Exam 3

Direct labor and material costs are typically:

Direct costs

What are the most common sources of supply information?

E-catalogs Online searches Company websites

Which activities can place an organization at legal risk?

Employees purchasing goods without seeking guidance from the supply personnel. Purchasing goods that are not part of a contract from a supplier.

Warranty of title and against infringement

Ensures there are no liens against the title of the goods and they are free from patent or copyright infringement.

Which of the following is not one of the topics that ethical and professional standards of supply management practice are built upon (as advocated by the Institute for Supply Management)?

Faith

Assurance of supply is an argument that favors single sourcing.

False

Commercial letters of credit (CLCs) are the least actively used structured payment instruments in global trade.

False

In value engineering and value analysis, value can be expressed as: Price ÷ Cost.

False

It is as easy to compare total cost of ownership from an offshore source to that of a domestic one.

False

Qualifying sources is an example of a post- ownership cost in the total cost of ownership model.

False

TCO is also applicable in one's private life enabling better decision-making.

False

The use of just-in-time, stockless buying or systems contracting favors the use of multiple sourcing.

False

True or false: A Maquila can only be owned by Mexican companies.

False

True or false: Buyers and sellers have the same legal authority.

False

What act makes it illegal for US companies to offer bribes to foreign government officials?

Foreign Corrupt Practices Act (FCPA)

Which of the following is not typically true of dual sourcing using the "70-30" approach?

Frequently used when time to market is critical

Where is the World Intellectual Property Organization (WIPO) headquartered?

Geneva, Switzerland

Sales representatives

Handles low-volume-value contracts and is paid a commission.

What can affect total costs for globally sourced goods?

Hidden costs Currency fluctuations

How can purchasers ensure compliance by suppliers to all government or social standards?

Audits

What is an alternate method to verify financial stability of a supplier?

Bank or financial institution letter

What involves the direct exchange of goods without any money?

Barter

What are some consequences of commercial bribery?

Buyers will pay higher prices than normal. Defects in quality are hidden. Total cost of ownership rises.

The UCC was written for "goods" and not services, while the UCC might be used for services, generally for services:

Common Law will apply.

Which of the following statements is not recognized as a countertrade characteristic:

Countertrade are smooth and easy to negotiate, and require low management and admistrative effort

What criteria are evaluated under traditional level 2 sourcing options?

Delivery Quality Price

Which of the following is not a typical acquisition cost?

Depreciation Costs

What geographical decisions must supply managers make?

Onshoring of suppliers. Reshoring suppliers. Offshoring of suppliers.

A certificate of certifies materials or labor and is used to obtain preferential tariff rates.

Origin

A is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem.

Patent

During communication with counterparts from a different country, what can help ensure a more successful encounter?

Speak slowly and clearly. Seek cultural advice from colleagues prior to the meeting. Avoid jargon.

What are the two categories of free trade zones?

Special purpose General purpose

What is the focus of strategic cost management?

Sustain cost savings year after year. Applying supply chain tools and techniques.

What is the correct formula for target cost?

Target cost = Estimated selling price - desired profit.

The NAFTA, the EU and ASEAN are all examples of Free Trade Agreements which were designed to facilitate trade between and among member countries.

True

True or false: In practice, abuse of reciprocal buying is practically certain.

True

True or false: In the event a product cannot be sourced with current or new suppliers and cannot be produced in house, supply managers can seek alternative products to meet requirements.

True

True or false: Supply professionals should refuse any gratuities or tokens of appreciation beyond insignificant amounts.

True

True or false: Under the UCC electronic signatures are considered valid.

True

World class supply management has to develop a strategic sourcing plan that details how supply management will discover, evaluate, select, develop and manage a viable supplier base.

True

What are some reasons supply professionals may choose to source globally?

US currency strength. Quality control concerns. Advances in technology.

The world's second largest exporter of manufactured goods is:

USA

The number one reason to outsource globally is

better value than from domestic sources.

Ethics comes from a Greek work , which means "character" or "custom."

ethika

Requesting a supplier to speed up production or delivery is

expediting

In activity-based costing, overhead is divided into costs that

change in response to unit-level activities.

When a large number of common requirements are needed, organizations can create a global management system.

commodity

When dealing with a global supply chain, ________ and _________ must be aid attention to carefully to prevent miscommunication.

communication form language

of interest is based on issue perception.

conflict

Alternative Dispute Resolution (ADR) helps settle disputes outside of the .

courtroom

To enhance the organizations negotiation session the supply manager should ensure the best _____ is (are) available.

data

Bypassing distributors and purchasing from the manufacturer in the supply chain is known as

disintermediation.

The Uniform Commercial Code (UCC) was developed to

facilitate fair and efficient transactions.

True or false: Activity based costing attempts to turn direct costs into indirect costs.

false

A trade zone is an area physically located within a country but considered outside the country's customs territory.

foreign

Supply professionals can guard against currency fluctuations through

hedging

Intellectual property is divided into

industrial property. copyright.

High-volume purchases are typically fulfilled by

large suppliers.

The FCPA prohibits payments

made in cash. of large commissions. to individuals who do not provide a service or good.

If a seller desires for a good to perform a specific role, they must provide

material specifications and the purpose of the equipment or goods.

Many countries when conducting business are formal than the United States.

more

Offshoring can involve suppliers that are

near shore. far shore.

Improvement using the learning curve stops.

never

Small suppliers:

often provide the greatest responsiveness, flexibility and higher loyalty

In 1993, the EU agreed to freedom of the movement of goods,

people. money. services.

Ellram developed a model to analyze total cost of ownership using

post-transaction costs. pretransaction costs. transaction costs.

ADR provides a chance to

reach negotiated settlements. maintain working relationships.

During an RFI there are signification costs involved, these should be the responsibility of the

requesting organization.

A request for information serves the purpose of

signaling a potential supplier has been identified. allowing a supplier to express interest in a business relationship.

A purchase contract must have certain considerations to be legal. Which of the following is not one of these considerations?

signers must be over 21

Scheduled duties payed on the value of goods imported into a country are known as

tariffs.

A line displaying the relationship between unit production time and the cumulative number of units produced is known as

the learning curve

Which of the following statements supports single sourcing:

the use of just-in-time production

The acts that the agent is explicitly authorized to perform, come under what type of authority?

express authority.

Distributors, wholesalers, and retailers:

in some situations may provide more valuable services than a manufacturer.

If payment is made prior to , this does not constitute acceptance on behalf of the buyer.

inspection

If a purchaser does not wish to purchase directly from an international supplier, they can make purchases through a(n) .

intermediary

Products that cross borders several times prior to final assembly are known as

intermediate unfinished goods.

Small suppliers can offer the benefits of

product availability. speed of response. flexibility.

The functions that can be performed within an FTZ are manufacturing, storage, exhibition/display,

refunding. transshipment. manipulation.

Onshoring sources can be

regional. local. national.

Supplier selection decisions can involve more than information, other considerations are

single vs multiple sourcing. manufacturer vs distributer. geographical locations. supplier size.

True or false: Only single source suppliers can be used for procurement.

False

Which of the following is a valid statement regarding NPV analysis and TCO

TCO does not consider the stream of revenues generated by using the equipment; however, the NPV analysis does include it

The best way to deal with legal disputes is to avoid them in the first place

True

The law gives a patent holder the exclusive right to manufacture, sell, and use the patented device for a specified number of years. A buying firm who engages in any of these activities during the period of patent protection, without permission from the patent holder, is guilty of patent infringement and can be sued for damages by the patent holder.

True

True or false: When unauthorized purchases are sanctioned, apparent authority is created.

True

What are some options in the event of a breach of contract?

Warn the supplier of a non-serious breach. Request a price adjustment for sub par goods. Request replacement goods.

What authority is created when a purchaser leads a supplier to think that they have authority by making a purchase, accepting delivery of the purchase, and paying the invoice?

Apparent

Only % of footwear is manufactured in the US currently.

1

What year was the ASEAN established?

1967

What year did congress pass the Foreign Corrupt Practices Act?

1977

In 2016, the United States exported over $Blank trillion in goods and services.

2.2

Utility patents are issued for ______ years.

20

The supply manager for ABC manufacturing should ensure that a single customer is purchasing no more than () to () % of their prodc=uct

20 to 30%

ABC manufacturing sells packaged food to end customers. ABC can only charge $40 per unit. If the company's intended profit margin is 10% on the selling price, the target cost per unit is $.

36

The UCC recognizes types of warranties.

4

There are principal variations of countertrade.

5

Managers should focus more time and attention on

A category items

The supply manager for ABC manufacturing needs to purchase goods where demand is irregular, who should he use to purchase the goods from?

A distributor

Import broker

A fee based agent to assist in global trade.

Reverse marketing or supplier development is an form of procurement

Aggressive

Which of the following is not true about the status of an agent?

An agent represents the firm in official as well as in personal dealings

Where can a supply manager in the US seek guidance on ethics, principles, and standards of purchasing?

Institute for Supply Management (ISM)

Which is the closest description regarding how "Target Costing" works:

It starts with the selling price of an organization's end product minus a reasonable profit to establish the target cost

What issues or concerns can arise when communicating with global suppliers?

Language barriers Time zone differences Communication network challenges

Trading company

Large firm that offers a sizable number of products from one or a limited number of countries.

Seller's subsidiary

Located in the country organizations purchase from but owned by the global company.

What options do supply managers have to meet organizational needs?

Make the product in house. Purchase the product from a new supply source. Purchase the product from a current supplier.

What forces increase the necessity for purchaser initiative in supply sources creation?

Management concerns with maintaining a competitive advantage. Technological advances in product development. Increase in international trade.

What steps can an organization take to prevent maverick purchases?

Managing spend categories effectively. Using e-procurement systems. Assigning p-cards to authorized spenders.

Buyers who make purchases without using the proper supply procedures are known as?

Maverick

Which of the following is not a common stage of the face-to-face discussions phase (within the negotiation process)?

Mediation

Which of the following is not true of mediation?

Mediation always results in the two parties ceasing all business dealings

Which of the following is not one of the four categories of actions that exist to resolve a dispute?

Modification

is a trade agreement between North America countries to reduce tariffs, eliminate trade barriers, create a common market, and increase trade/investment.

NAFTA

What does NAFTA stand for?

North American Free Trade Agreement

When a seller agrees to purchase a specified value of goods from the purchasing country, this is known as?

Offset agreements

Which of the following is a typical consideration in favor of multiple sourcing?

Prime concern about the assurance of supply

Multiple sourcing

Protect the buyer during difficult supplier times. When the supplier is dependent on the purchaser. When the future demand is unknown.

All of following are recognized as typical advantages of local buying with the exception of:

Provides the lowest risk of shortages (compare to buying at national level for example)

What options do supply managers have to meet organizational needs?

Purchase the product from a new supply source. Purchase the product from a current supplier. Make the product in house.

Import Merchant

Purchases goods in their name for resale to organizations.

Countertrade refers to any transaction in which payment is made partially or fully with goods instead of money.

True

The assumes that the supplier can meet all specification requirements.

RFQ & RFB

What is the practice of giving preferential treatment to suppliers who are also customers?

Reciprocity

Which of the following is not true about reciprocity?

Reciprocity is a "fact of life" in business and should be embraced by all companies

What options do buyers have for goods that do not conform to delivery or the contract?

Reject the entire shipment. Accept the entire shipment. Accept partial shipment and reject the rest.

Serious requests that ask the supplier to specify pricing and terms are called

Request for quotation (RFQ).

Which is not a type of letter of credit?

Retrievable

The supply manager for ABC manufacturing needs to procure a new product quickly and must obtain references to sources of supply while reviewing all available types of products for thorough evaluation and, which source of information would be best?

Sales representatives

A request for information serves the purpose of

Signaling a potential supplier has been identified. Allowing a supplier to express interest in a business relationship.

All of the following conditions require negotiation (vs. other methods of supplier selection i.e. bidding) with the exception of:

The market consists of an large number of competent sellers

Single sourcing

The purchaser obtains more influence with the supplier. Special tooling or technology is required. When the purchaser is interested in partnering with the supplier.

Onshoring Offshoring Reshoring

The supplier is located in the same country as the purchaser. The supplier is located in a different country from the purchaser. The supplier is changed from an international source to a domestic source.

Which of the following is typically not a reason for a corporation to pursue global purchasing?

To Experience Foreign Cultures

When choosing global suppliers, what questions must supply professionals clearly define the answers to?

To what degree will third party consultants be used? What will the global supply structure be? How will suppliers be identified and chosen?

Which of the following is not a global trade intermediary?

Trade seekers: utilize the Internet to broker the deal between both parties

A powerful tool a supply professional has to avoid legal problems resides in his skill and ability to selecting sound, reliable suppliers.

True

Although associated with a number of factors, the learning curve normally is most closely related to the analysis of direct labor costs.

True

Implied warranty of merchantability

When the goods fit the ordinary purpose for which goods of that description are used in the trade.

Express Warranty

When the seller affirms that the product will perform in a certain manner.

Implied warranty of fitness for a particular purpose

When the seller knows or has reason to know that the buyer is relying on the seller's skill or judgment to select a product that is suitable for the particular purpose.

Your US based company signed a € 1,000,000 contract with a German partner for importing a special machine. Today you realized that the $USD became stronger (approx. 5%) in respect to the €. If you have to do the payment today, which of the following statemtes will be true:

Your company will experience a financial currency exchange "gain" (or saving) due to the new exchange rate

The focus of strategic cost management

analyzes costs externally.

Total cost of ownership for noncapital goods acquisition includes all relevant costs, such as administration, follow-up, expediting, including inspection and testing, rework, warranty, service, downtime, customer returns, and lost sales.

true