Supply Chain CHAP 15 (1)

In purchasing, one's only ethical obligation is to one's suppliers.

FALSE Purchasing personnel have ethical obligations with regard to a variety of stakeholders, primarily the organizations that employ them.

The purchasing cycle ends when the purchasing department is notified that the supplier has shipped the items.

FALSE The purchasing cycle ends when the shipment has been received in satisfactory condition.

Centralized or decentralized purchasing is directly related to the size of an organization.

FALSE The use of centralized or decentralized purchasing is independent of organization size.

The design of the supply chain and establishing partnerships with vendors and distributors are examples of operating issues in a supply chain.

FALSE These are tactical responsibilities.

The need for supply chain management increases as globalization increases.

TRUE As globalization increases supply chain management is becoming more important.

Decentralized purchasing can usually offer quicker response than centralized purchasing.

TRUE Centralized purchasing can be more efficient, but decentralized purchasing can offer faster response.

An advantage of decentralized purchasing is the attention given to local needs.

TRUE Decentralized purchasing is more responsive to specific needs.

E-commerce refers to the use of electronic technology to facilitate business transactions.

TRUE E-commerce is a growing trend in supply chain management.

Every business organization is part of at least one supply chain.

TRUE Either the business organization is a complete supply chain or it is a player in a supply chain.

Vendor analysis is the process that evaluates the source of supply in terms of price, quality, reputation, and service.

TRUE Evaluating sources of terms of price, quality, reputation, and service is vendor analysis.

A company's supply chain involves the flow of materials and information from suppliers, through production, to the end users.

TRUE Flow of materials and information are the central focus of supply chain management.

Information technology is the key to success of global supply chains.

TRUE Global supply chains are made possible by the use of information technology.

Some firms have structured their procurement function to include both centralized and decentralized purchasing.

TRUE Good purchasing can involve both centralized and decentralized elements.

Scheduling and maintaining equipment are operational decisions.

TRUE Maintenance would be a form of corrective or preventative action to ensure the continued availability of capacity.

Most people working for a business organization are somehow involved with the supply chain of that business.

TRUE Most people working for a business organization are involved in the flow of materials, money or information.

The service function of purchasing interfaces with many area including legal, accounting, and engineering functions.

TRUE Purchasing interfaces with a wide variety of areas.

Design and purchasing people should work closely because changes in design, specifications, or materials can impact future purchase requirements.

TRUE Purchasing interfaces with a wide variety of functional areas.

The importance of purchasing is the cost of goods purchased, the quality of goods and services, and the timing of deliveries of goods or services.

TRUE These costs resulting from the purchase of parts and materials are highly consequential.

A given inventory item has a per-year holding cost of $500. One method of shipping this item is three days faster than the other, but it is $2.50 more per unit. Using the slower method would be __________ more expensive overall than using the faster method.

E. $1.61 Multiply the holding cost by the speed differential, then divide by 365. Compare this to the actual shipping cost difference.

In e-commerce, the front-end design is significantly more important than the back-end design.

FALSE Back-end design is often more consequential in e-commerce.

E-commerce involves business-to-business (B2B) interaction only.

FALSE E-commerce can also involve business-to-consumer (B2C) interactions.

Global supply chains make purchasing easier because of more options.

FALSE Global purchasing is more complex because of the variety of issues and risks that must be considered.

The materials in the supply chain flow toward the end of the chain, while the information and the dollars move toward the beginning of the chain.

FALSE Material flows toward the final consumer and information and dollars flow upstream.

The importance of purchasing relates only to the cost of parts and materials purchased, which is often 60% or more of the cost of finished goods.

FALSE Purchasing is important because other costs resulting from the purchase of parts and materials are highly consequential.