Chap 5 Quiz

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

False

Total Cost of Ownership is the sum of the cost elements Quality, Service, Delivery, and Price. (T/F)

True

A proposal or quotation submitted in response to a solicitation from a contracting authority is known as what? a. Countertrade b. Bond c. Bid d. Tariff

c. Bid

An outsourcing program can result in all of the following positive outcomes, EXCEPT? a. Gains In Manufacturing flexibility b. Cost reduuction c. Decreased need for supplier mgmt d. Reducing staffing levels

c. decreased need for supplier mgmg

"Supply Management" is a newer term that encompasses all acquisition activities beyond the simple purchase transaction. (T/F)

True

A high Return on Assets (ROA) is an indication that a company has a high level/value of assets compared to a low profit margin. (T/F)

True

Forward Vertical Integration refers to a company acquiring one or more of their customer organizations.(T/F)

True

Forward Vertical Integration refers to a company acquiring one or more of their sources of supply. (T/F)

False

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

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

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 transportation and warehousing costs c. Because they want to have better control of lead time d. Because they don't have the capacity in their internal factory to meet demand

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