**EXAM 2 SUPPLY CHAIN***

what are the four primary reasons that companies hold inventory

1. To meet customer demand 2. To buffer against uncertainty in demand and/or supply 3. To decouple supply from demand 4. To decouple dependencies in the supply chain

the profit leverage states

A decrease in purchasing expenditures directly increases profits before taxes

Inventory costs which are independent of the output quantity are called?

Fixed Costs

what is the term that is often used for the acquisition of service

contracting

strategic sourcing is the process of identifying a company that provides a needed good or service

false

the top two primary functions of inventory are to meet customer demand and to buffer against uncertainty in demand and/or supply

true

The concept which attempts bring about positive social change through organizational buying behavior, is known as?

ethical sourcing

Which of the following new technologies can improve supplier selection and increase the effectiveness of supplier relationship management?

Artificial Intelligence

To calculate the Economic Order Quantity, you need all of the following elements, EXCEPT?

Reorder Point

The Profit-Leverage Effect states that a decrease in purchasing expenditures will directly decrease profits

false

Item A is HIGH value, LOW risk, and there are multiple potential suppliers.

leverage

the e-procument process has many advantages.which one of those listed below is NOT one of these advantages

segmentation

Benefits derived from implementing an e-procurement system include all of the following EXCEPT?

Decentralizing Purchasing

Companies in the service industry cannot maintain an inventory of services, however, they can maintain an inventory of----------which are items that are used during the service being provided.

Facilitating Products

The lowest inventory level at which a new order must be placed to avoid a stockout is known as the Replenishment Threshold

False

Which one of the following would be considered an inventory holding or carrying cost?

Insurance costs

Which inventory stock level is inventory that is already out in the market being held by wholesalers, distributors, retailers, and even consumers. The ownership of this inventory has been transferred to the trading partners, but may still influence decisions the company makes regarding how they manage and control their internal inventory.

Pipeline Stock

what is ethical sourcing

That which attempts to take into account the public consequences of organizational buying, or to bring about positive social change through organizational buying behavior

The primary purpose of the basic economic order quantity model is?

To minimize the sum of ordering cost and holding cost

Inventory is an asset that allows a company to support manufacturing operations and fill customer orders immediately, but too much inventory ties up capital and can become a significant liability.

True

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

True

Inventory costs which are dependent on the output quantity are called?

Variable Costs

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

bid

a tender ,proposal, or quotation submitted in response to a solicitation from a contracting authority is known as what

bid

The term used to describe a debt secured by a bidder for the purpose of providing a guarantee that the successful bidder will accept the contract once awarded, is

bid bond

Item B is LOW value, HIGH risk, and there are a small number of alternative suppliers

bottleneck

In which item category would the sourcing strategies of maintaining safety/strategic stocks, developing contingency plans, strengthening relationships, and searching for alternatives, be appropriate?

bottleneck items

In a Spend Analysis, purchases that involve items representing a low percentage of the firm's total spend and having very little supply risk, are categorized as Leverage Purchases.

false

In a Spend Analysis, purchases that involve items representing a low percentage of the firm's total spend and having very little supply risk, are categorized as Leverage purchases

false

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

false

Sourcing Sustainability is described as the ability to meet the current needs of the supply chain without costing the company any additional time or money.

false

The concept of Distributive Negotiations refers to both sides work together to maximize the outcome or create a win-win result.

false

In which sourcing category would an item typically be classified, if it is considered to be high value, low risk, and there are multiple potential suppliers?

leverage

return on assets

net income/ expenditure (total asset ) then convert to percentage

In which sourcing category would an item typically be classified, if it is considered to be low value, low risk, and there are lots of potential suppliers?

non-critical

Which inventory stock level is inventory that is already out in the market being held by wholesalers, distributors, retailers, and even consumers. The ownership of inventory has been transferred to the trading partners, but may still influence decisions the company makes regarding how they manage and control their internal inventory.

pipeline stock

which of the following is an internal document that defines the need to purchase good and service? this document does not constitute a contractual relationship with any external party

purchase requisition

The inventory control tool that does not require direct line of sight to read the tag on a products), is known as

radio frequency identification

what technology stores information on a small electronic device which can be attached to an object and read from up to several feet away, without the need for direct line-of-site

radio frequency identification

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 quote

item C is HIGH value, HIGH risk, and there are few suppliers but they are excellent

strategic

what type of inventory is used to take advantage of a price discounts, to take advantage of a business opportunity or for life cycle changes

strategic stock

"rationalizing the supplier base" would mean that the purchasing firm is attempting to reduce the number of suppliers in its supplier network

true

A Supplier Code of Conduct is intended to inform suppliers of ethical sourcing expectations and is typically a condition for becoming an approved supplier.

true

Among other advantages, preferred suppliers are more likely than non-preferred supoliers to provide capacity for meeting unexpected demand, and also provide cost efficiency due to economies of scale.

true

Among other advantages, preferred suppliers are more likely than non-preferred suppliers to provide capacity for meeting unexpected demand, and also provide cost efficiency due to economies of scale.

true

Co-sourcing is the sharing of a process or function between internal staff and an external provider (i.e., a supplier).

true

The purchasing function is one of the most value-enhancing functions in any organization, however, it is still necessary to periodically monitor the purchasing function's performance against a set of standards or industry benchmarks.

true

ethical sourcing policies should include such things as the reporting of supplier compliance to stakeholders and detailing ethical sourcing expectations to suppliers

true

inventory is an asset that allows company to support manufacturing operations and fill customer order immediately, but to much inventory ties up capital and can become a significant liability

true

outsourcing allows the company that is outsourcing a product a product, to concentrate on core capabilities and reduce staffing levels

true

the purchasing tool described as "a detailed capabilities document used to determine a suppliers capability and interest in the production of a product or service"is called a request for proposal

true

Which of the following is the best description of a Preferred Supplier? Correct answer:

A supplier who best meets all of your company's overall purchasing requirements

Item D is LOW value, LOW risk, and there are lots of potential suppliers.

non-critical

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

outsourcing

A purchase order is legally binding once issued by the buyer.

true

to determine the reorder point calculate the demand lead time

true

total cost of ownership is the sum of the cost elements quality, service,delivery and prices

true

inventory costs which are dependent on the output quantity are called

variable cost

Which sourcing concept involves a supplier directly managing the buyer's inventories to reduce the buyer's inventory carrying costs and avoid stockouts?

vendor managed inventory

What is the term for the type of inventory system that issues an order whenever a withdrawal is made from inventory, and the replenishment order quantity is equal to the quantity withdrawn from inventory?

Base Stock Level System

The application of ethical principles in business situations is known as?

Business Ethics

In which sourcing category would an item typically be classified, if it is considered to be low value, high risk, and there are a small number of alternative suppliers?

bottle neck

reorder point

demand x lead time (make sure to convert to days if given in moths) + safety stock IF GIVEN

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 brokers

which of the following is NOT one of the primary goals of purchasing

increase the supplier base

which one of the following would be considered an inventory holding or carying cost

insurance cost

which inventory stock level is generally used for a very specific purpose or future event, and for a defined period of time

strategic stock