Bus 355 (Chapter 7 Q&A)

Which of these advantages is gained by a firm that has a multiple sourcing strategy? A. Risk is spread B. Per-unit transportation costs are usually lower. C. A stronger relationship is built between the companies. D. Per unit costs are usually lower.

A. Risk is spread

One technique used in spend analysis is purchase consolidation, which is: A. the pooling of purchasing requirements across multiple areas. B. the spreading of orders across as many suppliers as possible. C. the use of one purchasing agent to handle all transactions. D. the use of one supplier for all purchased items or services.

A. The pooling of purchasing requirements across multiple areas

Mister Plow has contracted to perform snow removal services for the city of Springfield. Record snowfall has more than doubled the time he will spend on the streets and the resources this job will require. Unfortunately, Mister Plow cannot come back to the city for more money, because the service contract is: A. a fixed-price contract. B. a last-bid contract. C. a cost-plus contract. D. a final contract.

A. a fixed- price contract

A company finds a less expensive way to purchase supplies; instead of shipping everything using overnight delivery, they ship things 2nd day air or ground. The result of this policy is that: A. Merchandise inventory and total assets will rise. B. COGS will fall as will merchandise inventory. C. Pretax profit will fall as will merchandise inventory. D. COGS will rise along with pretax profit.

B.

A firm that stocks several routine items may use a system that detects when inventory falls to a predetermined level. This function is known as: A. a fixed quantity system. B. a reorder point system. C. automated purchasing. D. automated ordering.

B. A reorder point system

A company finds a less expensive way to purchase supplies; instead of shipping everything using overnight delivery, they ship things 2nd day air or ground. The result of this policy is that: A. Merchandise inventory and total assets will rise. B. COGS will fall as will merchandise inventory. C. Pretax profit will fall as will merchandise inventory. D. COGS will rise along with pretax profit.

B. COGS will fall as will merchandise inventory.

Which of the following is a disadvantage of​ outsourcing? A. required high investment B. hollowing out of the corporation C. reduced strategic flexibility D. higher cash flow

B. Hollowing out of the corporation

Which of these is a disadvantage of outsourcing? A. Required high investment B. Hollowing out of the corporation C. Higher cash flow D. Reduced strategic flexibility

B. Hollowing out of the corporation

_____________ shows us how much the company paid for the inventory it had on hand at the time of the report. A. Cost of goods sold​ (COGS) B. Merchandise inventory C. Return on assets​ (ROA) D. Profit margin

B. Merchandise Inventory

The ratio of earnings to sales for a given time period is: A. merchandise inventory. B. profit margin. C. cost of goods sold. D. return on assets.

B. Profit margin

Which of these actions is most appropriate for an outsourced item that has been judged to fall in the Leverage quadrant of a portfolio analysis? A. Minimize administrative costs and automate requisitioning as much as possible. B. Develop new suppliers. C. Promote competitive bidding. D. Prepare contingency plans.

C. Promote competitive bidding

_______________ holds that​ $1 in cost savings increases pretax profits by​ $1, while a​ $1 increase in sales increases pretax profits by only​ $1 multiplied by the pretax profit margin. A. The profit margin effect B. The merchandise inventory effect C. The profit leverage effect D. The return on assets effect

C. The profit leverage effect

Which of these statements about cross sourcing is best? A. Cross sourcing is a form of single sourcing. B. Cross sourcing is multiple sourcing with only two suppliers. C. Cross sourcing requires a supplier to provide goods/services to a customer that in turn is the supplier for those goods/services to the primary firm. D. Cross sourcing is a form of dual sourcing with the split closer to 50/50.

Cross sourcing is a form of single sourcing

A document that authorizes a supplier to deliver a product or service is known as: A. an IP-5. B. a requisition C. a contract. D. a purchase order.

D. A purchase order

______________ 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 specification B. Description by market grade C. Description by performance characteristics D. Description by brand

D. Description by brand

​_______________ profiles the major forces and trends that are impacting the​ industry, including​ pricing, competition, regulatory​ forces, substitution, technology​ changes, and​ supply/demand trends. A. Core analysis B. Spend analysis C. Maverick spending D. Industry analysis

D. Industry analysis

The college of business faculty was evenly split; half preferred chalk and blackboards and the other half preferred dry erase markers and whiteboards. Reluctantly, the purchasing agent agreed to handle supply of these items. One professor didn't want chalk or plain dry erase markers; he went directly to a specialty producer of scented dry erase markers. His motto had always been that it was better to ask forgiveness than ask permission. His path around the normal purchasing channel is known as: A. rule circumvention. B. unauthorized ordering. C. scofflaw ordering. D. maverick spending.

D. Maverick spending

"The set of activities required to first identify a​ need, assign a supplier to meet that​ need, approve the specification or​ scope, acknowledge​ receipt, and submit payment to the​ supplier" is the definition of A. electronic funds transfer​ (EFT). B. statement of​ work, or scope of work​ (SOW). C. purchase order​ (PO). D. procure-to-pay cycle.

D. Procure-to-pay cycle.

Communicating your needs can be difficult when purchasing services. The document that communicates this need is called a A. approach contract. B. purchase requisition. C. request for services. D. statement of work.

D. Statement of work

General Motors asks Bendix to produce brakes for its latest model sedan. The brakes should weigh no more than 1 kg and be capable of stopping a two-ton car traveling 60 miles per hour in 80 feet. This purchase description is by: A. specification. B. brand. C. market grade. D. performance characteristics

Performance characteristics

A company elects to use portfolio analysis to conduct their sourcing strategy. They decide to begin this arduous process with Post-it® notes because they are used in every office and at every workstation in the building. Where would this item likely fall? A. Leverage quadrant B. Routine quadrant C. Critical quadrant D. Bottleneck quadrant

Routine quadrant