SCM 486 Final Exam - Modules 11-14

___________ components are those components not defined as strategic components.

Commodity-based

_____________________ is known as the father of the Japanese post-war industrial revival and was regarded by many as the leading quality guru in the United States.

Dr. W. Edwards Deming

Before firms can enjoy the benefits of a buyer supplier partnership, they must first develop and design the partnership implementation process. A supplier partnership involves a significant attitudinal as well as structural change from traditional supply arrangements, so the allying firms must be meticulous to ensure that a true win-win partnership is developed.

False

Customer expectations include 1) fabrication, 2) appearance, 3) maintainability, and 4) reliability.

False

Improvements are possible in the way most tasks are performed. The improvement process may have an insignificant effect on the buyer s total purchase price.

False

Justifying a quantity discount is the responsibility of the buying firm. The buyer must be able to document the actual cost savings.

False

Large setup and tooling costs can easily be amortized by the buying firm

False

MBO is an innovative way of thinking that affects the culture, the strategy, and the technology of a company.

False

The ability to identify errors before they occur recycles scrap material, improves downstream inspections, and will promote profitability.

False

Two factors driven by power and critical to the partnership dyad are commitment and trust. Trust may be defined as the perception of being emotionally impelled.

False

Ultimate dissolution of the partnership may be necessary if the firms are able to successfully work through the critical steps of partnership formation or synergies can be recognized.

False

When the buying firm is buying from sellers that service firms similar to the buying firm s markets, the prices will more than likely increase.

False

_________ is a set of standards that document the implementation of a quality program. In order to be certified, suppliers need to provide documentation to an external examiner that they meet the ________ requirements. Once a firm is certified, it will be listed in a directory so that all of its potential customers can know which firms have been certified and to what level.

ISO 9001 / ISO 9001

Six-sigma suppliers focus on all of the items listed below with one exception. Which one is the exception?

Improvement of profit margins

Guides to the implementation process are summarized below, with one exception. Which one is not one of the steps?

Reward partner for superb quality and service

Ultimate supply chain partner __________ remains the overriding factor in determining the future of a supply chain partnership.

Satisfaction

______ reaches much wider than the traditional quality view of incoming inspection and process control it means that the entire organization is working as a team, including top management and each and every employee.

TQM

As defined by Maloni and Benton: the power of a supply chain member [is] the ability to control the decision variables in the supply strategy of another member in a given chain at a different level of the supply chain. It should be different from the influenced member s original level of control over their own supply strategy.

True

In order to qualify for the (Malcolm Baldridge) Award, applicants must address the following categories: 1. Leadership 2. Information and analysis 3. Strategic quality planning 4. Human resource development and management 5. Management of process quality 6. Quality and operational results 7. Customer focus and satisfaction

True

Partnerships move beyond special influence transactions by involving efforts of both firms to coordinate functional activities. The three tiers listed below show how partnerships can be segmented based on the intensity and duration of the leadership. Tier I partnerships entail short-term, single-function/division coordination. Tier II partnerships extend coordination to integration and encompass multiple activities over a longer time span. Tier III partnerships dilate into significant levels of operational integration.

True

The underlying behavior of the improvement curve reflects a systematic improvement (percentage reduction) of labor per unit as a function of cumulative units produced.

True

Over recent decades, firms within the supply chain have begun to realize the advantages enjoyed from sharing of technology, information, and planning with other firms. Even competitors, and many modern business thinkers will claim that not only is a more open and relational attitude advantageous, but actually essential and inevitable in maintaining ___________________.

a competitive advantage

The specification is ____________________, including specific characteristics such as weights and measurements that enable the product to work in a manner acceptable to the ___________.

a description of the required output / consumer

Despite the differences in opinions about the size of the supplier base, the major issue remains that a closer relationship with suppliers facilitates

a reduced number of suppliers

Some supply managers argue that implementation of many new manufacturing techniques necessitates _______________________.

a reduction in the number of suppliers

Setting the ___________ criteria is usually based on either predetermined standards or basic statistics.

acceptance

Drivers of satisfaction within supply chain partnerships include relationship-oriented factors such as _________________.

all of the above

The price of a product or service should be expected to cover cost of _____________, plus a reasonable profit.

all of the above

Within the win-win partnership dyad, buyer and supplier share goals as well as inherent risks through joint planning and control, seeking to create a supply chain with increased information flow and enhanced loyalty. Like the overall goal of supply chain management, such coordination allows for ________________________.

all of the above

Supply chain partnerships bridge the barrier between buyer and seller, leading manufacturers to ________________.

ally with a reduced supplier base

The new or modified part agreement between the buying and the selling firm is usually complete after ________________________ has been _____________.

an acceptable final test sample / generated and verified

In the short term, a firm can sell its products ____________; however, at some point, the firm will be required to _______________.

below its total cost / make a profit or quit the business

Ideally, the end result for both firms should be _____________, yielding greater control of costs, cycle times, inventory, quality, and, ultimately, customer satisfaction.

decreased uncertainty

Recognizing partnerships between buyer and supplier, as a fundamental driver for the success of the Pacific Rim supply chain processes, American firms have begun to _______________.

emulate these supplier alliances

There are some instances where the supplier will employ short-term strategic pricing in order to _______________.

gain market share or dump unwanted items

Conflict is present in the supply chain when one supply chain member ________ goal attainment and performance of another. Conflict is an omnipresent factor in any supply chain relationship.

hinders

In general, price is important; however, remember __________ of many variables that go into purchasing decisions.

it is only one

The ______ suppliers usually get the long-run demand forecast and are involved in the manufacturer s product development.

key

Implementing TQM requires the following: Defining the _______. Identifying systems ________. Identifying systems ________.

mission/output/customers

Though ___________ has received abundant recognition over the last few decades from both researchers and practitioners alike, the concept of a __________ is perhaps as old as or even older than business itself.

partnering/partnership

One of the most important and complex decisions a firm has to make is how much to _____________________.

pay for its items and services

A final point on the effects of power concerns the ultimate ______________ of the supply chain members as well as the supply chain itself.

performance and subsequent profitability

The ___________ evaluation is an assessment of the supplier s actual performance on a variety of criteria, such as delivery reliability, cost, quality defect rate, etc.

performance-based

The notion of ______ in an interfirm relationship implies _______ dependence on the source; otherwise the _______ would not need to subject itself to the unbalanced relationship.

power / target / target

The relationship between _______________ is dependent upon the origins of the commitment.

power and commitment

________ is a direct result of dependence, and the extent of dependence is directly induced by _____________ of power.

power/perceptions

The buyer s evaluation of the supplier s performance is a catalyst for the supplier development activities. There are two main categories for the supplier evaluation. Identify the two correct evaluations.

process-based evaluations and performance-based evaluations

The suppliers ___________ systems must be consistent with the in-house quality requirements of the __________.

quality assurance/customer

A healthy long-term relationship between suppliers and manufacturers is becoming more and more important and can result in ___________________.

reduced transaction costs

Intensive price competition and information technology have led to the implementation of a ______________ procurement approach for commodity components.

reverse auction

The objective of the purchasing department is to buy the _______ materials from the ______ supplier at the ______ time and at the ______ price.

right / right / right / right

The first step in the supplier partnership implementation process includes the strategic verification of the need for a supplier partnership. Here, the firm must evaluate the potential ____________ of a partnership in comparison to traditional processes.

risks and benefits

__________ in the supply chain can be defined as the extent of contentment with the relationship.

satisfaction

The notion of interfirm power holds its roots in ______________ literature and has been extensively developed by marketing channel researchers.

social science

The ____________ is actually the average distance a normal point is from the mean. Thus, the ____________ represents a more tractable measure of the variance.

standard deviation / standard deviation

Although the basic ideas of TM are simple, the ___________ procedures are complex and can be difficult to __________.

statistical/implement

Although many firms engage in partnering activities, the specific interpretation of a ___________ or partnership is at best vague.

strategic alliance

Also termed a __________, a supply chain partnership is a relationship formed between two independent entities in supply channels to achieve specific objectives and benefits, and it is these partnerships that form the essential building blocks of _______________ management.

strategic alliance / supply chain

Critical to the implementation of purchasing and supply management techniques is the development of _________________.

supply chain partnerships

Abandonment of partners may lead to __________, making future partners _________ to attract.

suspicion / difficult

Power essentially attempts to force a _______ to comply with the ________ desires, and, like commitment, the level of compliance and more importantly cooperation are critical to the relationship tenure as well as profitability.

target / sources

The most severe penalty for poor quality expectations is (are) ____________. If the quality of the inputs to the productive system is inferior, the final product will be inferior.

the loss of sales

The ____________ approach to manufacturing process control is to select production samples and compare the attributes of the sample to the specifications.

traditional

While many firms have sought ___________ through acquisition to harness supplier expertise, some argue that _____________ can provide similar benefits without the necessity of ownership and arduous exit barriers.

vertical integration/partnerships

________________ exists where there are areas of mutual concern and complementary interests. The situation is a varying-sum schedule such that, by working together, both parties can increase the total profits available to be divided between them.

Integrative bargaining

______________ (QFD) focuses on how businesses develop high quality products for (their) customers. QFD is driven by cross functional market research. This is the process of understanding customer expectations, and how well providers of products address these expectations

Quality Function Deployment

_______________ (QFD) is a methodology for collecting customer information to drive product development.

Quality Function Deployment

The physical and social setting of the bargaining may have an effect. Is the bargaining being conducted in the home territory of one of the bargainers or on neutral ground? What, if any, is the seating arrangement? Which of the factors is this statement referring to?

Situational factors

________ is a way to measure supplier quality. Supplying firms that follow the core philosophy of _________ will make excellent strategic partners.

Six sigma / six sigma

_________ standards can be applied to both manufacturing and service firms using the same methodology. SPC provides input to the _________ approach.

Six-sigma / six-sigma

This factor refers to the relationships of the bargainers to significant others not participating directly in the bargaining. Which of the following is this statement referring to?

Social relationship with significant others

One of the factors refers to the social relationship existing between the bargainers. Examples are degree of friendship or differences in status or power. Which of the following factors is this referring to?

Social relationship with the opponent

Effective _____ requires the integration of production planning, marketing, engineering distribution, and field service.

TQM

The ________ method (TM) addresses design and engineering (offline) as well as manufacturing (online) quality. This fundamentally differentiates TM from SPC, which is purely an online quality control method.

Taguchi

The __________ method (TM) nicely complements many of the advantages of SPC.

Taguchi

Each buying firm must specify in detail the agreed-upon quality targets. As an example, at a minimum, the following four issues should be addressed in any purchasing contract: PPM target agreement, Field failure and reliability requirements, Warranty agreement, Urgency to solve problems

True

It is not enough to set as an objective to negotiate a percentage improvement from the seller s original price proposal. The buyer should never reveal (his/her) objectives to the seller. The negotiation s objectives should also use a data driven approach to determine minimum and maximum pricing strategies.

True

The analysis phase (of the buying decision) requires the decision maker to investigate _____________ sources of supply.

at least two potential

The _________ suppliers usually get a small volume of business and do not have a close working relationship with the manufacturer.

backup

The ____________ needs to determine how he/she, as a decision maker, ought to behave in light of his/her analysis of how his/her opponent might behave.

bargainer

The condition under which ____________ takes place is when two or more parties have divergent interests or goals and communication between the parties is possible.

bargaining

____________ occurs between all forms of human groupings including individuals, groups, organizations, and countries.

bargaining

The findings by psychologists can be categorized under six areas, each representing a major factor assumed to affect bargaining. Listed below are five of the six areas. However, one is incorrect. Which one?

bargaining system

If you buy items for one-half the market price without obtaining appropriate quality, delivery, or quantity standards, your firm would _________________.

be rendered noncompetitive

Giving a bargaining opponent the impression that tough bargaining is because of one s payoff system and that one is firm but fair is the _________ strategy.

best

Perhaps the most important factor associated with the purchasing decision is the _____________ and the ______________ between the buying and supplying firms.

business environment / power imbalance

And like supply chain management, _____________ extends beyond a simple interfirm relationship to involve integration of confidential and vital processes such as strategy formation, planning, information flow, and operations.

buyer-supplier partnering

In today s business environment, when sound money management is so important, selling firms will offer ________ discounts if payments for goods and services are promptly remitted.

cash

The first question a purchasing professional should ask a supplier is, How much of a discount can I receive if I buy from you? Some of the more popular discounts are __________________ discounts.

cash, trade, and quantity

___________ is nothing more than a form of compliance as well as identification and _________.

commitment/involvement

The market approach to pricing is more erratic simply because the supplier, through the use of market research, collects information on its __________ and from their ___________ to determine where the price should be pegged.

competitors/customers

__________ is action without inherent desire, and, thus, _________ remains a relatively easy factor to measure since it implies action, not feeling.

compliance/compliance

Given the complexity of the buying decision, the purchasing professional must be prepared to analyze each significant buying situation on the basis of the ___________________ of various buying decisions

conceptual and the economic impacts

Implementing TQM also requires the following: Negotiating __________ requirements. Developing a supplier specification that details ___________ requirements and expectations. Determining the necessary activities required to fulfill those requirements and ____________.

customer / customer / expectations

SPC uses two control charts to ensure quality in manufacturing: the sample mean (X-bar) chart and the sample range (R) chart. The control chart limits are established for X-bar and R charts based upon tolerances set during the design stage of the product. In most cases, problems are ________________ before any ___________ parts are produced, thus reducing scrap and rework

diagnosed and resolved / substandard

The cost components of price determination can be divided into direct and indirect costs. _______ costs relate to the actual units of production. If the unit is not produced, ________ costs are not incurred.

direct/direct

Discussion, understanding, and agreements are vital to ___________ bargaining.

distributive

Economists, on the other hand, have seen ____________ bargaining as a problem that only involves two parties dividing fixed resources with no opportunity for any outside influence of third parties

distributive

The parties in __________ bargaining are in basic conflict and competition because of a clash of goals: the more one party gets, the less the other gets.

distributive

Two-party bargaining can be divided into two types: _________ and ___________.

distributive / integrative

With its many benefits, supply chain partnerships retain several inherent risks that can be potentially damaging to participants. First and foremost, heavy reliance on one partner can be disastrous if the partner _____________.

does not meet expecations

In general, __________ theory can help predict the approximate outcome of bargaining situations, but _____________ conditions will cause the true solution to vary around the predicted outcome point.

economic/psychological

A combined _____________ approach will help provide the truest solution and best approach to understanding bargaining and negotiation situations and their outcomes.

economic/psychology

The final step in the partnering process includes the maintenance of the relationship to ______________________________.

either enhance its development or bring about its dissolution

Performance may be defined as the ability to ________________.

execute intentions and goals

A bargaining situation can then be defined as an interaction where parties with certain disagreements confer and exchange ideas about a possible solution until a compromise is reached or the bargaining is terminated. This is referred to as ______________.

explicit bargaining

The buying firm, no matter how powerful, should attempt to obtain a ___________ and good consensus.

fair price

If setup cost and learning rates are ignored, a buying firm will, more than likely, _______________.

fall into a competitive bidding trap

The model [the buyer-seller interactions exchange model] is built on the relationships inherent in a bargaining situation and illustrates at least _______ major types of relations that can be affected by any bargaining interaction.

five

A rule of thumb must be developed that can be used to decide whether or not a partnership _____________.

has sufficient potential

A buying firm must consider the price variation that is inherent in buying __________ components in order to understand various design specifications and associated costs.

high-priced

The buying firm must consider its total cost of accepting a quantity discount. Specifically, the ___________ associated with carrying larger quantities must be compared to the expected benefit of the discounts.

holding costs

Conflict can be defined as tension between two or more social entities... which arises from _______________________.

incompatibility of actual or desired responses

_________ costs are associated with non-manufacturing-related costs. Insurance, managerial salaries, property taxes, and depreciation expenses are examples of _________ costs.

indirect/indirect

The ____________ techniques have been used extensively in cost estimating, pricing, negotiating contracts, and estimating the major implications of changes in design.

learning curve

A Harvard Business School study concluded that a key driver in the decline of U.S. competitiveness in the international marketplace has originated from investing _______________, such as supplier relations.

less in intangible benefits

The effective buyer in a competitive environment will more than likely obtain purchased goods and services at a __________ given that quality, delivery, and proper quantities are appropriate.

market price

Once a partner is selected, the establishment of the actual relationship provides the critical step in which the partners must create a complete sense of awareness about the ______________ of all involved parties.

needs and participation

The word ___________ is derived from Latin and in civil law means trading on deliberations leading to an agreement.

negotiation

Various names have been used to describe the amount that must be exceeded in the bargaining interaction in order to obtain a profit. Several of the names are listed below. However, one is incorrect. Which one?

net-sum point

The most important ____________ for a seller is to submit the most responsive Request for Proposal (RFP) or Request for Quote (RFQ).

planning activity

Exploration of the effects of _______ on factors of the supplier buyer alliance provides the key to understanding the concept of the power-partnership link...

power

The major psychological influence in a buyer supplier relationship is __________. It is conceivable that a (n) _________ buyer could force a supplier to eliminate its overhead from the ultimate price. The danger for the buyer is that this so-called good buy may drive the supplier out of business and that this reduction in competition may result in massive price __________ in the long run.

power / powerful / increases

Extremely complex in nature, ________ serves as a composite relationship-oriented variable, affecting both the ______________ in many transparent as well as concealed ways.

power/target and source

The competitive bidding process must begin with an assessment sizing up the suppliers _________________.

pricing strategies on competitive positions

The customer perception of _______________ is also important when determining market prices.

quality and service

Without high-quality raw materials or component parts from suppliers, a (n) _____________ program will not be successful.

quality management

_________ discounts are discounts granted to the buyer for buying larger quantities.

quantity

The objective of a drastically ____________ base precludes an acceptance of supplier partnerships because a firm must accept dependence upon _____________ before they can internalize legitimate forms of supply chain management and supplier partnerships.

reduced supplier / fewer suppliers

Negotiation should be used any time the buyer does not have confidence in the __________ price lists and competitive bidding seems unreasonable.

standard

___________ price lists are usually prices generated based on the seller s total cost structure.

standard

In the end, the buying firm must determine whether the purchase price fits its competitive cost structure. This is called ____________. If the _________ is too low to generate interest from suppliers, it may be necessary for the buyer to consider applying a value analysis approach to the product in question.

target pricing / target price

Companies are spending an increasingly larger percentage of their revenue dollars for __________________.

the acquisition of goods and services

All of the following, with one exception, are the minimum necessary variables for a model of the overall bargaining process (which) include both the decision maker s and the opponent s ______________. Which one is the exception?

the final maximum offer

The best strategy is to give the other side the impression that one is _________.

tough but fair

The purchasing professional must understand the dynamic nature of ________ cost.

variable

In a __________ schedule bargaining situation, the profits (and/or losses) of the respective bargainers, when added together, need not always equal the same fixed amount.

varying-sum

In order to successfully achieve a __________, buying and supplying organizations must continuously improve their processes.

zero defect target

In the ________ bargaining situation, the profits (and/or losses) of the respective bargainers always sum to the same fixed amount. The term _________ stands for the fact that what one bargainer gains, the other losses and the gains (and/or losses) net out to be _______.

zero-sum / zero-sum / zero

There are major quality awards that ensure that suppliers are TQM effective. The most universally known quality awards are the ____________ and the ________________ National Quality Award.

Deming Award / Malcolm Baldridge

A bargainer's resistance to making concessions is negatively correlated to both the time required to make a further concession and the probability of withdrawing from the negotiations.

False

A cost-based approach cannot succeed in a competitive market if the product does not remain acceptable to the Department of Commerce.

False

Usually a tougher bargaining one using a more extreme opening position, fewer concessions, and/or smaller concessions can obtain a more favorable agreement.

False

Individual differences in bargaining predispositions may affect bargaining behavior. This is referred to as ________________.

General bargaining predispositions

Of the items listed below which is the factor that includes the specific actions of the bargainer during bargaining. For example: How extreme is his/her opening? Does he/she concede frequently or infrequently?

Bargaining strategy

Conceding only in response to a strike threat by the other side gives the impression that one is strong, while sometimes reciprocating a concession gives the impression that one is tough. This leads to the general conclusion that every agreement ought to lie somewhere between the two starting points of the bargainers.

False

The buyer must be thoroughly prepared for each and every negotiation. Data collection is the first step in the preparation process. The next step involves setting the time and place of the negotiations and then identifying the negotiation team members.

False

The level of resistance also is assumed to be related to the minimum necessary share. As a bargainer concedes toward his/her minimum necessary share, (his/her) resistance should increase. It also can be predicted that for a given offer, the lower the minimum necessary share, the greater the resistance.

False

Payoffs result from various aspects of the negotiated agreement. For example, certain terms may yield a specific amount of profit, or there may be a bonus for attaining a specified agreement, or the time spent in bargaining may involve certain costs. This is referring to __________.

Payoff system

__________________ is becoming the most important competitive weapon necessary to ensure survival in today s competitive environment.

Price determination

The ___________ Act suggests that it is illegal to offer a quantity discount for commodities of like grade and quality that are not based on differences in the cost of manufacturer sales, or delivery resulting from the differing methods or quantities in which such commodities are sold or delivered.

Robinson-Patman

According to the textbook, three additional conditions also must exist in order for bargaining to occur. Which of the following is not one of those conditions?

The provisional offers must determine the outcome of the situation, i.e., one party must lose and the other party must win.

________________ is still one of the hottest topics in the business world today.

Total quality management (TQM)

The buyer s bargaining strengths are: The number of bidders . The urgency of the buyer needs. The length of time before agreement. The status of the buyer.

True

The procedure for a formal negotiation [a short version] is given below: 1. Select team 2. Determine objectives 3. Prepare 4. Determine bargaining strength 5. Develop a plan 6. Set strategy 7. Determine tactics 8. Follow-up

True

The seller s bargaining strengths depend on the following: The sellers current capacity. The probability of being the successful bidder. The sellers deadline. The status of the seller.

True

Time pressure in psychological experiments has been exerted in various ways: High or low probability that the present round of offers would be the last. Warning that time was almost up. Number of offers remaining before penalties for additional offers. Cost of each of the trial offers.

True

The general sources of price information are which of the following?

all of the above: published price lists and quotations other buyers in the market and trade journals negotiations and competitive bidding distribution

There are standard procedures for processing RFPs. After receipt of the initial proposals, the proposals should be screened for responsiveness in terms of ________.

all of the above: technical quality and managerial capability financial stability experience on similar projects and other relevant criteria

Price reflects more than cost and profit; pricing decisions also must be based on the degrees of competition and buyer seller relationships. According to the textbook the competitive pressures of price also must consider which of the following?

all of the above: the number of sellers in the market the number of buyers in the market the general economic environment

A strategy of _________ reciprocating both the frequency and magnitude of the other bargainer s concessions was found to be more effective in obtaining concessions from the other bargainer than strategies involving _______ reciprocation.

always/less

_____________ must be developed to determine the disposition of a lot of raw materials on component parts. If a batch of parts is inferior, it should be rejected and returned to the supplier.

Acceptance plans

______________ is a methodology used to determine whether to accept or reject a batch of non-strategic components or items.

Acceptance sampling