Supply Chain Quiz & HW Questions (EXAM 2)

Item D is low value, low risk, and there are lots of potential suppliers. A. Non-Critical B. Bottleneck C. Leverage D. Strategic

A. Non-Critical

Item A is high value, low risk, and there are multiple potential suppliers. A. Non-Critical B. Bottleneck C. Leverage D. Strategic

C. Leverage

Cost associated with the loss of customer goodwill A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

C. Post-Transaction Cost

Cost for replacing defective finished goods A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

C. Post-Transaction Cost

The inventory control tool that does not require direct line of sight to read the tag on a product(s). A. Radio Frequency Identification B. Base Stock Level System C. Linear Barcode

A. Radio Frequency Identification

This type of inventory is needed to run the manufacturing operations and the business, but does not end up as part of the finished product. A. Strategic Stock B. Pipeline Inventory C. Cycle Stock D. Maintenance, Repair, and Operating (MRO) supplies E. Safety Stock

D. Maintenance, Repair, and Operating (MRO) supplies

(T/F) A purchase order is legally binding once issued by the buyer.

FALSE

(T/F) 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

If you want to reduce the risk of a supply disruption, you would choose?

Multiple Suppliers

If your purchase volume is very small, you would choose?

Single Supplier

What is Total Cost of Ownership (TCO)?

The sum of all the costs associated with every activity in the supply stream of a product

A tender, proposal, or quotation submitted in response to a solicitation (i.e., RFP, RFQ) from a contracting authority is known as what? A. Bid B. Broker C. Reverse Auction D. Bond

A. Bid

Cost of warranty repairs A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

C. Post-Transaction Cost

(T/F) Award-winning suppliers serve as role models for other suppliers and may therefore be exempt from audits and certification programs

FALSE

This type of inventory is generally used for a very specific purpose or future event, and for a defined period of time. A. Strategic Stock B. Pipeline Inventory C. Cycle Stock D. Maintenance, Repair, and Operating (MRO) supplies E. Safety Stock

A. Strategic Stock

Cost to transport purchased materials A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

B. Transaction Cost

What is a Request for Quote (RFQ)?

A document used to solicit bids from interested and qualified suppliers for goods or services that the organization needs to obtain

Which of the following is the best description of a Preferred Supplier? A. A supplier who best meets all of your company's overall purchasing requirements B. A supplier who provides the most product to your company C. A supplier who has high quality D. A supplier who has the lowest price

A. A supplier who best meets all of your company's overall purchasing requirements

(T/F) The Profit-Leverage Effect states that a decrease in purchasing expenditures will directly increase profits.

TRUE

What are the four (4) primary reasons that companies hold inventory?

1. To meet customer demand 2. To buffer against uncertainty in demand and/or supply 3. To decouple supply from demand 4. To decouple dependencies in the supply chain

What is Strategic Sourcing?

A comprehensive approach for locating and sourcing key suppliers, so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace

What is a Request for Proposal (RFP)?

A detailed capabilities document used to determine a supplier's capability and interest in the production of a product or service.

An outsourcing program can result in all of the following positive outcomes, EXCEPT? A. Decreased need for supplier management B. Gains in manufacturing flexibility C. Cost reduction D. Reducing staffing levels

A. Decreased need for supplier management

The key characteristics to consider in the development and implementation of a Supplier Relationship Management System, include all of the following, EXCEPT? A. Detachment B. Integration C. Collaboration D. Visibility

A. Detachment

Which one of the following is NOT a reason for buying or outsourcing? A. Due to a lack (i.e., shortage) of procurement personnel B. To take advantage of better quality C. Due to insufficient capacity to make the item internally in your company-owned operations D. To achieve cost savings

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

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? A. Leverage Items B. Non-Critical Items C. Strategic Items D. Bottleneck Items

A. Leverage Items

In which item category would the sourcing strategies of simplifying and streamlining the purchasing process, reducing the number of suppliers and simplifying the ordering process, and transferring the buying responsibility to users within the company, be appropriate? A. Non-Critical Items B. Leverage Items C. Strategic Items D. Bottleneck Items

A. Non-Critical Items

Cost associated with investigating the need for a purchased material A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

A. Pre-Transaction Cost

Cost for a site visit to qualify a new supplier A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

A. Pre-Transaction Cost

Which one of the following is NOT a reason to have a single supplier? A. To spread the risk of a supply disruption B. To achieve transportation economies C. To establish a good relationship D. To have less quality variability

A. To spread the risk of a supply disruption

Suppliers directly manage buyer inventories to reduce the buyer's inventory carrying costs and avoid stockouts for the buyer A. Vendor Managed Inventory B. Reverse Auction C. Co-Managed Inventory D. Supplier Co-Location

A. Vendor Managed Inventory

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

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

A type of inventory system that issues an order whenever a withdrawal is made from inventory. A. Radio Frequency Identification B. Base Stock Level System C. Linear Barcode

B. Base Stock Level System

Item B is low value, high risk, and there are a small number of alternative suppliers. A. Non-Critical B. Bottleneck C. Leverage D. Strategic

B. Bottleneck

Which of the following is NOT one of the keys to successful strategic partnerships? A. Understanding and influencing capabilities B. Building independent objectives C. Gaining commitment from top management D. Developing personal relationships

B. Building independent objectives

A sourcing technique where pre-qualified suppliers enter a website and at pre-designated time and date, and try to underbid competitors to win the buyer's business A. Vendor Managed Inventory B. Reverse Auction C. Co-Managed Inventory D. Supplier Co-Location

B. Reverse Auction

Payment for the purchased materials A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

B. Transaction Cost

Why might a company decide to outsource (i.e., buy) a product that they currently make in their company-owned operations? A. Because they want to protect their proprietary technology B. Because they want to have better control of lead time C. Because they don't have the capacity in their internal factory to meet demand D. Because they want to have better control of transportation and warehousing costs

C. Because they don't have the capacity in their internal factory to meet demand

An arrangement where a specific quantity of an item is stored at the buyer's location. Once the inventory is used, the item is replaced by the supplier, with the full knowledge and approval of the buyer A. Vendor Managed Inventory B. Reverse Auction C. Co-Managed Inventory D. Supplier Co-Location

C. Co-Managed Inventory

This type of inventory depletes gradually as customer orders are received, and is replenished cyclically when supply orders are received. A. Strategic Stock B. Pipeline Inventory C. Cycle Stock D. Maintenance, Repair, and Operating (MRO) supplies E. Safety Stock

C. Cycle Stock

What is a Spend Analysis?

Categorizing and analyzing expenditure data for the purpose of decreasing costs, improving efficiency, and monitoring compliance

Candidates for a Supplier Certification Program include suppliers who meet one or more of the following criteria, EXCEPT? A. A supplier who has a fully documented process and quality system with cost controls and continuous improvement capabilities B. A supplier whose processes are determined to be stable and in control C. A supplier who has no incoming product rejections for a specified time period D. A supplier who has a minimal number of significant negative quality-related incidents for a specified time period

D. A supplier who has a minimal number of significant negative quality-related incidents for a specified time period

The keys to developing successful supply partnerships include all of the following EXCEPT? A. Mutual Benefits and Needs B. Personal Relationships C. Performance Metrics D. Individualized Objectives

D. Individualized Objectives

Item C is high value, high risk, and there are few suppliers, but they are excellent. A. Non-Critical B. Bottleneck C. Leverage D. Strategic

D. Strategic

(T/F) Outsourcing allows the company that is outsourcing a product, to concentrate on core capabilities and increase staffing levels.

FALSE

(T/F) Supplier Relationship Management is a comprehensive approach for locating and sourcing key suppliers, so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace

FALSE

What is Ethical Sourcing?

It attempts to take into account the public consequences of organizational buying, or to bring about positive social change through organizational buying behavior

If you wanted to obtain the most information, you would choose?

Multiple Suppliers

Name at least three (3) typical inventory ordering costs.

Order preparation costs Order transportation costs Order receipt processing costs Material handling costs

If you want to create transportation economies, you would choose?

Single Supplier

(T/F) Ethical sourcing policies should include such things as the reporting of supplier compliance to stakeholders, and detailing ethical sourcing expectations to suppliers.

TRUE

(T/F) The practice of Supplier Co-location involves a supplier's employee being embedded in a buyer's purchasing department to forecast demand, monitor inventory and place orders for the item(s) provided by the supplier.

TRUE

(T/F) Through collaborative negotiations both side work together to maximize the outcome or create a win-win result

TRUE

The Profit-Leverage Effect states . . . ?

A decrease in purchasing expenditures directly increases profits before taxes (assuming no decrease in quality or purchasing total cost)

Cost to understand suppliers' needs and operations A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

A. Pre-Transaction Cost

(T/F) The Weighted-Criteria Evaluation System is typically used to select a supplier or to evaluate the performance of a supplier.

TRUE

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? A. Leverage B. Non-Critical C. Bottleneck D. Strategic

C. Bottleneck

A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers. A. Radio Frequency Identification B. Base Stock Level System C. Linear Barcode

C. Linear Barcode

Name at least three (3) typical inventory carrying costs.

Cost of capital, taxes, insurance, obsolescence, storage

If you want to develop strong supplier relationships, you would choose?

Single Supplier

(T/F) A purchase order is legally binding only after it is accepted by the supplier.

TRUE

(T/F) Among other advantages, preferred suppliers are more likely than non-preferred suppliers to provide capacity for meeting unexpected demand, and also provide cost efficiency due to economies of scale.

TRUE

(T/F) Products with low profit margin, relatively stable demand, and high levels of competition, are known as Functional Products.

TRUE

Cost associated with a late delivery A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

B. Transaction Cost

Cost for closing out the purchase order A. Pre-Transaction Cost B. Transaction Cost C. Post-Transaction Cost

B. Transaction Cost

Which one of the following is NOT one of the 12 steps in the basic Purchasing Process? A. Fulfillment B. Expediting C. Analysis D. Obtain authorization as necessary

B. Expediting

This type of inventory is in the transportation network and the distribution system, being held by wholesalers, distributors, retailers, and consumers. A. Strategic Stock B. Pipeline Inventory C. Cycle Stock D. Maintenance, Repair, and Operating (MRO) supplies E. Safety Stock

B. Pipeline Inventory

The process commonly utilized in continuous improvement is known as? A. Specific, Measurable, Achievable, Relevant, Time-Oriented (S.M.A.R.T.) B. Plan, Do, Check, Act C. Plan, Source, Make, Deliver D. Ready, Set, Go

B. Plan, Do, Check, Act

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

An arrangement where a representative of the supplier is embedded in the buyer's purchasing group to forecast demand, monitor inventory, and place orders. A. Vendor Managed Inventory B. Reverse Auction C. Co-Managed Inventory D. Supplier Co-Location

D. Supplier Co-Location

This type of inventory is above and beyond what is actually needed to meet anticipated demand, and is maintained to protect against fluctuations in demand or supply A. Strategic Stock B. Pipeline Inventory C. Cycle Stock D. Maintenance, Repair, and Operating (MRO) supplies E. Safety Stock

E. Safety Stock

(T/F) A strong supplier partnership requires that both buyer and supplier adopt a strong tactical perspective.

FALSE