (i.e., deserves to get fired) c. Good Job (i.e., can keep job/potential bonus) d. Mediocre Job (i.e., will likely keep job but no bonus) e. You give up; i.e., you have no clue!

d. Mediocre Job (i.e., will likely keep job but no bonus)

All of the following can serve as conditions for success of an electronic sourcing strategy, EXCEPT . . . a. Sound process infrastructure b. Open communication c. Effective change management d. Not listening to the concerns of affected users e. Understanding the application and the contexts for which it is being adopted

d. Not listening to the concerns of affected users

All of the following are characteristics of effective electronic sourcing, EXCEPT . . . a. Online catalogs can be conveniently searched. b. The three-way-match can be conducted automatically. c. The analysis can be easily linked to other data. d. Requisition approval relies on paper documents circulated between parties. e. Data analysis can be automated with alerts generated based on pre-set conditions.

d. Requisition approval relies on paper documents circulated between parties.

Which of the following characterizes how you should manage routine buys? a. They are unimportant b. You should outsource them to the supplier c. You should spend a lot of your own time working on the purchase d. Use P-cards and catalogs to outsource to the end user e. None of the above

d. Use P-cards and catalogs to outsource to the end user

Given the following information, what is the total landed cost PER FOOT of hydraulic hose? Price paid to supplier: $630 per reel (500 foot of hose per reel) 4 reels of hose fit on each pallet Pallets per container: 10 Shipping costs: $4600 per container to the Los Angeles Port Duties: 5.3% the value of the container Customs Fees: 2.3% the value of the container Rail transportation from LA port to Intermodal rail hub in St. Louis: $1150 (per container) Transportation from Rail hub to your company's warehouse: $900 (per container) Internal warehouse charges (receiving, stocking): $220 per pallet Quality control (pressure testing, inspections): $110 per pallet a. $1.45 b. $1.55 c. $1.65 d. $1.75 e. $1.85

e. $1.85

Reverse engineering a. Is a common practice among manufacturers b. It involves buying a product, taking it apart to see how it is made. c. Involves an understanding of which suppliers are making key parts d. Helps you to better negotiate with suppliers e. All of above

e. All of above

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. All of the above

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. All of the above

Given an increase in manufacturing labor: a. Price will potentially increase b. Factory cost will increase c. Manufacturing overhead will increase d. SGA will increase e. All of the above

e. All of the above

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. All of the above

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. All of the above

Under which circumstance do you need to search for a new supplier? a. New product or service introduction b. New suppliers have entered the market c. Your current supplier overpromised and is underperforming d. Testing the market e. All of the above f. A and B only

e. All of the above

Which activities can be enabled by electronic sourcing? a. Identification of a suitable set of suppliers b. Qualification of suppliers c. Negotiations with suppliers d. Exchanging documents electronically (e.g. POs) e. All of the above

e. All of the above

Which is a benefit of an electronic sourcing application suite? a. Information can be accessed through different modules b. All information is stored in one system c. Customizable dashboards allow continuous performance monitoring d. Purchasing tasks can be conducted more efficiently and effectively e. All of the above

e. All of the above

Which of the following are critical steps to running a successful reverse auction that builds productive buyer/supplier relationships? a. Use online bidding events for the right product categories b. Include the right criteria to select the supplier c. Provide supplier education d. Set clear expectations e. All of the above f. A, B, and D only

e. All of the above

Which of the following are key benefits of P2P (i.e., operational) modules? a. Improved visibility of transactions b. Automated or streamlined purchasing c. Brings spend under control d. Enhances compliance e. All of the above

e. All of the above

Which of the following are true regarding Cost Drivers? a. They are activities or decisions that create costs. b. They can be just about anything and vary across industry. c. Understanding cost drivers helps you make better decisions. d. Can help you reduce costs tactically and strategically. e. All of the above

e. All of the above

Which of the following is a benefit on an invoice-management module? a. Faster invoice processing b. Reduced invoice processing costs c. Fewer invoice processing errors d. You make friends e. All of the above f. A, B, and C only

e. All of the above

Which of the following is a potential positive outcome of a successful electronic sourcing strategy? a. Lower transaction costs b. Better sourcing decisions c. Improved leverage d. More effective supplier relationship management e. All of the above

e. All of the above

Why do you perform Target Costing? a. To manage the costs of a product over its entire life cycle. b. To determine how to make sure a product can achieve a positive net present value. c. To change the cost equation if a product is not profitable. d. To sell product at a profit. e. All of the above

e. All of the above

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. All of the above are true

Which of the following is usually NOT considered an operational module in a sourcing application suite a. Spend Analysis b. Contract Management c. Web Catalogues d. Purchase Order Management e. Both A and B f. Both C and D

e. Both A and B

Change management entails all of the following activities, except . . . a. The need for change needs to be made abundantly clear b. Involving affected individuals as early in the process as possible c. Addressing fears and concerns of affected individuals d. Obtaining the input from affected individuals e. Discounting feedback from affected individuals

e. Discounting feedback from affected individuals

Which of the following do Total Landed Costs and Total Costs of Ownership both consider? a. Price b. Transportation c. Documentation d. End-of-life Disposal d. All of the above e. Only A, B, & C

e. Only A, B, & C

What is the central component of an ERP system? a. The purchasing module b. The finance module c. The interface between accounting and finance d. The interface between purchasing and sales e. The relational database

e. The relational database

Defining clear key selection criteria help you to collect consistent and comparable data. Which of the following criteria are important to consider and compare? a. Price b. Reach/scalability c. Management Strength d. Cultural fit e. A and D only f. A, B, C, D

f. A, B, C, D

Which of the following expresses the relationships that are essential to calculating target cost? a. Price = Cost + Profit b. Profit = Price - Cost c. Target Profit = Target Price - Target Cost d. Target Cost = Target Price - Target Profit e. None of the above f. Both C & D

f. Both C & D

Which of the following are a good match for strategic buys? a. Nuisance b. Exploitable c. Development d. Core e. A and B f. C and D

f. C and D

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. Only A, B, & C

When might a supplier legitimately determine you are NOT a customer of choice? a. If suppliers' capacity is exceeded by market demand and you buy a relatively low volume but require delivery in frequent, small quantities. b. If your service requirements are so high that you are causing the supplier to lose money. c. If your negotiations are so fierce that the supplier makes unprofitable concessions. d. None of the above—the customer is always right. e. Whenever they feel like it and want to pay you back for the way you treat them. f. Only A, B, & C

f. Only A, B, & C

Which of the following are lenses for Strategic Cost Management? a. Strategic Positioning Analysis b. Value Chain Analysis c. Cost Driver Analysis d. Iceberg Analysis e. All of the above f. Only A, B, & C

f. Only A, B, & C

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. Only B, C, & D

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. Only B & C

As an exploitable customer of routine buys you are confident in the supplier's pricing strategy. T/F

False

Caveat Emptor means let the seller beware. T/F

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. T/F

False

For electronic sourcing to yield beneficial outcomes, the successful implementation of the technology is the only requirement. T/F

False

If you are unable to make an apples-to-apples comparison, then competitive bidding is a better option than negotiation. T/F

False

Most companies possess pricing power. T/F

False

Negotiations often lead to a decreased understanding of a supplier—and as a result, less cooperation. T/F

False

As a core customer you and a highly capable/desirable supplier are a good match. T/F

True

If suppliers are unwilling to bid, then negotiation is a better option than competitive bidding. T/F

True

Multi-criteria analysis is a tool that helps you compare "distinctly different" options. T/F

True

Purchasing consortiums are a good way to aggregate buys and gain industry intelligence. T/F

True

Selecting the right suppliers is your most important job? T/F

True

To calculate results you multiply the score for each criterion by the associated weight and add up the results. T/F

True

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. 10.3

When did Material Requirements Planning start to gain traction (i.e., widespread adoption)? a. 1970s b. 1980s c. 1990s d. 2000s e. It never really gained traction

a. 1970s

The Producers Price Index (PPI) is . . .? a. Benchmarking data for various commodities. b. Presented in a specific unit of analysis and easily compared to actual price paid. c. Used to understand pricing variability for all purchases within an organization. d. Used to assess your bonus for the year. e. None of the above

a. Benchmarking data for various commodities.

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. By selling products and collecting revenue before paying suppliers

Which of the following is not one of the four reasons to include a multi-criteria analysis in your toolkit? a. Comprehensiveness b. Intuitiveness c. Quantifiability d. Applicability e. Disciplined

a. Comprehensiveness

Which is not commonly part of an electronic sourcing application suite? a. Demand forecasting b. Spend analysis c. E-sourcing d. Contract management e. Supply base management

a. Demand forecasting

Which of the following statements is false? a. Electronic sourcing applications are a one-size-fits-all solution. b. The implementation of electronic sourcing needs to be approached carefully. c. A sound process infrastructure is critical for a successful electronic sourcing strategy. d. Success in electronic sourcing doesn't come by itself. e. Electronic sourcing requires purchasing professionals to change how they do business.

a. Electronic sourcing applications are a one-size-fits-all solution.

A customer that is exploitable . . .? a. Has to pay premium pricing. b. Has relatively high value to the business. c. Has high attractiveness to the supplier, particularly with a long-term perspective. d. Is a good long-term partner.

a. Has to pay premium pricing.

Often the price a supplier requests because of increases in individual cost elements: a. Is higher than calculated based on the cost element change b. Is lower than calculated based on the cost element change c. Is exactly the same as with the cost element change d. Has no influence on the changes in cost elements e. None of the above

a. Is higher than calculated based on the cost element change

Which of the following is a critical step in using cost modeling to estimate a product or component cost? a. Map the process used to product/procure the component b. Understand strategic positioning c. Utilize net present value d. Hardball your supplier to give you the information e. None of the above

a. Map the process used to product/procure the component

When setting up and using a web catalogue, which of the following is not one of your primary responsibilities (i.e., as a purchasing professional)? a. Placing purchase orders b. Identifying the right suppliers c. Negotiating the supply contracts d. Training end users e. Working with IT to set up the catalogue

a. Placing purchase orders

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. Quick ratio

Which of the following is usually NOT considered a strategic module in a sourcing application suite? a. Requisition management b. E-sourcing and reverse auctions c. Supplier performance measurement and management d. Spend analysis e. Contract management and compliance

a. Requisition management