Chapter 2 Review

Which type of requisition is used for materials and standard parts that are requested on a recurring basis?

Traveling requisition

Which of the following would be a good reason to outsource (buy) versus making?

A firm lacks the technology or expertise to produce an item

Which of the following statements is FALSE?

Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.

Inventory turnover can be calculated by:

Ratio of cost of goods sold over average inventory cost

While most public procurement is focused on goals like those of purchasing departments in the private sector, U.S. federal government purchases must comply with the:

Federal Acquisition Regulation

The primary goals of purchasing include:

Improve the quality of finished goods produced Secure materials at the lowest cost Maximize customer satisfaction

Which of the following is NOT a form of countertrade?

Kaizen blitz

Which of the following NOT a reason firms are expanding their supply bases to include foreign suppliers?

Lower shipping rates due to lower tariffs

Which of the following refers to the measurement of the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged?

Profit-Leverage Effect

Total Cost of Ownership does NOT consider which of the following factors?

Purchase order costs

Inventory Turnover can be calculated by:

Ratio of cost of goods sold over average inventory cost

When a product is purchased which is complicated or highly technical a ______________may be issued instead of a request for quotation.

Request for proposal

Firms can use total cost analysis to:

Select the most cost-effective supplier

Which of the following is an advantage of a centralized purchasing department?

Specialization

The total cost of ownership for Supplier A is $2,670,000. The total cost of ownership for Supplier B is $1,750,000. The total cost of ownership for Supplier C is $2,990,000. Using Total Cost Analysis, it will be more cost-effective to use

Supplier B

Which of the following is a reason that single sourcing is considered risky/bad?

There could be supplier interruptions due to political instability

T/F: A reason for making items instead of buying them would include better quality control.

True

T/F: Decentralized purchasing is the practice where individual, local purchasing departments throughout a single corporation make their own, individual purchasing decisions to fulfill their individual local needs.

True

T/F: The total cost analysis shows how other costs besides the unit cost can affect purchase decisions.

True

T/F: in purchasing, buyers can be broadly classified into two categories: merchant and industrial buyers

True

Blanket or open-end purchase orders are suitable for buying

office supplies

Petty cash is being phased out in favor of:

p-card

which of the following would be a good reason to make versus outsource (buy)?

technology/ IP leakage