Chapter 5

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

Bid

While paperless transactions are now possible through e-procurement and Web-based services, these would NOT be considered sustainable business practices. True or False

False

Buying materials and components from suppliers instead of making them in your company-owned operations, is known as? Selective Sourcing Insourcing Offshoring Outsourcing

Outsourcing

Which of the following is NOT one of the advantages of e-Procurement? Mobility Inaccuracy Real Time Trackability

Inaccuracy

What is the term for an internal document that defines the need for goods and/or services? Purchase Requisition Purchase Order Procurement e-Procurement

Purchase Requisition

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

Expediting

Forward Vertical Integration refers to a company acquiring one or more of their sources of supply. True or False

False

Which of the following is NOT one of the primary goals of Purchasing? Increase the supplier base Ensure the uninterrupted flow of materials and services at the lowest total cost Improve the quality of the finished goods produced Optimize customer satisfaction

Increase the supplier base

"Supply Management" is a newer term that encompasses all acquisition activities beyond the simple purchase transaction. True or False

True

Total Cost of Ownership is the sum of the cost elements Quality, Service, Delivery, and Price. True or False

True

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

A firm lacks the technology or expertise to produce an item

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

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

All of the following are reasons for Buying or Outsourcing an item from a supplier, EXCEPT for which one? Due to the lack of expertise in your own company operations Because you want a adopt multi-sourcing strategy Because you want to use existing idle capacity in your own company operations Because the item is non-strategic

Because you want to use existing idle capacity in your own company operations

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

Bid

Benefits derived from implementing an e-procurement system include all of the following EXCEPT? Time Savings Real Time Access Decentralizing Purchasing Trackability

Decentralizing Purchasing

All of the following are reasons for Making an item in your own company operations, EXCEPT for which one? To protect your proprietary technology Due to insufficient capacity in your company operations To control transportation and warehousing costs There is no competent supplier available

Due to insufficient capacity in your company operations

Industrial buyers purchase raw materials and other components for conversion into a finished product, but they do not purchase services or capital equipment True or False

False

The Profit Leverage Effect states that a decrease in purchasing expenditures will directly decrease profits. True or False

False

The purchasing function is one of the most value-enhancing functions in any organization, and therefore, it is not necessary to periodically monitor the purchasing function's performance against a set of standards or industry benchmarks. True or False

False

Which of the following are described as Agents licensed by the governmental regulatory authority to conduct business on behalf of importers, for a service fee? Import Merchants Import Brokers Trading Companies

Import Brokers

In public purchasing in the government & non-profit business sector, bidders (i.e., potential suppliers) are generally required to furnish bonds as an incentive to ensure that the successful bidder will fulfill the contract awarded. Which type of bond provides protection against 3rd party liens (i.e., debts) not fulfilled by the bidder? Surety Bonds Bid Bonds Performance Bonds Payment Bonds

Payment Bonds

Which of the following is an internal document that defines the need to purchase goods and/or services? This document does not constitute a contractual relationship with any external party. Request-for-Quote (RFQ) eProcurement Purchase Requisition Purchase Order

Purchase Requisition

The purchasing tool described as "A document used to solicit bids (i.e., price and delivery) from interested and qualified suppliers for goods or services that the organization needs to obtain," is known as? Request for Proposal Purchase Requisition Request for Quote Request for Information Purchase Order

Request for Quote

The e-Procurement process has many advantages. Which one of those listed below is NOT one of these advantages? Accuracy Mobility Segmentation Trackability

Segmentation

If you understand the Total Cost of Ownership (TCO) then you know: That it is better to own an item rather than to rent or lease an item That you need to consider all the related costs over the life of the product That you should always buy from the supplier with the lowest purchase price That the acquisition cost is almost always the largest portion of the total cost of ownership

That you need to consider all the related costs over the life of the product

A purchase order is legally binding only after accepted and confirmed by the supplier. True or False

True

Duties, taxes, or customs imposed by the host country for imported or exported goods, are known as Tariffs True or False

True

Forward Vertical Integration refers to a company acquiring one or more of their customer organizations. True or False

True

One of the main reasons to consider purchasing from an international global source is the opportunity to improve quality, cost, and delivery performance. True or False

True