Purchasing
When an employee who is not a legal agent of the company agrees to buy something from a salesperson and the item is received and the company pays the invoice, the employee is exercising implied authority.
False
a. a causal model.
When a commercial janitorial service company predicts demand for janitorial services using commercial building permits issued, office leasing and vacancy rates, this is an example of: a. a causal model. b. a repetitive pattern modeling tool. c. a time series forecasting technique. d. a deterministic model. e. a qualitative forecasting technique.
the nature of the products or services acquired; the extent to which supply and suppliers can provide competitive advantage; the ratio of purchased material and services costs to total costs or total income.
Which factors have a major influence on supply's level in the organization:
effectively interpreting corporate and supply objectives, selecting appropriate actions to achieve objectives, and integrating supply information into organizational strategies.
Three major challenges exist when setting supply objectives and strategies:
Supplier development initiatives may be focused on (1) persuading an existing supplier to expand into new areas that meet the needs of the buying organization, and (2) locating a new, untried/unknown company and identifying potential areas of business.
True
False
ISO 14000 which focuses on global purchasing processes is similar to ISO 9000 in management principles.
False
In Kanban systems large raw material inventories are necessary.
Although associated with a number of factors, the learning curve normally is most closely identified with the analysis of: A. tooling costs. B. profit rates. C. overhead costs. D. direct labor costs. E. direct material costs.
D. direct labor costs.
a. derived demand.
Demand for buttons and zippers at a sportswear manufacturer is an example of: a. derived demand. b. buffer demand. c. anticipated demand. d. independent demand. e. scheduled demand.
ceasing dependence on inspection.
Deming's 14 points stress the importance of:
trade-offs among stakeholders (e.g., marketing, operations, and supply).
Determination of the "best buy" is based on:
Canceling a contract for a technicality when market prices are falling is considered a perfectly acceptable and ethical practice.
False
Governments typically play no role in establishing prices on regulating how buyers and sellers are allowed to behave in agreeing on prices
False
Information regarding price trends cannot be easily obtained because most organizations are reluctant to share cost and price information
False
Reciprocity, the practice of requiring a supplier to purchase a set amount from the buying firm, is legal domestically, but not internationally.
False
Site visits to suppliers are of little use to supply managers because of their subjective nature.
False
Social problems should not be addressed through supply policy and practice.
False
The purchasing manager indexes (PMIs) are lagging economic indicators derived from monthly surveys of purchasing managers about forecasted company conditions
False
Under the Uniform Commercial Code, when the buyer has examined the goods as fully as he or she has desired, there is a warranty with regard to defects which an examination ought to have revealed to him or her.
False
When cost analysis is applied to a supplier's price, the buyer focuses on identifying an overall cost reduction target with little insight into specific cost elements.
False
the probability of it meeting customer specifications can be predicted.
If a process is stable and predictable:
The Robinson-Patman and Sherman Antitrust Acts are primarily designed to prevent the stronger party from imposing too onerous conditions on the weaker one and preventing collusion so that competition will be maintained.
True
In portfolio analysis, the goal when purchasing strategic goods or services is to: a. assure quality at expected levels. b. assure continuous supply at lowest cost of ownership. c. minimize acquisition time and cost. d. minimize acquisition time and cost and price per unit. e. reduce or eliminate customization.
b. assure continuous supply at lowest cost of ownership.
Life cycle costing (LCC):
may include costs that are 10-15 years in the future and highly uncertain
The buyer's assessment of the risk associated with a supplier is influenced by whether it is a non-critical, leverage, bottleneck, or strategic purchase.
True
indirect costs
Costs incurred in the operation of a production plant or process, but normally cannot be related directly to any given unit of production or service provided, are called:
b. are a factor in transportation strategy development in many organizations.
Fuel efficiency and energy consumption considerations: a. have no impact on transportation strategy in most organizations. b. are a factor in transportation strategy development in many organizations. c. encourage shippers to focus on increasing LTL shipments. d. lead to disintermediation in the supply chain. e. result in lower use of third party logistics providers.
d. increasing in volume and scope.
Outsourcing of services is: a. decreasing in volume, but increasing in scope. b. decreasing in volume and scope. c. increasing in volume, but decreasing in scope. d. increasing in volume and scope. e. about the same in volume and scope over the last decade.
influences supply processes, internal cross-functional relationships, and procedures and systems.
The organizational structure (centralized, decentralized, or hybrid) of the supply function:
true
The process capability index (Cp) combines process spread and tolerance into one index and indicates whether process variation is satisfactory.
False
The ratio of total purchases to sales (the percentage of dollars paid out to suppliers as a percentage of sales) varies little from industry to industry.
False
The terms and conditions included in a purchase order from a company do not vary from purchase to purchase, regardless of what goods or services are being acquired.
The question of how much of a premium should be paid to conform with political directives such as Buy Local or Buy American is the subject of much ongoing debate.
True
In portfolio analysis, the goal when purchasing strategic goods or services is to assure continuous supply at lowest total cost of ownership. This can be done by:
avoiding, eliminating or reducing costs in buyer and supplier cost structures
In portfolio analysis, the goal when purchasing bottleneck items is: a. assure quality at expected levels. b. assure lowest total cost of ownership. c. reduce or eliminate customization. d. minimize acquisition time and cost. e. minimize price per unit.
c. reduce or eliminate customization.
To avoid risk, a buyer can: a. hedge in a commodities market. b. require bid or performance bonds. c. decide not to do business in certain countries. d. a and b. e. a, b, and c.
e. a, b, and c.
the learning curve is based on:
the common principle that one become more efficient with experience
random sampling.
A sampling technique in which every element in the population has an equal chance of being selected is called:
b. random sampling.
A sampling technique in which every element in the population has an equal chance of being selected is called: a. additive sampling. b. random sampling. c. sequential sampling. d. 100 percent testing. e. cumulative sampling.
d. to cover a well-defined future need.
Anticipation inventories are carried: a. to stock the distribution pipelines. b. to permit activities on either side of a major process. c. to protect against machine breakdown. d. to cover a well-defined future need. e. to protect against uncertainties in supply and demand.
a. is a system which closes the loop between the supplier and the purchaser.
Closed-loop MRP: a. is a system which closes the loop between the supplier and the purchaser. b. provides a feedback loop between capacity and the master production schedule. c. requires a feedback loop between purchasing and accounting. d. requires a check between the master production schedule and inventory. e. allows a unit manager to sequence jobs done in that department.
is relatively inflexible and slow, and has higher damage rates.
Compared to motor carriers, rail:
False
Currently, managements tend toward making rather than buying.
True
By identifying and eliminating the causes of uncertainty and risk in the supply chain, the supply manager may be able to reduce the needed inventories and therefore buy a lower quantity.
Activity based costing attempts to correct the distortions built into product costing:
By tracking cost drivers of indirect costs and turning indirect costs into direct
When estimating the costs of a manufacturing supplier: a. prices of raw materials are not commonly accessible. b. equipment depreciation is typically the largest single cost element in overhead. c. material costs are difficult to estimate. d. direct labor costs are the easiest costs to estimate. e. labor rates are typically uniform across different plant locations.
b. equipment depreciation is typically the largest single cost element in overhead.
In a contractual dispute between buyer and seller, the process of elevating the discussion from buyer and sales representative up through the organization and out to an unbiased referee is called: a. arbitration. b. mediation. c. internal escalation. d. negotiation. e. adjudication.
c. internal escalation.
Decision trees: a. may be useful in making effective supplier selection decisions the first-time a buying decision is made, but not on repetitive purchases. b. may be useful in making effective supplier selection decisions when making repetitive purchases, but not special, one-time purchases. c. may be useful in making effective supplier selection decisions if probabilities of success and failure are assessed for each option. d. are of limited value because options can only be evaluated qualitatively, not quantitatively. e. cannot reflect past decisions so they are useless as a decision tool when making repetitive purchases.
c. may be useful in making effective supplier selection decisions if probabilities of success and failure are assessed for each option.
Which of the following statements supports single sourcing: a. there is a need to reduce supplier dependence on the buying organization. b. there is a high probability of a devastating natural disaster. c. there is a patent involved. d. there is volatility in the supply market. e. concerns exist about supplier capacity for future volume.
c. there is a patent involved.
Sources of sustainable competitive advantage include: a. product differentiation (where customers have low price sensitivity), b. low cost (where customers have high price sensitivity), c. a combination of product differentiation and cost-leadership. d. a, b and c e. none of the above
d. a, b and c
Small suppliers: a. are most suited for large dollar value "A" requirements. b. usually represent very low risk to the purchaser. c. tend to have a strong financial base. d. often provide the greatest responsiveness and flexibility. e. tend to have an extensive management structure.
d. often provide the greatest responsiveness and flexibility.
The legal authority of a salesperson normally is: a. the same as that of a buyer. b. to make legally-binding contracts for $500 or less. c. to make legally binding contracts for sales over $5,000. d. to solicit orders and get ratification and acceptance from his or her employer. e. based on the length of time the salesperson has been employed.
d. to solicit orders and get ratification and acceptance from his or her employer.
In portfolio analysis, the goal when purchasing bottleneck items is:
reduce or eliminate customization
Target costing starts with:
the selling price of an organization's end product minus the operating profit to establish the target cost.
e. measures the gap between service expectations and performance perceptions.
A formal service quality evaluation process: a. is relatively simple and applicable for all types of services. b. is performed exactly the same as it is for goods. c. impossible to quantify if the service is highly intangible. d. is most easily done on the buyer's premises. e. measures the gap between service expectations and performance perceptions.
True
Any cost associated with having, as opposed to not having, inventory is included in inventory carrying costs, including (1) capital costs, (2) inventory service costs, (3) storage space costs, and (4) inventory risk costs.
d. minimizing total cost with a single source.
Deming's 14 points stress the importance of: a. incoming inspection in quality assurance. b. top management in quality control. c. annual rating or merit systems. d. minimizing total cost with a single source. e. specialized education for high potential employees.
True
It is common practice to specify the procedure and results necessary to meet quality standards as part of the specification.
True
It is possible for some activities in a function to be core competencies that are made or insourced, and for some activities in the same function to be noncore and bought or outsourced.
Simplification
A corporate travel department determines that employees have been staying in 15 different hotel chains. The director of corporate travel mandates that travelers may only stay in four designated hotel chains. This action is an example of:
consists of two or more independent organizations that combine requirements for materials, services, and capital goods to gain better pricing, service, and technology.
A purchasing consortium:
Forward buying: 1. offsets transactions to protect against price and exchange risks 2. involves no risk for the buying organization. 3. involves purchasing for known or estimated near-term requirements. 4. is the same as speculation. 5. seeks to take advantage of price movements.
3. involves purchasing for known or estimated near-term requirements.
False
Assurance-of-supply strategies must consider changes in supply but not demand.
layoffs, exposure to supplier's risks, and loss of control.
Concerns about outsourcing include:
False
Decentralization refers to a supply organization that is physically located at corporate headquarters from which all or most organizational spending decisions are made.
b. often a fairly complex decision and a function of many factors.
Deciding what represents a core competency in an organization is: a. always the same for companies in the same industry. b. often a fairly complex decision and a function of many factors. c. a fairly easy decision once organizational goals and objectives are known. d. a decision best left to the organization's Board of Directors. e. a decision best left to the Chief Executive Officer.
d. a and b
Decreasing logistics costs may be attributed to: a. deregulation of the transportation sector. b. technology advances and e-commerce. c. an increase in global supply chains. d. a and b e. b, and c.
False
Economic, safety and environmental regulations have been eliminated for the most part for all modes of transportation.
Competitive bidding, in general, is the least efficient means of obtaining a fair price for items bought.
False
If the goal of negotiation is performance, then the process and tactics used during the negotiation are unimportant because they have no great impact on the intention to perform.
False
Besides price determination, there are very few areas in supply management where negotiation is a useful and cost-effective tool.
False
In negotiation, a fact is any piece of information on which the buyer believes he or she can negotiate an agreement with the supplier.
False
In the context of supplier selection decisions, the term local is typically defined as suppliers within a 100 mile radius of the buying organization.
False
True
It is reasonable to expect a supplier to both improve quality and lower costs.
True
Some of the reasons an organization may decide to make rather than buy are: greater supply assurance, stringent quality requirements, and very small quantity requirements.
desirable because of the interdependencies between and among functions.
Internal business partnerships between supply and other functional areas such as marketing/sales, finance/accounting, and engineering are:
false
Internal failure costs include the costs of inspection, testing, and measuring product or service quality.
False
Internal failure costs include warranty costs and managerial time handling customer complaints.
True
Inventories can be classified by form and function
True
JIT requires frequent deliveries of relatively small quantities in compliance with quality standards.
False
Jidoka is a Japanese term for continuous improvement.
increasing in volume and scope.
Outsourcing of services is:
True
Reliability is the mathematical probability that a product will function for a stipulated period of time.
True
Stock-out costs may be higher in a buyer's market compared to a seller's market.
True
There is not one best way for all organizations to organize and manage the supply function, conduct activities, and effectively integrate suppliers.
the primary user, design, engineering, supply, and all other relevant functional areas such as accounting/finance, marketing, and operations.
To add the greatest value to the design of new products and services, the following functions should work together during the design stage:
Canceling a contract for a technicality when market prices are falling is considered an unacceptable and unethical practice
True
Competitive bidding, in general, is the most efficient means of obtaining a fair price for items bought
True
Qualifying sources is an example of a pre-transaction cost in the total cost of ownership model
True
The preferred hierarchy of supply chain strategies is (1) source reduction—design or use less, (2) reuse—multiple use of same item such as a package or container, (3) recycle—reprocess into raw material, (4) incinerate—at least extract energy, but create CO2 pollution at a minimum, (5) landfill—require space and transportation to store with potential impact on land and water.
True
Value engineering (VE) and value analysis (VA) use the same methods, but VE is performed in the design stage and VA is performed in the re-design stage.
True
Cost management tools and techniques that may provide data for negotiations with internal organizational stakeholders and/or externally with suppliers include:
activity based costing, the learning curve, total cost of ownership
To achieve sustainable competitive advantage, management must choose between product differentiation (where customers have low price sensitivity) or low cost (where customers have high price sensitivity).
False
False
Growth in outsourcing in the logistics area can be attributed to growing regulation of transportation companies.
True
MRP II systems link the organization's planning processes with its financial system to produce "what if" scenarios to help achieve sales and profitability projections.
False
Outsourcing is prevalent in both the private and public sectors, but for goods only.
True
Potential barriers to purchasing consortia include confidentiality, inequality in the sharing of benefits, and loss of control.
True
Quality function deployment (QFD) is a comprehensive quality system that seeks both spoken and unspoken customer needs.
False
Some of the reasons an organization may decide to buy rather than make are: greater supply assurance, stringent quality requirements, and very small quantity requirements.
False
Stockout costs are the same whether it is a seller's market or a buyer's market.
b. providing a comprehensive, competitive process.
Supply managers believe they can add the most value to the outsourcing decision by: a. advising the outsourcing team on relevant contractual terms and conditions. b. providing a comprehensive, competitive process. c. reviewing the analysis conducted by the outsourcing team. d. being available if the internal users want their assistance. e. managing the contract once the decision has been implemented.
True
Supply managers may be able to provide information to identify risks to the organization, and can develop strategies to mitigate those risks.
competitive-edge strategies.
Supply strategies that are designed to exploit market opportunities and organizational strengths to give the buying organization an advantage in the marketplace are known as:
True
Supply's role in logistics may include direct functional responsibility and acquisition of logistics services.
e. all of the above.
The selection of the FOB point is important to the purchaser, for it determines: a. who pays the carrier. b. when legal title to goods being shipped passes to the buyer. c. who is responsible for preparing and pursuing loss or damage claims. d. who routes the freight. e. all of the above.
True
The six sigma (6σ) approach to quality uses the five-step methodology of: define, measure, analyze, improve, and control (DMAIC).
c. a bill of material, a master production schedule, and the inventory record.
The three main inputs of a material requirements planning (MRP) system are: a. required human resources and machine resources, and available resources. b. required manufacturing and human resources, and master production schedule. c. a bill of material, a master production schedule, and the inventory record. d. Pareto analysis results, inventory records and a master production schedule. e. inventory records, annual sales forecast, and a master production schedule.
False
The upper and lower control limits on a process control chart are set using customer specifications.
commit resources to cross-functional teams.
To achieve time, quality, or cost reduction targets, organizations may:
false
Total quality management (TQM) is a philosophy and system of management focused on short-term success through statistical process control.
False
Transportation costs decrease as distance, quantity, and speed increase.
b. are established primarily through negotiation.
Transportation rates: a. are lower for LTL than TL shipments. b. are established primarily through negotiation. c. are established primarily by government regulation. d. typically decrease as delivery speed increases. e. typically do not change when smaller shipments are consolidated.
Farmers turn to marketing and production contracts when they perceive the efficacy of spot markets to be inadequate in handling their risks, and processors turn to contracts as a way to encourage farmers to produce specific products at desired times
True
To be fair, the basis and terms of cancellation should be agreed on in advance and made part of the terms and conditions of the purchase order.
True
b. it is multiplied by the material unit cost to calculate the per unit carrying cost.
When the carrying cost of inventory is expressed as a percentage: a. the lower it is, the lower the economic order quantity. b. it is multiplied by the material unit cost to calculate the per unit carrying cost. c. it usually exceeds 57.5 percent per year. d. it must exclude the insurance cost of inventory. e. it is usually the same as the borrowing cost of the organization.
If the buyer wants to motivate the seller to manage total costs, the best type of contract is: a. firm-fixed-price (FFP). b. cost-plus-incentive-fee (CPIF) c. firm-fixed-price plus incentive fee (FFPIF). d. cost-plus-fixed-fee (CPFF). e. cost-no-fee (CNF).
b. cost-plus-incentive-fee (CPIF)
The authority that is necessary, usual, and proper to carry through to completion the express authority conferred, is called: a. apparent authority. b. implied authority. c. express authority. d. direct authority. e. performance authority.
b. implied authority
Target pricing: a. starts with the supplier's price, and works to determine the selling price of the buying organization's end product or service. b. starts with the selling price of an organization's end product minus the operating profit to establish the target cost. c. starts with the selling price of an organization's end product minus actual manufacturing, overhead, and materials costs to determine operating profit. d. starts with the supplier's price, and works to determine the supplier's true cost structure. e. starts with the buyer's lowest reasonable price target, and works to a negotiated price agreed on by the buyer and the supplier.
b. starts with the selling price of an organization's end product minus the operating profit to establish the target cost.
Supply management's role in environmental considerations is: a. expanding because purchasing has primary responsibility for specification writing. b. limited because environmental issues have little impact on the acquisition cycle. c. expanding because the goal of zero environmental impact affects the buying cycle. d. limited by the product design developed by design engineers. e. limited to compliance with government laws and regulations.
c. expanding because the goal of zero environmental impact affects the buying cycle.
The zone of negotiation :
indicated the feasibility of negotiation and the likelihood of an agreement
Portfolio or quadrant analysis: a. may be used to develop longer-term strategies for moving categories of spend into a more desirable location on the spend map. b. may be used to justify, clarify or revise existing commodity strategies. c. is based on the Pareto curve. d. a and b. e. a, b and c.
d. a and b.
In the event the bidder does not make proper payment to its suppliers, the bond that protects the buyer against liens that might be granted to these suppliers, is called a: a. performance bond. b. surety bond. c. bid bond d. payment bond. e. lien bond.
d. payment bond.
The goal of value engineering and value analysis is to: a. analyze the value-added from engineering services and production. b. analyze functions to satisfy all needed quality requirements at any cost. c. define value of a function in technically accurate and precise language. d. perform a function at the same or an improved level while reducing costs. e. perform a function at an improved level at the same cost.
d. perform a function at the same or an improved level while reducing costs.
When a supplier offers a lower price for a larger quantity, the buyer should:
determine the return on investment
Cost management tools and techniques that may provide data for negotiations with internal organizational stakeholders and/or externally with suppliers include: a. activity based costing. b. the learning curve. c. total cost of ownership. d. a and c. e. a, b, and c.
e. a, b, and c.
When developing a negotiation strategy, the negotiator should assess the positions of strength of both (all) parties to: a. decide if negotiation makes sense. b. establish negotiation points. c. avoid setting unrealistic expectations. d. b and c. e. a, b, and c.
e. a, b, and c.
Activity based costing
eliminates non-value-adding activities; reduces activity occurrences, and reduces the cost driver rate
in portfolio analysis, the goal when purchasing non-critical or routine spend is to:
minimize acquisition time and cost
In portfolio analysis, the goal when purchasing leverage items is:
minimize acquisition time and cost and price per unit
which tool will focus everyone in the organization on cost management
target costing
The process of attempting to determine all cost elements such as acquisition price, purchasing administration, follow-up, expediting, inspection and testing, rework, scrap, downtime, lost sales and customer returns is called:
total cost of ownership
In portfolio analysis, the goal when purchasing leverage items is: a. minimize total cost of ownership. b. minimize acquisition time and cost and price per unit.. c. reduce or eliminate customization. d. assure continuous supply at lowest total cost of ownership. e. assure quality at expected levels.
a. minimize total cost of ownership.
b. may enable the buyer and seller to lower costs and improve quality.
A supplier certification program: a. adds cost to the supplier, but provides few benefits to the supplier. b. may enable the buyer and seller to lower costs and improve quality. c. may improve quality, but at best will not raise costs. d. always improves quality, but usually at a higher purchase price. e. typically cost more to implement than the value of the quality improvement.
True
A payment bond protects the buyer against liens that might be granted to suppliers of material and labor to the bidder, in the event the bidder does not make proper payment to its suppliers.
False
ISO 14001:2015 focuses on compliance with federal, state, and provincial environmental laws and regulations.
In the portfolio matrix, characteristics of goods and services in the leverage quadrant are: a. competitive supply market, substitution is possible, price per unit is important. b. competitive supply market, substitution is possible, and total cost is a primary focus. c. few suppliers with adequate capability so substitution and switching are difficult. d. item substitution is possible, switching is difficult, and many suppliers are available. e. item substitution and supplier switching are possible, but few suppliers are capable.
a. competitive supply market, substitution is possible, price per unit is important.
When cost analysis is applied to a supplier's price, the buyer: a. identifies a cost reduction target with no insight into specific cost elements b. identifies and analyzes each cost element for cost reduction opportunities. c. relies on supplier information about areas where it can cut costs. d. recognizes that little cost data is available for most cost elements. e. cannot expect any assistance from the supplier.
b. identifies and analyzes each cost element for cost reduction opportunities.
If a termination for convenience clause is included in a services contract: a. its validity depends on whether the contract is in the private or public sector. b. it is easy to determine if it is exercised in bad faith or an abuse of discretion. c. if exercised in bad faith, it may mean the termination is a breach of contract. d. specifically identifies events that will trigger termination. e. it defines what constitutes sufficient cause to terminate.
c. if exercised in bad faith, it may mean the termination is a breach of contract.
Corporate social responsibility: a. is another name for ethics. b. is another name for supplier diversity programs. c. requires sacrificing financial gain for the greater good of the community. d. refers to individual, not corporate, decisions and actions. e. extends beyond ethics to include community, environment, and human rights.
e. extends beyond ethics to include community, environment, and human rights.
a. may indicate poor delivery scheduling on the part of the buying organization.
Demurrage charges: a. may indicate poor delivery scheduling on the part of the buying organization. b. are never legitimate because delays are typically caused by the carrier's actions. c. are insignificant and can easily be justified in the buying organization. d. discourage the buyer from using a particular carrier. e. growing because of the lengthy delays in most supply chains.
False
Economic, safety and environmental regulations have been eliminated for most modes of transportation through deregulation during the last 30 years.
Total cost of ownership (TCO) can be used to:
Highlight cost reduction opportunities, compare suppliers in a supplier selection decision, prepare a negotiation, assess the reasonableness of a supplier's prices.
True
In a decentralized purchasing structure, tasks that are more effectively handled at the corporate level include establishing policies, procedures, controls, and systems.
True
Terms such as purchasing, procurement, supply,and supply chain management are terms that are used almost interchangeably.
True
The procurement of indirect or noncore spend is more likely to be outsourced than procurement of direct or core spend.
True
The purchasing manager indexes (PMIs) are leading economic indicators derived from monthly surveys of purchasing managers about forecasted company conditions.
Items for which prices are comparatively low, and the cost of price reduction efforts may exceed any price savings realized, are called: 1. sensitive commodities. 2. raw materials. 3. special items. 4. standard production items. 5. MRO items.
5. MRO items.
c. focuses on preventing defects by using data to reduce variation and waste.
A six sigma (6σ) approach to quality: a. means there are no more than 6 defects per million opportunities. b. was developed by Japanese companies in the 1950s. c. focuses on preventing defects by using data to reduce variation and waste. d. has no connection to the concept of zero defects. e. has soft goals such as happier customers and employees.
Target pricing may result in company wide cost reductions in: A. design to cost. B. manufacture to cost. C. purchase to cost. D. a and b. E. a, b, and c.
E. a, b, and c.
c. if there is a prime contractor bidding out part of a job.
Subcontracts can only occur: a. in government procurement. b. when a lead contractor is behind schedule. c. if there is a prime contractor bidding out part of a job. d. if substitution is required after the specification has been set. e. when purchasing a good, not a service.
a. a decision of strategic importance that deserves careful evaluation.
The decision to make or buy a good or service is: a. a decision of strategic importance that deserves careful evaluation. b. a one-time decision never to be reconsidered. c. primarily an operational decision. d. the same as deciding to insource or outsource. e. typically made by the chief supply officer and his or her executive team.
c. rise significantly as defects increase in the finished product.
The real costs of quality: a. are frequently overstated in an organization. b. are incurred in the quality control department. c. rise significantly as defects increase in the finished product. d. tend to rise significantly with the cost of prevention. e. are easily identified by the accounting department.
False
Total quality management (TQM) is a philosophy and system of management focused on short-term success through statistical process control.
d. balancing price, volume, carrying cost, and the cost of stockouts is key to successfully determining how much to buy at any point in time.
Which statement is most accurate when thinking about deciding how much to buy: a. forecasts of future demand, lead times, and prices are usually fairly accurate. b. the price premium to attain the desired quantity is usually less than the costs of not having materials available when needed. c. managers seldom make purchase decisions until they are absolutely sure of the volume required. d. balancing price, volume, carrying cost, and the cost of stockouts is key to successfully determining how much to buy at any point in time. e. the costs of placing orders and holding inventory are so low they do not significantly affect the decision of how much to buy.
A cash discount allows: a. the seller to secure prompt payment, but has no benefits for the buyer. b. the buyer to pay a lower price per unit, but has no benefits for the seller. c. the seller to secure prompt payment, and the buyer to pay a lower price per unit. d. the seller to demand payment in cash on demand (C.O.D.) upon receipt of goods. e. the buyer to always calculate the discount based on the delivery date.
c. the seller to secure prompt payment, and the buyer to pay a lower price per unit.
True
Buying capital equipment differs from other types of purchases because determination of final cost includes estimates over the life of the equipment.
A unique cost model is one that applies to a variety of common supply situations.
False
Accepting a price discount for ordering larger quantities leads to lower levels of anticipation inventory
False
Activity based costing primarily is an accounting process that has little practical value for buyers.
False
Although online searching is commonplace in many areas of business, it has not become a common tool for gathering information on potential suppliers
False
An escalator clause provides for an increase, but not a decrease, in price if costs change
False
Buyers should always expect to receive samples free of charge from suppliers.
False
Educating suppliers about the buying organization's operations is an example of a transaction cost in the total cost of ownership model.
False
For goods bought on a non-recurring basis, the contract may provide for a reduction in price should the buyer ever again purchase the item.
False
Normally, if an offer to buy or sell is made, the contract is completed once the legal documents are in the hands of both parties.
False
Online reverse auctions are useful means of price determination for special items.
False
False
For nonrepetitive requirements, a system or process of acquisition can be designed.
d. providing a set of standardized requirements a quality system must meet.
ISO 9001:2008 provides a tested framework for a systematic approach to consistently delivering product that satisfies customers' expectations by: a. dictating how quality requirements should be met in every organization. b. dictating scope and flexibility for quality system implementation. c. assuming all national cultures will meet quality requirements the same way. d. providing a set of standardized requirements a quality system must meet. e. assuming all business sectors will meet quality requirements the same way.
True
Kaizen is a Japanese term for continuous improvement.
True
The bill of lading is the key document in the movement of goods.
specifications can add costs and the potential for disqualifying or discouraging potential suppliers.
The disadvantages of buying with specifications include:
True
The first step in optimizing the supply process is to build internal consensus around the opportunities to add value to the organization.
True
The gray zone in make or buy refers to the range of options between 100 percent make to 100 percent buy.
the right quality materials, in the right quantity, at the right time and place, from the right source, at the right service level, and at the right price.
The objectives of supply are to obtain:
False
Truckload (TL) shipments are typically for short haul distances compared to less-than-truckload (LTL) shipments.
Although associated with a number of factors, the learning curve normally is most closely identified with the analysis of direct labor costs.
True
Governments play a role in establishing prices by establishing production and import quotas and by regulating the ways that buyers and sellers are allowed to behave in agreeing on prices.
True
If a supplier fails to deliver goods which meet the contract agreement, one of the buyer's options is to reject the whole shipment
True
In many organizations, standards of conduct for purchasing personnel stress the need to avoid all appearances of impropriety.
True
In planning for negotiation, a factor or item of information over which disagreement is expected is known as an issue.
True
In the U. S., product liability is generally considered a strict liability offense which means that the defendant is liable when it is shown that the product was defective
True
Mediation and arbitration are examples of alternative legal means of settling disputes.
True
One justification for a quantity discount is that the buyer should not pay more than the actual cost of packing, crating, and transportation.
True
Payment made to a supplier does not automatically constitute an acceptance of the goods.
True
The Uniform Commercial Code (UCC) covers the purchase of goods and services, if the goods portion of the contract is more than 50 percent of the contract value.
True
Value engineering (VE) and value analysis (VA) refer to the same process, but VE is applied to the design stage, and VA is applied to redesign.
True
True
Two effective logistics cost reduction strategies are partnering agreements with logistics services providers and long-term contracts.
Standard Specifications
When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:
d. continuing to make.
When a team has decided that a task or function currently performed by company employees is a core competency, the team will probably recommend: a. outsourcing. b. insourcing. c. offshoring. d. continuing to make. e. continuing to buy.
what to make or buy, what to insource or outsource, and what standard items or what customized items will be acquired.
When developing supply strategies, the supply manager must determine:
b. ordered frequently.
"C" items in ABC analysis are: a. reviewed frequently. b. ordered frequently. c. often managed by the supplier. d. normally carried in small quantities. e. particularly critical in financial terms.
Most direct costs are: 1. variable costs. 2. overhead costs. 3. general and administrative costs. 4. semivariable costs. 5. fixed costs.
1. variable costs.
measures the gap between service expectations and performance perceptions
A formal service quality evaluation process:
measures the gap between service expectations and performance perceptions.
A formal service quality evaluation process:
False
A mode of transportation is any means of conveyance of people or property, but not information.
a. layoffs, exposure to supplier's risks, and loss of control.
Some of the concerns about outsourcing are: a. layoffs, exposure to supplier's risks, and loss of control. b. supply's ability to provide the required inputs at the right quality and price. c. transitioning from supplier's operations to internal operations. d. losing long-term buyer-supplier relationships and cost advantages. e. loss of a lean enterprise as the supply base grows.
supply-chain-support strategies.
Strategies designed to make available the knowledge and capabilities of supply chain members to others in the buying organization are called:
False
Supply chain inventory management involves establishing operational design of the physical flow of goods and services, but does not deal with managing information flows.
Value methodology is a systematic approach to analyzing the functions of a product, part, service, or process to satisfy all needed quality and user requirements at optimum total cost of ownership.
True
False
Lean focuses on maximizing profitability while minimizing waste in the form of the costs of quality (scrap, rework, and inspection).
False
Lean thinking focuses on maximizing profitability while minimizing waste in the form of the costs of quality (scrap, rework, and inspection).
an effective supply strategy.
Linking current and future needs with current and future markets is the primary focus of:
essential in all organizations, and many lack the mechanisms to link them.
Linking supply strategy to corporate strategy is:
False
Logistics costs can be divided into three categories—inventory carrying costs, administrative costs, and transportation—with inventory carrying costs accounting for the bulk of the costs.
c. is difficult because multiple contracts may exist at varying prices and terms with the same suppliers.
Managing the consumption of services organizationwide: a. is easy because organizationwide services spend data is readily accessible. b. is of little concern because annual spend for services is declining in most organizations. c. is difficult because multiple contracts may exist at varying prices and terms with the same suppliers. d. is easy because supply management has historically had responsibility for managing services spend. e. is easy because forecasting aggregate demand for services is typically more reliable than forecasting demand for goods.
determined by performing Pareto analysis to determine if the purchase is an "A" item.
A criterion in establishing whether a purchase is strategic can be:
providing competitive intelligence about competitors and suppliers, and identifying opportunities of operational synergies.
Supply management can play an important role in mergers, acquisitions, and divestitures by:
A cash discount of 2/10, N/30 (2 percent cash discount if payment is made in 10 days, with the gross amount due in 30 days) is the equivalent of approximately a 36 percent interest rate.
True
An escalator clause provides for an increase, as well as a decrease, in price if costs change.
True
An externally focused process of analyzing costs in terms of the overall value chain is called strategic cost management.
True
Target costing may result in companywide cost reductions in design to cost, manufacture to cost, and purchase to cost.
True
The goal of value engineering and value analysis is to:
perform a function at the same or an improved level while reducing costs
True
Logistics is the management of inventory in motion and at rest.
The market approach to pricing: 1. means prices are set to cover direct costs, contribute to indirect, and attain a profit. 2. is the only defensible pricing mechanism for ethical companies to use. 3. implies that prices are set based on what the market will bear. 4. means that prices are adjusted regularly to ensure that the selling organization recoups all its market costs. 5. implies that market analysis is the only technique that should be employed to negotiate prices.
3. implies that prices are set based on what the market will bear.
Identical prices received from various sources should: 1. be expected when the specification is highly customized. 2. always make the buyer suspicious of collusion. 3. only draw attention if the buyer is dissatisfied with the price quoted. 4. draw attention if the specification is complex or detailed. 5. result in the buyer taking legal action against all bidders.
4. draw attention if the specification is complex or detailed.
False
A recent North American trend is to perform in-house a number of services that were traditionally outsourced.
it will be difficult to translate organizational objectives into supply objectives.
If organizational objectives and supply objectives are incongruent:
c. practically unlimited because of few land or sea restraints to laying cable.
Telecommunication routes are: a. practically unlimited because of the superiority of hardware and software. b. practically unlimited because radio frequency waves have unlimited range. c. practically unlimited because of few land or sea restraints to laying cable. d. very limited because network and distribution costs are high. e. very limited because most countries severely restrict land and sea cables.
True
The "bullwhip effect" is a term that refers to the buildup of inventory in a supply chain.
True
The allocation between buyer and seller of the costs incurred when materials are rejected is affected by the kind of materials rejected, trade customs, the buyer's cost accounting procedures, and the positions of strength of each organization.
True
The cost per hundredweight (cwt) is generally higher for LTL shipments compared to TL shipments.
True
The increase in outsourcing has resulted in an increase in the percentage of revenue paid out to suppliers.
How can supply and supply chains contribute effectively to organizational objectives and strategy?
The key question in strategic supply management is:
When the goods fit the ordinary purpose for which goods of that description are used in the trade, there is a(n): a. implied warranty of merchantability. b. express warranty. c. warranty of title. d. implied warranty of fitness for a particular purpose. e. implicit warranty.
a. implied warranty of merchantability.
Cost management of services: a. includes demand management and supplier cost structure analysis. b. is confined to internal demand analysis and consumption management. c. is confined to supplier cost structure analysis. d. focuses primarily on better design of the service. e. is only possible when the service is highly tangible.
a. includes demand management and supplier cost structure analysis.
When it comes to product liability, supply management: a. lowers risk by ensuring that suppliers deliver defect-free goods. b. has little or no role since this is essentially a legal action. c. has responsibility only to the internal customer, not the final customer. d. is liable depending on the type of warranty agreed to in the contract. e. is responsible for establishing the cost of the actual damage
a. lowers risk by ensuring that suppliers deliver defect-free goods.
An externally focused process of analyzing costs in terms of the overall value chain is called: a. strategic cost management. b. supply chain management. c. total cost management. d. profit leverage effect. e. activity based costing.
a. strategic cost management.
A fair price: a. is based on market conditions, and cost structure has no bearing on the determination of a fair price. b. is the lowest price that ensures a continuous supply of the proper quality where and when needed and at which the supplier makes a reasonable profit. c. is based on the cost to produce an item or service without consideration for the supplier's profit margin. d. is an amount arrived at through negotiations where the seller's price is a starting point.. e. is when all sellers of equal goods or services receive the same per unit price.
b. is the lowest price that ensures a continuous supply of the proper quality where and when needed and at which the supplier makes a reasonable profit.
Distributors, wholesalers, and retailers: a. never add enough value to a buyer to make it worth doing business with them. b. may be able to deliver at a lower cost than the manufacturer. c. may provide valuable services such as prompt delivery and filling emergency orders, but they cannot offer a better price than the manufacturer. d. have an indefensible value proposition in the typical modern supply chain. e. typically carry a very limited supply in an effort to keep inventory costs low.
b. may be able to deliver at a lower cost than the manufacturer.
Commercial bribery: a. usually involves only one company offering bribes. b. may become an industry practice. c. is outlawed in very few countries. d. is outlawed throughout the West, but not in Asia. e. legal rulings rest on the doctrine of promissory estoppel.
b. may become an industry practice.
Which of the following is a factor in determining the validity of a contract? a. incompetent parties. b. offer and acceptance. c. employment in the purchasing department. d. amount over $500. e. due process.
b. offer and acceptance.
In portfolio analysis, the goal when purchasing strategic goods or services is to assure continuous supply at lowest total cost of ownership. This can be done by: a. dividing spend for the item among multiple suppliers b. a strong cancellation clause that lets the buyer easily switch suppliers. c. avoiding, eliminating or reducing costs in buyer and supplier cost structures. d. avoiding, eliminating or reducing costs in the supplier's cost structure only. e. avoiding, eliminating or reducing costs in the buyer's cost structure only.
c. avoiding, eliminating or reducing costs in buyer and supplier cost structures.
When estimating the cost structure of a manufacturing supplier: a. material costs are difficult to estimate. b. direct labor costs are the easiest costs to estimate. c. equipment depreciation is typically the largest cost element in overhead. d. prices of raw materials are not commonly accessible. e. labor rates are typically uniform across different plant locations.
c. equipment depreciation is typically the largest cost element in overhead.
The Sarbanes-Oxley Act: a. has no impact on the supply management process. b. requires the Chief Purchasing Officer to sign off on every contract. c. requires listing off-balance sheet items such as long-term purchase agreements. d. requires supply management to report directly to the Chief Financial Officer. e. affects internal accounting procedures of privately-held companies.
c. requires listing off-balance sheet items such as long-term purchase agreements.
Activity based costing attempts to: a. correct the distortions built into product costing by the way that direct costs are allocated. b. correct the distortions built into product costing by the way that the learning curve is applied to direct labor costs. c. turn indirect costs into direct costs by tracking the cost drivers behind indirect costs. d. turn direct costs into indirect costs by tracking the cost drivers behind direct costs. e. introduce a new way to allocate direct costs that more accurately captures labor and material usage.
c. turn indirect costs into direct costs by tracking the cost drivers behind indirect costs.
Activity based costing: a. corrects the distortions built into product costing by the way that the learning curve is applied to direct labor costs. b. corrects the distortions built into product costing by the way that direct costs are allocated. c. eliminates nonvalue-adding activities, increases activity occurrences, and increases the rate of return. d. eliminates nonvalue-adding activities; reduces activity occurrences, and reduces the cost driver rate. e. is important to cost accountants, but has little practical use for buyers.
d. eliminates nonvalue-adding activities; reduces activity occurrences, and reduces the cost driver rate.
Target costing starts with: a. the supplier's price, and works to determine the selling price of the buying organization's end product or service. b. the supplier's price, and works to determine the supplier's true cost structure. c. the buyer's lowest reasonable price target, and works to a negotiated price agreed on by the buyer and the supplier. d. the selling price of an organization's end product minus the operating profit to establish the target cost. e. the selling price of an organization's end product minus actual manufacturing, overhead, and materials costs to determine operating profit.
d. the selling price of an organization's end product minus the operating profit to establish the target cost.
When estimating the cost structure of a manufacturing supplier:
equipment depreciation is typically the largest cost element in overhead
When cost analysis is applied to a supplier's price, the buyer:
identifies and analyzes each cost element for cost reduction opportunities
Cost Management of services
includes demand management and supplier cost structure analysis
True
If there were 400 requests for a particular item in a year and 372 were immediately satisfied, the service coverage would be 372/400 or 93 percent.
True
In fixed quantity inventory models, a fixed economic order quantity is ordered when the reorder point is reached.
True
Quality function deployment (QFD) is a comprehensive quality system that seeks to translate customer requirements into specifications.
True
Radio frequency (RF) waves are a mode of transportation for information and carriers for RF waves are air, copper wire and fiberoptic cable.
When developing a negotiation strategy, the negotiator should assess the positions of strength of both (all) parties to decide if negotiation makes sense, establish negotiation points, and avoid setting unrealistic expectations.
True
True
Two effective cost reduction strategies are partnering agreements with logistics services provider and long-term contracts.
2725
A company manufactures 1,200 cylinders per day, each requiring a pressure gauge. The purchase price of the pressure gauge is $3.20. The company controller estimated annual holding costs at 25 percent per year, while the cost of placing an order was estimated at $55.00. Assuming that the plant operates 45 weeks per year, the EOQ for the pressure gauge is:
a. procure-to-pay (P2P).
A procurement outsourcing contract that covers approval workflow, material acquisition, purchase order, expediting, material and invoice receipt, invoice payment, financial performance, compliance management, policies and procedures, and performance and results reporting is called: a. procure-to-pay (P2P). b. procure-to-contract (P2P). c. source-to-contract (S2C). d. source-to-pay (S2P). e. third party logistics (3PL).
e. all of the above.
A transportation strategy should include consideration of: a. safety on the ground, in the air and on water. b. environmental factors such pollution. c. consolidation of freight. d. alternative transport modes. e. all of the above.
False
Accepting a price discount for ordering larger quantities leads to lower levels of anticipation inventory.
the opportunity for the potential supplier to establish how to make the most suitable product/service.
An advantage of buying by performance or function over other specification methods is that it provides:
True
An online reverse auction may require significant upfront preparation and cost.
When developing a negotiation strategy, the negotiator should assess the positions of strength of both (all) parties to:
Decide if negotiation makes sense, establish negotiation points, avoid setting unrealistic expectations
c. trade-offs among stakeholders (e.g., marketing, operations, and supply).
Determination of the "best buy" is based on: a. suitability for a given use. b. a balance between price and quality. c. trade-offs among stakeholders (e.g., marketing, operations, and supply). d. technical considerations only. e. the internal user or specifier's perceptions.
True
For the supply function, time-based strategies that impact competitive advantage relate to cycle time reductions, and greater coordination of materials and information flows.
True
For the supply management function, time-based strategies that impact competitive advantage relate to cycle time reductions and greater coordination of materials and information flows.
A and C
Evaluation of the supply function's contribution to organizational goals and strategies can be viewed in the context of: operational and strategic. strategic and transactional. direct and indirect. both A and B above. both A and C above.
When planning a negotiation strategy, if the estimated range of acceptable results for both buyer and seller indicates there is no zone of overlap and no likely means of closing the gap, then negotiation makes sense.
False
between and among supply, and other internal functions and external sources.
Information flows:
frequently enables competitive advantage from product/service differentiation at lower cost
New technology:
False
Online reverse auctions are useful means of price determination for customized items.
True
Subcontracts are useful when the work is difficult to define, has a long time horizon, and is relatively expensive.
False
Subcontracts are useful when the work is difficult to define, has a short time horizon, and is not expensive.
if there is a prime contractor bidding out part of a job. Answers: in government procurement.
Subcontracts can only occur:
False
There is a growing emphasis on purchase transactions and less on acquisition processes.
False
Third-party logistics service providers are carriers that always own assets (trucks, airplanes, railcars) and act as intermediaries between trading partners, for example, shippers and carriers.
If the goal of negotiation is performance, then the process and tactics used during the negotiation are important because they have great impact on the intention to perform.
True
Loss exposure can be reduced by matching decisions about packaging, transportation, and security levels with the risk of loss.
True
c. the carrier's ability to handle multiple parts of the logistics process.
With deregulation of the transportation industry and the development of intermodal service, the focus for the transport buyer is: a. selecting the best mode of transport. b. procuring logistics services at the lowest rates. c. the carrier's ability to handle multiple parts of the logistics process. d. bringing all logistics activities under the management of the VP of Supply. e. shifting responsibility for shipper-carrier relationships to the carrier.
Assessment of a potential supplier's financial situation: a. is usually unnecessary because it is highly unlikely that a supplier will go out of business, and, even if they do, it is relatively easy to replace a supplier. b. may yield substantial opportunities for negotiating favorable terms for both buying and selling organizations. c. is best left to the finance department which will alert supply to any issues that might adversely affect a pending deal. d. is always necessary and follows a strict protocol no matter what type of purchase or dollar value. e. seldom relies on financial information provided by the supplier.
b. may yield substantial opportunities for negotiating favorable terms for both buying and selling organizations.
e. the probability of it meeting customer specifications can be predicted.
If a process is stable and predictable: a. the process averages a varying number of standard deviations. b. common causes have been eliminated through process change. c. it produces the same exact result each time the activity is performed. d. random causes have been detected and eliminated. e. the probability of it meeting customer specifications can be predicted.
is of less strategic importance than identifying opportunities for outsourcing.
In an outsourcing decision, developing and negotiating the outsourcing contract:
e. is of less strategic importance than identifying opportunities for outsourcing.
In an outsourcing decision, developing and negotiating the outsourcing contract: a. is not an area where supply managers believe they can add value. b. is the biggest area where supply managers can affect organizational strategy. c. is less important than ensuring prompt payment to suppliers. d. is best left to the function most directly affected by the outsourcing decision. e. is of less strategic importance than identifying opportunities for outsourcing.
a. are outside, nonrandom problems such as breakdown of machinery, material variation, or human error.
In statistical process control (SPC), special or assignable causes of variation: a. are outside, nonrandom problems such as breakdown of machinery, material variation, or human error. b. are intrinsic to the process and will always be there unless the process is changed. c. have everything to do with the underlying process and can only be eliminated by changing the process. d. are of secondary importance in quality control procedures used to detect and eliminate variation. e. can be present in a process that is fully capable of meeting specifications consistently.
True
Insourcing and outsourcing occur when a company reverses previous make or buy decisions.
e. a, b and c.
Integrated carriers (truck-air) like UPS and Federal Express are able to capture a larger market share because they: a. utilize their own aircraft. b. have extensive ground networks. c. have accurate, real-time tracking systems. d. b and c. e. a, b and c.
essential in all organizations, and many lack the mechanisms to link them.
Linking supply strategy to corporate strategy is: - non-essential in most types of organizations. - essential in all organizations, and many lack the mechanisms to link them. - essential in all organizations, and most have the mechanisms to link them. - essential only in manufacturing, and most have the mechanisms to link them. - essential only in the service sector, and most lack the mechanisms to link them.
False
MRP II is a business practice in which multiple trading partners agree to exchange knowledge and share risks to generate the most accurate forecast possible, and develop effective replenishment plans.
survival, growth, financial, and sustainability.
Normally, most organizational objectives can be summarized under four categories:
c. buying 100 at a time will save the company $2,130 per year.
On an annual requirement of 100 items spread evenly throughout the year, any purchaser has an opportunity of buying all 100 units at a price of $100 each, or buying 10 units at a time at a price of $130. If the inventory carrying cost is 20 percent per year and assuming no ordering costs: a. buying 100 at a time will save the company $3,600 per year. b. buying 100 at a time will save the company $2,260 per year. c. buying 100 at a time will save the company $2,130 per year. d. buying 100 at a time will save the company $1,260 per year. e. buying 100 at a time will lose the company $840 per year.
to clarify the description of need before communicating with potential suppliers.
One purpose of a requisition is
True
Operator action is required when process output exceeds the upper control limit (UCL) or dips below the lower control limit (LCL).
d. truck.
Organizations operating under a just-in-time system, prefer to ship by: a. rail. b. same day air. c. next-day air. d. truck. e. intermodal carriers.
d. may reduce or control operating costs, improve focus on core competencies, and gain access to world-class capabilities.
Outsourcing: a. occurs primarily in large manufacturing firms in the private sector, but is rarely practiced in public purchasing. b. decisions are based on financial factors that most organizations can easily access through their accounting system. c. usually results in increased hiring to attain expertise that the organization does not already possess. d. may reduce or control operating costs, improve focus on core competencies, and gain access to world-class capabilities. e. is a low risk venture because the firm can always revert back to performing the function in-house at low cost.
False
Reductions in inventory investment primarily come from getting users to reduce their demand for inventoried items.
Reverse marketing is: a. encouraged by the rapid rate of technological change, growth in international trade, and the need to extract competitive advantage from supply chains. b. when the buying organization has decided to stop making something inhouse and identifies a supplier from its existing supply base. c. is an aggressive, marketing-initiated, approach to finding and developing world class suppliers. d. requires that the marketing department in the buyer's organization fully understand the needs of supply. a. is most appropriate when the product is fairly standard and available from multiple local suppliers.
a. encouraged by the rapid rate of technological change, growth in international trade, and the need to extract competitive advantage from supply chains.
Life cycle costing (LCC): a. may include costs that are 10-15 years in the future and highly uncertain. b. includes all relevant costs expected in the first three years of ownership. c. focuses on purchase price which is typically the highest percentage of LCC. d. is easy to understand theoretically and easy to put into practice. e. is applied to all types of purchases except capital acquisitions.
a. may include costs that are 10-15 years in the future and highly uncertain.
The prime function of an organized commodity exchange is to furnish an established marketplace where: a. the forces of supply and demand operate freely. b. commodity prices can be controlled. c. sellers of the same commodity can come together to set prices. d. products that are difficult to grade can be traded. e. there are only a limited number of buyers and sellers.
a. the forces of supply and demand operate freely.
