324 exam 2 mc

Which of the following would encourage countertrade? A. the need to develop export markets for new products. B. a well-developed domestic economy. C. a strong base of suppliers. D. excess foreign exchange. E. readily available credit.

A

A U. S. buyer may be discouraged from sourcing offshore if: A. the political situation in the country of interest is questionable. B. unemployment is high in the U.S. C. there are few domestic sources. D. popular opinion in the U.S. is against it. E. the supplier offers lower overall costs.

A

A cash discount allows: A. the seller to secure prompt payment, and the buyer to pay a lower price per unit. B. the seller to secure prompt payment, but has no benefits for the buyer. C. the seller to demand payment in cash on demand (C.O.D.) upon receipt of goods. D. the buyer to pay a lower price per unit, but has no benefits for the seller. E. the buyer to always calculate the discount based on the delivery date.

A

If the buyer wants to motivate the seller to manage total costs, the best type of contract is: A. cost-plus-incentive-fee (CPIF) B. cost-plus-fixed-fee (CPFF) C. cost-no-fee (CNF) D. firm-fixed-price (FFP) E. Both A and B

A

In portfolio analysis, the goal when purchasing non-critical or routine spend is to: A. minimize acquisition time and cost. B. assure continuous supply at lowest total cost of ownership. C. assume quality at expected levels. D. seek alternatives. E. reduce or eliminate customization.

A

Small suppliers: A. often provide the greatest responsiveness and flexibility. B. are most suited for large dollar value "A" requirements. C. tend to have an extensive management structure. D. tend to have a strong financial base. E. usually represent very low risk to the purchaser.

A

The ability to extend the advantages of local sourcing to offshore suppliers is primarily due to: A. transformations in communications and transportation. B. better educated supply managers making supply decisions. C. greater diversity in legal frameworks around the world. D. end customer pressure to do business globally. E. greater openness to global trade on the part of economically developing countries.

A

The cost approach to pricing A. means prices are set to cover direct costs, contribute to indirect, and attain profit. B. implies that prices are set based on the cost the market will bear. C. is the only defensible pricing mechanism for the ethical companies to use. D. implies that cost analysis is the only technique to be used to negotiate prices. E. means prices are adjusted to ensure the selling organization recoups all costs.

A

The learning curve is based on: A. the common principle that one becomes more proficient with experience. B. the assumption that labor will never forget how to do something. C. an indirect relationship to direct material costs. D. a direct relationship to overhead costs. E. the difficult to prove premise that more training leads to lower costs.

A

When dealing with an international supplier, a knowledgeable buyer: A. may decide to deal in international currency options. B. will attempt to price in Euro Dollars. C. will normally price in the currency of the seller's country. D. normally will attempt to negotiate a cost-plus-incentive-fee contract. E. will always state the price in U.S. dollars.

A

When one condition of a countertrade agreement is that the selling firm agrees to set up a producing plant in the buying country and buy back a specific amount of what is produced by the plant as payment, this is called: A. buyback. B. pure barter. C. mixed barter. D. co-production. E. an offset arrangement.

A

When sourcing offshore: A. the buyer should learn about the culture, customs, norms, taboos, and history of the supplier's country. B. the buyer should immediately establish and informal first-name basis with the supplier's representatives. C. the global availability and use of email, fax, and phone has largely eliminated communication barriers. D. the need for personal space is generally the same in most regions of the world. E. different cultural and social norms will have little impact since most business people are accustomed to working with North Americans.

A

When there is a large number of common requirements across facilities or business units, and the supply base is dispersed geographically, an appropriate global sourcing structure is: A. A global commodity management organization. B. a centralized international purchasing office equidistant from key suppliers. C. a centrally managed global sourcing office located in the corporate headquarters. D. a decentralized structure where purchasing managers are at each facility. E. regional purchasing offices that manage the region's spend for every commodity.

A

Which of the following statements supports single sourcing: A. the use of just-in-time production, stockless buying, or systems contracting. B. there is volatility in the supplier market. C. there is a high probability of a devastating natural disaster. D. concerns exist about supplier capacity for future volume. E. there is a need to reduce dependence on a supplier.

A

If the delivery date is some months or years away and if there is substantial chance of price escalation, a supplier may feel that there is far too much risk of loss to agree to sell under a: A. cost-no-fee (CNF) B. firm-fixed-price (FFP) C. cost-plus-incentive-fee (CPIF) D. firm-fixed-price plus incentive fee (FFPIF) E. cost-plus-fixed-fee (CPFF)

B

The market approach to pricing: A. means that prices are adjusted regularly to ensure that the seller recoups all its marketing costs. B. implies that prices are set based on what the market will bear. C. implies that market analysis is the only technique that should be employed to negotiate prices. D. is the only defensible pricing mechanism for ethical companies to use. E. means prices are set to cover direct costs, contribute to indirect, and attain a profit.

B

The process of attempting to determine all cost elements such as acquisition price, purchasing administration, follow-up, expediting, inspection and testing, rework, scrap, downtime, lost sales and customer returns is called: A. learning curve. B. total cost of ownership. C. target costing. D. activity-based costing. E. competitive bidding.

B

A document which is drawn by the buyer's bank at the buyer's request, and guarantees that the bank will pay the agreed-on amount when all prescribed conditions, such as satisfactory delivery, have been completed, is called a: A. bill of material. B. bill of exchange. C. letter of credit. D. a sight draft. E. letter of exchange.

C

Distributors, wholesalers, and retailers: A. have an indefensible value proposition in the typical modern supply chain. B. typically carry a very limited supply in an effort to keep inventory costs low. C. may provide valuable services and a better price than the manufacture. D. typically cannot deliver at a lower cost than the manufacturer. E. never add enough value to a buyer to make it worth doing business with them.

C

Reverse marketing is: A. when the buying organization has decided to stop making something inhouse and identifies a supplier from its existing supply base. B. an aggressive, marketing-initiated approach to finding an developing world class suppliers. C. an aggressive, purchaser-initiated approach to finding and developing world class suppliers. D. when the marketing department tries to convince the supply department to stop buying from a specific supplier. E. is when the supply department sells internal users on a specific supplier that the user was opposed to initially.

C

Assessment of a potential supplier's financial situation: A. is usually unnecessary because it is highly unlikely that a supplier will go out of business, and, even if they do, it is relatively easy to replace a supplier. B. is always necessary and follow a strict protocol no matter what type of purchase or dollar value. C. is best left to finance department which will alert supply to any issues that might adversely affect a pending deal. D. may yield substantial opportunities for negotiating favorable terms for both buying and selling organizations. E. seldom relies on financial information provided by the supplier.

D

Most direct costs are: A. fixed costs. B. overhead costs. C. general and administrative costs. D. variable costs. E. semivariable costs.

D

Target costing starts with: A. the selling price of an organization's end product minus actual manufacturing, overhead, and materials costs to determine operating profit. B. the supplier's price, and works to determine the supplier's true cost structure. C. the supplier's price, and works to determine the selling price of the buying organization's end product or service. D. the selling price of an organization's end product minus the operating profit to establish the target cost. E. the buyer's lowest reasonable price target, and works to a negotiated price agreed on by the buyer and the supplier.

D

The supplier selection decision: A. should always be preceded by a formal supplier evaluation and rating. B. should be based on quantifiable factors such as price and delivery, and ignore social and political issues. C. is based on a uniform set of weighted criteria that can be applied to every purchase. D. can be depicted by a decision tree identifying options, evaluation criteria, and probabilities of success and failure. E. can be seen as a decision making process undertaken in an environment of certainty.

D

Which of the following is not a supplier performance measurement? A. Cost-based method. B. Weighted-point system. C. Categorical system. D. ABC analysis.

D

Which of the following is not the advantage of categorical system? A. Easy to implement. B. Low implementation cost. C. Good for small firms with limited resources. D. Less reliable.

D

Which of the following is not the advantage of cost-based method? A. Most objective. B. Consider the total cost of doing business with supplier. C. Calculate Supplier Performance Index (SPI). D. Implementation cost is low.

D

Buyers' perceptions of risk in supplier selection decisions: A. are generally the same for strategic and non-strategic items. B. are generally the same for new and current suppliers of the same items. C. are generally the same for A, B, and C items. D. vary depending on the level of data available in each case. E. vary depending on level of customization of product or service.

E

Compared to domestic sourcing, when sourcing offshore more lead time may be needed because of: A. inland transportation delays in the supplier's country. B. time needed to procure payment documentation. C. delays in domestic customs. D. delays due to heightened security requirements. E. all of above.

E

If the decision has been made that a new requirement cannot be made in-house and no existing supplier is adequate, then: A. three options exist: search the marketplace for new supplier, convince an existing supplier to develop the capability, or inform the internal user the item cannot be purchased. B. two option exist: search the marketplace for a new supplier, convince an existing supplier to develop the capability. C. three options exists: search the marketplace for new supplier, convince an existing supplier to develop the capability, or engage in reverse marketing. D. one option exists: search the marketplace for an untried/unknown, new supplier. E. three options exist: search the marketplace for a new supplier, engage in reverse marketing, or redesign/respecify the requirement so that it is procurable.

E

In international buying, the entity that makes a contract with the buyer and then buys the product in its name from the foreign supplier, takes title, delivers to the place agreed on with the buyer, and then bills the buyer for the agreed-on price, is a(n): A. import agent. B. import broker. C. trading company. D. sales agent. E. import merchant.

E

In portfolio analysis, the goal when purchasing strategic goods or services is to assure continuous supply at lowest total cost of ownership. This can be done by: A. dividing spend for the item among multiple suppliers. B. avoiding, eliminating or reducing costs in the buyer's cost structure only. C. a strong cancellation clause that lets the buyer easily switch suppliers. D. avoiding, eliminating or reducing costs in the supplier's cost structure only. E. avoiding, eliminating or reducing costs in buyer and supplier cost structures.

E

In the portfolio matrix, characteristics of goods and services in the leverage quadrant are: A. item substitution and supplier switching are possible, but few suppliers are capable. B. few suppliers with adequate capability so substitution and switching are difficult. C. competitive supply market, substitution is possible, total cost is a primary focus. D. item substitution is possible, switching is difficult, many suppliers are available. E. competitive supply market, substitution is possible, price per unit is important.

E

The goal of value engineering and value analysis is to: A. analyze functions to satisfy all needed quality requirements at any cost. B. analyze the value-added from engineering services and production. C. define value of a function in technically accurate and precise language. D. perform a function at an improved level at the same cost. E. perform a function at the same or an improved level while reducing costs.

E

The governing convention on shipping terms and responsibilities involved in international transportation is called: A. FCA (Free Carrier named place) terms. B. ITAPS (International Transport and Payment Specifications) terms. C. FOB (Free on Board) terms. D. EXQ (Ex Quay) terms. E. INCOTERMS (International Commercial Terms).

E

The zone of negotiation (overlap): A. is perceived in exactly the same way by buyer and seller in a negotiation. B. is the range of options the buyer will consider during the negotiation. C. may be positive or negative depending on the gap between buyer's and seller's objectives. D. is the mindset that one must be in prior to initiating face-to-face negotiations. E. indicates the feasibility of negotiation and the likelihood of an agreement.

E

Total cost of ownership (TCO) can be used to: A. highlight cost reduction opportunities. B. compare suppliers in a supplier selection decision. C. prepare for a negotiation. D. assess the resonableness of a supplier's prices. E. all of the above.

E

When developing a negotiation strategy, the negotiator should assess the positions of strength of both (all) parties to: A. decide if negotiation makes sense. B. establish negotiation points. C. avoid setting unrealistic expectations. D. B and C. E. A, B, and C.

E