Chapter 2 - practice

d. Centralized Purchasing

Making all the purchasing decisions, including order quantity, pricing policy, contracting, negotiations, and supplier selection and evaluation are the key characteristics of a. Logistics Management b. Single stage replenishment c. Decentralized Purchasing d. Centralized Purchasing

c. green purchasing

More than a dozen presidential executive orders requiring federal purchasing officials to include environmental considerations and human wealth when making purchasing decisions can be attributed to a concept called: a. hybrid purchasing b. buy america act c. green purchasing d. counter purchasing

b. Ensure uninterrupted flows of raw materials at the lowest total cost

One of the primary goals of purchasing is to: a. Maximize stockholder wealth b. Ensure uninterrupted flows of raw materials at the lowest total cost c. Facilitate the processes of knowledge transfer between individuals and between organization d. Help build the organization's public image and reputation

b. P-cards

Petty cash is being phased out in favor of: a. Venmo b. P-cards c. Bitcoin d. Kanban

b. Franchising services

Purchasing activities include all the following EXCEPT: a. Contract administration b. Franchising services c. Logistics considerations d. Negotiations

b. 31,667 units

Given the following information, find the break-even quantity using Break-even Analysis. Costs Make Option Buy Option Fixed Cost $100,000 $5,000 Variable Cost $12 $15 a. 35,000 units b. 31,667 units c. 25,000 units d. 33,333 units

a. Profits before taxes increase by $10,000

If a firm manages to lower its purchase spend on materials by $10,000 then: a. Profits before taxes increase by $10,000 b. Stockholders equity increases 20% c. Cost of goods sold increases by $10,000 d. Return on investment increases by 10%

b. Canada

In 2016, ___________ was the leading market for U.S. exports. a. Japan b. Canada c. China d. Mexico

c. Blanket

A(n) ____________ purchase order is negotiated for repeated supply over a fixed time period, such as quarterly or yearly. a. Blank check b. Automatic c. Blanket d. Invitation for bid

a. Import broker

A(n) _______________ performs transactions for a fee, and does not take title to the goods. Instead, title passes directly from the seller to the buyer. a. Import broker b. Second-tier-supplier c. Keiretsu d. Leverage buyer

d. Public procurement

The purchasing and supply management function in the government and nonprofit sectors, such as educational institutions; hospitals; and federal, state, and local governments is called: a. Transactional procurement b. Competitive buying c. Public spending d. Public procurement

b. Supplier 1

The total cost of ownership for Supplier 1 is $1,670,000. The total cost of ownership for Supplier 2 is $1,750,000. The total cost of ownership for Supplier 3 is $1,690,000. Using Total Cost Analysis, it will be more cost-effective to use a. Supplier 2 b. Supplier 1 c. Supplier 3 d. Cannot be determined.

a. Using Supplier 1 will save about $32,000

Use the following information to determine which supplier is more cost-effective using total cost analysis. Note: Late delivery of components would cause 50% lost sales and 50% back orders of finished goods. Order lot size 500 Annual Requirements 6,000 units Weight per steering wheel 20 pounds Order processing cost $125 Inventory carrying rate 20% per year Cost of working capital 10% per year Profit margin 20% Price of finished golf cart $5,000 Back order cost $15 per unit Unit Price Supplier 1 Supplier 2 1 to 999 units/order $50 $49.50 1000 to 2,999 units/order $49 $48.50 Tooling cost $1000 $1000 Terms 2/10 net 30 1/10 net 30 Distance 120 miles 100 miles Supplier Quality Rating 2% 3% Supplier Delivery Rating 1% 2% Truckload (TL ≥ 40,000 lbs): $0.90 per ton-mile Truckload Less-than-truckload (LTL): $1.10 per ton-mile Note: per ton-mile = 2,000 lbs. per mile; number of days per year = 365 a. Using Supplier 1 will save about $32,000 b. Using Supplier 1 will save about $41,000 c. Using Supplier 2 will save about $30,000 d. Using Supplier 2 will save about $20,000

c. Number of customers with which the supplier currently has contracts

Which of the following is NOT a factor to consider when selecting suppliers for important materials? a. Supplier's willingness to share technologies b. Supplier's distance from the manufacturing facility c. Number of customers with which the supplier currently has contracts d. Reliable product quality level

b. Less quality variability

Which of the following is NOT a reason for favoring multiple sourcing? a. Increases information about new processing technologies b. Less quality variability c. Encourages competition among suppliers d. Spreads the risk of supply interruption

c. Gas prices

Which of the following is NOT used to calculate total transportation cost when using the Total Cost of Ownership concept? a. Distance to factory b. Weight per unit c. Gas prices d. Number of units

d. All of these choices are correct.

Which of the following is a potential challenge for global sourcing? a. Currency exchange b. Dealing with duties c. Political problems d. All of these choices are correct.

d. Poor supplier performance could result in plant shutdowns

Which of the following is a reason that single sourcing is considered risky/bad? a. It is easier to establish a mutually beneficial strategic alliance b. Firms cannot take advantage of transportation economies c. Volume of order may be too small d. Poor supplier performance could result in plant shutdowns

c. Better knowledge of unit requirements

Which of the following is an advantage of decentralized purchasing departments? a. Use of common supply base b. Avoids duplication c. Better knowledge of unit requirements d. Lower transportation costs

d. All of these choices are correct.

Which of the following is an advantage to utilizing an e-procurement system? a. Time savings b. Cost savings c. Mobility d. All of these choices are correct.