Purchasing Ch. 2

16. In drafting a purchase order, purchasing must include a large number of details regarding policies because it is a legally binding document.

True

18. Buyers use material purchase releases to order items covered by blanket purchase orders.

True

23. Historically, most organizations have paid minimal attention to MRO items.

True

27. Most companies spend too much time and too many resources managing the ordering of goods and services, particularly lower-value items.

True

52. _____ is might be the best choice for standard items, where the requirements are well understood and there is common agreement between supply chain partners about what certain terms mean. a. Description by market grade b. Description by brand c. Description by performance characteristics d. Use of prototypes e. Description by specification

a. Description by market grade

43. All of the following are benefits of electronically generating and transmitting purchasing-related documents except _____. a. a reduction in the need to ensure higher levels of quality from suppliers b. a virtual elimination of paperwork and paperwork handling c. improved communication both within the company and with suppliers d. a reduction in errors e. a reduction in the time spent in by purchasing personnel on processing purchase orders and invoices and more time spent on strategic value-adding purchasing activities

a. a reduction in the need to ensure higher levels of quality from suppliers

66. The _____ helps protect the carrier against wrongful allegations that the carrier somehow damaged, lost, or otherwise tampered with a shipment. a. bill of lading b. material packing slip c. invoice d. material purchase release e. blanket purchase order

a. bill of lading

30. All of the following are objectives of a world-class purchasing organization except _____. a. ensure that all hard copies of purchase orders and other paper documents are filed correctly in a secure area b. develop integrated supply strategies that support business goals and objectives c. manage the sourcing process efficiently and effectively d. supplier performance management e. supply assurance

a. ensure that all hard copies of purchase orders and other paper documents are filed correctly in a secure area

71. Suppliers are more often being paid through _____, which is the automatic transfer of payment from the buyer's bank account to the supplier's bank account. a. RFQ b. EFT c. MRO d. PO e. None of the above.

b. EFT

78. Which of the following is not an advantage of online ordering systems? a. Immediate visibility to back-ordered items. b. Longer order cycle time from input to delivery. c. Faster order input time. d. Reduced ordering errors. e. Ability to batch multiple items from multiple users on a single order.

b. Longer order cycle time from input to delivery.

34. Effective supply market intelligence involves all of the following except _____. a. updating supply markets and trends and translating their impacts on key business outcomes b. ensuring that purchasing does not exceed its annual operating budget c. identifying emerging materials and service technologies to support company strategies in key performance areas d. developing supply options and contingency plans to reduce risk e. supporting the organization's requirements for a diverse and globally competitive supply base

b. ensuring that purchasing does not exceed its annual operating budget

65. Transportation carriers use a/an _____ to record the quantity of goods delivered to a facility. a. electronic transfer of funds b. material packing slip c. receiving discrepancy report d. bill of lading e. purchase order

d. bill of lading

76. Once a purchaser and a supplier reach agreement on a longer-term purchase contract, material releasing responsibility should shift to _____. a. marketing b. purchasing c. the supplier d. user groups e. accounts payable

d. user groups

51. _____ is used when a product or service is proprietary or when there is a perceived advantage to using a particular supplier's products or services. a. Description by market grade b. Description by industry standard c. Description by specification d. Description by performance characteristics e. Description by brand

e. Description by brand

33. Which of the following is not one of the objectives in supplier performance management? a. Selecting suppliers that are competitive. b. Identifying new suppliers that have the potential for excellent performance and developing closer relationships with these suppliers. c. Improving existing suppliers. d. Developing new suppliers that are not competitive with current suppliers. e. Ensuring timely and accurate payment of supplier invoices.

e. Ensuring timely and accurate payment of supplier invoices.

35. _____ is the process of collecting historical data by commodity, relative to demand from the lines of business, with the exception of personnel expenses, occupancy, and corporate spend. a. Demand management b. Supply analysis c. Category management d. Contract management e. Spend analysis

e. Spend analysis

67. Which of the following is false regarding concealed damage? a. A user may discover concealed damages after opening a shipping container. b. Responsibility for concealed damage is often difficult to establish. c. The carrier may blame the supplier or maintain that the damage occurred after delivery of the material. d. The supplier may maintain total innocence and implicate the carrier. e. The bill of lading protects the carrier against charges of concealed damage.

e. The bill of lading protects the carrier against charges of concealed damage.

11. When purchasing works directly with internal stakeholders to anticipate future requirements, such as during new-product development, or with physician councils in a health care provider, purchasing is acting reactively.

False

14. For standard items, the negotiation process is an efficient method to purchase relatively straightforward requirements.

False

28. The dollar value of the items covered by procurement cards is relatively high.

False

59. Good reasons for allowing other departments to view purchase orders and incoming receipts does not include which of the following? a. The accounting department gains visibility to future accounts payable obligations. b. The requestor can refer to the purchase order number when inquiring into the status of an order. c. Receiving has a record of the order to match against the receipt of the material. d. Traffic becomes aware of inbound delivery requirements and can make arrangements with carriers or use the company's own vehicles to schedule material delivery. e. There is never a good reason for purchasing to allow other departments access to purchase orders and incoming receipts due to the confidential nature of the price and delivery terms.

e. There is never a good reason for purchasing to allow other departments access to purchase orders and incoming receipts due to the confidential nature of the price and delivery terms.

47. All of the following are required elements in a purchase requisition except _____. a. quantity and date required b. estimated unit cost c. operating account to be charged d. authorized signature e. identification and approval of a supplier by the end user

e. identification and approval of a supplier by the end user