exam 2 sample questions

A purchase order is legally binding once it is officially issued by the buyer to the supplier

false

The purchasing tool described as detailed capabilities document used to determine a suppliers capability and interest in the production of a product or service (RFP)

True

In-sourcing is defined as reverting to in-house production when external quality, delivery, and services do not meet expetations

true

co-sourcing is the sharing of a process or function between internal staff and an external provider (i.e. a supplier)

true

In public purchasing for the government and non profit sector, bidders are generally required to furnish bonds as incentive to ensure that the successful bidder will fulfill the contact awarded. Which type of bond provides protection again 3rd party liens (i.e debts) not fulfilled by the bidder? bid bonds surety bonds performance bonds payment bonds

payment bonds

outsourcing creates an opportunity for the company that is outsourcing a product, to reduce their own staffing levels

true

The application of ethical principles in business situations is known as?

business ethics

which one of the following is NOT a reason for buying or outsourcing? to achieve a cost savings due to insufficient capacity to make the item internally due to a lack (ie shortage) of procurement personnel to take advantage of better quality

due to a lack (ie shortage) of procurement personnel

the manufacturing strategy in which the product is designed engineered and built to specifications only after the order has been received is called what? It is used when products are unique and extensively customized for the specific needs of individual customers

engineer to order or ETO

Products with short product life cycles, volatile demand, high profit margins, and relatively little competition, are known as Innovative products

true

ethical sourcing policies should include such things as reporting of supplier compliance to stakeholders, and detailing ethical sourcing expectations to suppliers

true

strategic sourcing is a comprehensive approach for locating and sourcing key suppliers which often includes the business process of analyzing the total spend by material category

true

supply management is a newer term that encompasses all acquisition activities beyond the purchase transaction

true

Which of the following is the best description of a preferred supplier? a supplier who has the lowest price a supplier who provides the most product to your company a supplier who best meets your company's overall purchasing requirements a supplier who has high quality

a supplier who best meets your company's overall purchasing requirements

What is the sourcing strategy that involves commodity items where many alternatives of supply exist, supply risk is low, spend it high, and there are potential procurement savings?

leverage

Buying materials and components from suppliers instead of making them in-house, is known as? Outsourcing Offshoring Insourcing Selective sourcing

outsourcing

which manufacturing process can be characterized as creating a custom product for each customer? project process batch process line process continuous process

project process

a tender proposal or quotation submitted in response to a solicitation from a contracting authority is known as what?

bid

The primary goal of purchasing include all of the below, EXCEPT? ensure uninterrupted flows of materials and services at the lowest total cost Dvelop as many good quality suppliers as possible for each material or service Improve the quality of the finish good produced Optimize customer satisfaction

develop as many good quality suppliers as possible for each material or service

Forward vertical integration refers to a company acquiring one or more of their sources of supply

false

In a spend analysis purchases that involve items representing a low percentage of the firm's total spend and having very little supply risk, are categorized as leverage purchases

false

In the context of total cost manufacturing (TCM) procurement, production, inventory, warehousing, and transportation per unit costs each go down as volume goes up

false

Industrial buyers purchase raw materials and other components fro conversion into a finish product, but they do not purchase services or capital equipment

false

The process to evaluate a supplier's capabilities, and their capacity to supply a product or service to the buyer is known as supplier certification

false

the operating philosophy that focuses on waste reduction and value enhancement is known as what?

LEAN

The e-procurement process has many advantages. Which one of those listed below is NOT one of these advantages? Mobility Segmentation Trackability Accuracy

Segmentation

when using a weighted criteria evaluation system with five or more categories, suppliers should be ranked based on their score in only the two highest weighted categories

false

an internal document that defines the need for goods and/or services. This document does not constitute a contractual relationship with any external party

purchase requisition

the process of pre-qualifying suppliers to enter a website and at a pre-designated time and date to try to underbid competitors is known as?

reverse auctions

which one of the following is NOT a reason to have a single supplier? - to establish a good relationship -To have less quality variability -To achieve transportation of economies -To spread the risk of a supply disruption

to spread the risk of a supply disruption

The practice of Supplier co-location involves a supplier's employee being embedded in a buyer's purchasing department to forecast demand, monitor inventory and place orders for the item(s) provided by the supplier

true

among other advantages, preferred suppliers are more likely to provide capacity for meeting unexpected demand, and also provide cost efficiency due to economies of scale

true

the goal of a good supplier performance evaluation system is to provide metrics that are: understandable, easy to measure, and focused on real value added results understandable, quantitative, and focused on cost related results understandable, qualitative, and focused on performance related results understandable, quantitative, and focused on quality related results

understandable, easy to measure, and focused on real value added results

what is the term used in business to describe the in-depth process of capturing internal and external customer's stated and unstated expectations, preferences, likes, and dislikes

voice of customer (VOC)

Which one of the following is NOT part of the seven (7) tools of quality control? pareto analysis Histograms Control charts Lean layouts

LEAN layouts

sourcing sustainability is described as the ability to meet the current needs of the supply chain without costing the company any additional time or money

false

the goal of six sigma is the is the elimination of waste and the minimization of the amount of all resources (including time) used in the operation of a company

false

If you understand the Total Cost of ownership (TCO) then you know: that the acquisition cost is almost always the largest portion of the total cost of ownership that it is better to own an item than to rent or lease and item that you need to consider all the related costs over the life of the product that you should always buy from the supplier with the lowest purchase price

that you need to consider all the related costs over the life of the product

A high Return on Assets (ROA) is an indication that a company has a high level/value of assets compared to a low profit margin

False

Total Quality management (TQM) is an integrated organization effort to improve quality at every level. Which one the following is NOT part of TQM? management commitment customer segmentation continuous improvement customer focus

customer segmentation

the six sigma 5 step plan referred to as DMAIC stands for? detect, monitor, access, implement check determine, motivate, accept, investigate, conclude define, measure, analyze, improve, control defect, method, attribute, inspect, cause

define, measure, analyze, improve, control

the term for a visual signal that authorizes production or the movement of materials to the next workstation is?. LEAN layouts Kanban continuous assembly kaizen

kanban

Costs incurred in the process of finding or discovering defects including testing, evaluating, and inspecting quality is categorized as which of the following? prevention costs appraisal costs external failure costs internal failure costs

appraisal costs

Why might a company decide to outsource (i.e. buy) a product they currently make? because they want to protect their proprietary technology because they don't have the capacity in their internal factory to meet demand because they want to have better control of transportation and warehousing costs because they want to have better control of lead time

because they don't have the capacity in their internal factory to meet demand

which one of the following is NOT part of the right (8) wastes identified through LEAN manufacturing? non-utilized talent extra processing insufficient capacity overproduction

insufficient capacity

A strategic partnership with a supplier: is a commitment over an extended period to work together to the mutual benefit of both parties is a legal contract between a supplier and a buyer, binding them to certain financial obligations is the ultimate object of the end goal that a company should have with every supplier is a significant benefit to the buyer but may not be a significant benefit to the supplier

is a commitment over an extended period to work together to the mutual benefit of both parties

to make or process raw materials into a finished product, especially by means of a large scale industrial operation is called what?

manufacturing

which one of the following is NOT an element of lean manufacturing waste reduction inventory and set up time reduction small-batch scheduling mass customization

mass customization

the fastest or more immediate way that a purchasing person can directly impact the profit of their company is to: improve the delivery time to their suppliers improve the inventory turnover of the items they are buying improve the quality of the items they are buying obtain a price reduction on the items they are buying

obtain a price reduction on the items they are buying

The quality management philosophy that focuses on improving the overall quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes, is known as what?

six sigma