SCM 371 Exam 1 Study Guide

27. Which of the following operating methods offers maximum control and delivers the lowest operating cost structure. a. Subcontracting b. Shelter Operations c. Wholly Owned Subsidiary d. None of the above

Wholly Owned Subsidiary

13. A customer sells your company a defective part. The part is put into your product, rendering it defective. What will most likely happen? a. Your customer will likely blame you for the defect, not the supplier b. Your customer will likely blame the supplier c. You aren't legally responsible for any problems the customer has with the product d. Your only additional costs will be giving the customer a good product and taking the old one back e. The customer can call a federal agency, get the supplier name, and deal with them directly

Your customer will likely blame you for the defect, not the supplier

1. Why is a leverage item called a leverage item? a. This item is typically purchased through debt financing b. The supply market is incredibly complex c. Suppliers can basically force you to accept their terms d. Your purchasing power and multiple supplier options means you can demand (and get) the best deals from suppliers e. You spend very little money on it

Your purchasing power and multiple supplier options means you can demand (and get) the best deals from suppliers

1. You've been buying a small amount of standard material from a local supplier for 20 years. The supplier factory suddenly burns down, forcing you to buy the item from a supplier halfway around the world, with whom you have never done business. What just happened? a. Your delivery pipeline just got shorter b. You've just encountered a major technological shift c. You now have less risk in your supply market d. Quality will definitely decrease e Your routine item has probably become a bottleneck

Your routine item has probably become a bottleneck

13. Like a well-managed household budget, a ______ will help you make sure you are getting the best value for your money, time, and efforts. a. revenue matrix table b. cost-value analysis c. high value chain d. a systematic spend analysis e. none of the above

a systematic spend analysis

10. For high-technology processing you might look at a/n ______ process technology. a. easy b. difficult c. cumbersome d. automated e. All of the above

automated

7. Being able to manage the supply side of a business to better meet the demands of the business is ______. a. easy b. challenging c. cumbersome d. an anomaly e. All of the above

challenging

27. You should use ______ to build the total cost of ownership model at the commodity (or category) level. a. excel spreadsheets b. optimization models c. pricing standards d. cost drivers e. None of the above

cost drivers

17. If the situation requires it then you need to have enough ______ to reverse an outsourcing and/or location change decision. a. guts b. glory c. game d. giggles e. green

guts

6. Once you know who the _____ are, what ______ them, and where you ______ , you can develop a strategy to improve supply management's position of respect and influence. a. approvers, incentivizes, work b. decision makers, moves, stay c. influencers, motivates, stand d. approvers, motivates, stand

influencers, motivates, stand

18. The economic bottom line is concerned with ______. a. making money b. safe working conditions c. fair wages d. harming the environment as little as possible e. supporting diverse suppliers

making money

8. To help your firm compete, you must organize supply management to leverage ______ without losing ______. a. profits, capital b. resources, agility c. resources, flexibility d. capital, profits e. relationships, trust

resources, agility

18. The social bottom line is concerned with ______. a. profitability b. safe working conditions c. making money d. harming the environment as little as possible e. ensuring your supplier's environmental sustainability

safe working conditions

1. What is the rule for outsourcing and offshoring decisions? a. "When" and "Where" b. "Who" then "Where" c. "What" and "When" d. "Where" then "When" e. None of the above

"Who" then "Where"

13. MATH: If you are expected to reduce spend by 5% (cost savings target) on a category where $2,500,000 is spent each year (annual purchase value or APV) what is your annual cost savings target $ amount? a. $100,000 b. $125,000 c. $150,000 d. $225,000 e. $250,000

$125,000

20. MATH: If operating profit is 16%, how many additional sales dollars are needed to have the profit impact of a dollar in cost savings? a. $6.25 b. $8.00 c. $10.75 d. $16.00 e. $20.50

$6.25

20. MATH: If costs are 85% of sales (and profit is 15%), what is the amount of extra sales needed to equal $1,200 in profit from purchasing cost savings efforts? a. $1,020 b. $1,412 c. $8,000 d. $9,412 e. $12,000

$8,000

33. MATH: What is the percent of SGA of the Cost? Labor $2.00 Material $3.00 Overhead $3.00 Cost $8.00 SGA $0.80 Total Cost $8.80 Profit $0.88 Price $9.68 a. 1% b. 5% c. 10% d. 15% e. 100%

10%

13. MATH: Of an overall spend of $50M: $6.5M is spent on travel. What percent total spend is on travel? a. 1% b. 5% c. 8% d. 13% e. 20%

13%

27. MATH: What is the supplier's overhead as a percent of labor given the following information? Labor $2.00 Material $3.00 Overhead $3.00 Cost $8.00 SGA $0.80 Total Cost $8.80 Profit $0.88 Price $9.68

150%

3. What is a Tier 1 supplier? a. The biggest supplier you have b. A supplier who sells to you c. A supplier who sells to your suppliers d. A supplier who is also your customer e. The supplier with the best quality rating

A supplier who sells to you

1. What is your biggest fear with a bottleneck item? a. The price will never change b. A supply disruption c. Too many potential suppliers d. Your customers will hate it e. The technology is too standardized

A supply disruption

42. To help your firm compete, you must organize supply management to leverage resources without losing ______. a. Speed b. Agility c. Reliability d. Trust e. Both A & C

Agility

1. Total cost of ownership tries to determine what it really costs to do business with a particular supplier in a particular location. What costs might be considered if you are doing business with a supplier in China? a. Transportation costs b. Cost of holding inventory c. Duties d. Tariffs e. All of the above

All of the above

1. What are the strategic drivers behind outsourcing? a. Access to new markets b. Competitive pressures c. Industry practice d. Business process redesign e. System Redundancy f. All of the above

All of the above

1. Which of the following are activities that companies will outsource? a. Call center services b. Accounting c. Manufacturing d. Payroll processing e. All of the above f. None of the above

All of the above

1. Which of the following would be a reason for insourcing? a. New technologies emerge b. New suppliers come to market c. Costs change d. Politics shift e. Only B & C f. All of the above

All of the above

13. To define the best organizational structure and identify improvement opportunities, you should look for which of the following? a. Standardization opportunities b. Aggregation opportunities c. Duplication d. Supplier performance e. All of the above

All of the above

19. In order to perform cost modeling what do you need to understand? a. Data triangulation b. Total cost of ownership c. Key drivers d. Cost elements e. All of the above

All of the above

3. What can bargaining too aggressively on price result in? a. Long-term cost increases b. Angry and resentful suppliers c. A supplier going out of business d. Lower quality and innovation e. All of the above

All of the above

32. What are some key strategic considerations to include for certain locations? a. Access to customers b. Access to innovation c. Flexibility d. Total Cost e. All of the above

All of the above

32. When offshoring, what pitfalls should you avoid? a. Impose home-country thinking b. Poor communication c. Fail to anticipate change d. All of the above e. Only B & C

All of the above

35. When considering implementation in Stage 4 of the outsourcing/offshoring process, what issues should you really consider? a. How to communicate expectations and monitor performance? b. What level of intensity should the relationship be? c. How will continuous improvement be driven? d. Who will be on the team? e. All of the above f. Only A, B, & C

All of the above

35. Which of the following do you need to evaluate in Stage 2 of the outsourcing/offshoring process? a. Are you giving the supplier too much power? b. Are you able to assess supplier performance readily? c. Are there interdependent processes that need to be done together? d. Is there unique machinery that your supplier will need to acquire if you outsource? e. All of the above f. Only A & C

All of the above

4. There are a number of strategic choices that influence how you should select suppliers (i.e., they require that you match your selection process to your sourcing strategy). What do these strategic choices include? a. Size b. Location c. Buying from a rival d. Corporate Social Responsibility e. All of the above

All of the above

6. An income statement. . . ? a. Tries to measure and communicate whether your company can produce and deliver products and service profitably b. Is also known as a profit-and-loss statement c. Measures revenues for a specific time period d. Measures costs/expenses and profits/income for a specific time period e. All of the above

All of the above

6. New product development activities can impact which of the following? a. Cash flow statement b. Profit c. Cost of Goods Sold (COGS) d. Balance sheet e. All of the above

All of the above

27. How can you mitigate risk in the offshoring process? a. Do a SWOT analysis b. Picking the right operating structure c. Figure out the when d. All of the above e. None of the above

All of the above Not sure

30. Who is an internal customer? a. The cafeteria manager b. The production manager c. The finance manager d. The guard e. All of the above are potential customers of a supply manager

All of the above are potential customers of a supply manager

25. Which of the following supplier requests should raise a red flag regarding a supplier's financial health? a. Urgent re-pricing b. Check pickup c. Funding for capital expenditures d. Delay of cost reductions e. All of these f. Only A and B

All of these

8. Which of the following is true about services? a. Are always direct spend b. Are very easy to assess from a quality standpoint c. Are never associated with a good d. Require almost no advance planning to buy e. Are characterized by intangibility

Are characterized by intangibility

12. Which of the following is true about direct material purchases? a. Are typically the largest spend category b. Are intangible c. Go into the income statement as SG&A expenses d. Do not go into the final product e. Are frequent, small-dollar buys scattered over a geographically dispersed area

Are typically the largest spend category

3. What is the best way to know how the internal customers for purchasing services perceive purchasing's performance? a. Tell them b. Wait for feedback c. Ask them d. Set up interviews e. All of the above

Ask them

11. What are the other options that a company could choose besides the make vs. buy decision? a. Buy or rent b. Automate or eliminate c. Sell or buy d. Eliminate or buy e. None of the above.

Automate or eliminate

15. Which of the following is a poor match between buyer and supplier for all types of buys? a. Nuisance b. Exploitable c. Development d. Core e. Both A & B f. None of the above

Both A & B

1. Which category is low-importance, but high market complexity? a. Critical b. Routine c. Leverage d. Bottleneck e. Exploitable

Bottleneck

35. Which is the last step to a Multi-criteria analysis? a. Set weights b. Evaluate results d. Calculate results d. Define scoring system e. Decide on criteria

Calculate results

35. What criteria should be included in Stage 3 of the outsourcing/offshoring process? a. Capabilities, costs & location attractiveness b. Costs, supplier uniqueness, & ability to measure progress c. Location attractiveness, supplier uniqueness & costs d. Unique machinery, costs, & supplier standards e. None of the above

Capabilities, costs & location attractiveness

3. What is the rate of change in an industry called? a. Velocity b. Clockspeed c. Efficiency d. Swiftness e. Speed

Clockspeed

1. Which of the following is probably a high importance buy for Starbucks Coffee? a. Aprons for the baristas b. Holiday jazz CDs c. Coffee beans d. In-store pumpkin spice advertisements e. Toilet paper

Coffee beans

27. Understanding power dynamics helps you to identify key influencers, which of the following is a more powerful reaction or consequence of the effective use of power? a. Resistance b. Commitment c. Compliance d. Acquiescence e. None of the above

Commitment

15. If the buyer is a major shareholder of the supplier, this could be indicative of which unethical situation? a. Sharp business practices b. Conflict of interest c. Bribery d. Collusion e. Accepting small gifts

Conflict of interest

8. The risk of price volatility can be addressed by which of the following? a. Part standardization b. Contract language c. Supplier segmentation d. Supplier selection e. Supplier monitoring

Contract language

15. Which of the following is a good match between buyer and supplier for all types of buys? a. Nuisance b. Exploitable c. Development d. Core e. None of the above

Core

8. What pressures are so intense that most companies tend to lean more towards a centralized sourcing structure? a. Cost b. Management c. Supplier d. Customer e. Stockholder

Cost

1. Which category is high-importance, and high market complexity? a. Critical b. Routine c. Leverage d. Bottleneck e. Exploitable

Critical

11. Which of the following is a voluntary program by the U.S. Customs and Border Protection that aims to improve supply chain security? a. The Uniform Commercial Code b. The Sarbanes-Oxley Act c. The Dodd-Frank Act d. Customs-Trade Partnership Against Terrorism e. Foreign Corrupt Practices Act

Customs-Trade Partnership Against Terrorism

36. What is the main pressure that purchasing professional feel from internal customers—especially senior management—when making purchasing decisions? a. Selecting qualified suppliers b. Cutting costs c. Working with other departments d. Creating contacts e. Switching between suppliers

Cutting Costs

35. Which is the first step to a Multi-criteria analysis? a. Set weights b. Evaluate results d. Calculate results d. Define scoring system e. Decide on criteria

Decide on criteria

35. Which is the third step to a Multi-criteria analysis? a. Set weights b. Evaluate results d. Calculate results d. Define scoring system e. Decide on criteria

Define scoring system

17. What might flashlight and calculator manufacturers view smartphone manufacturers as? a. Customers b. Suppliers c. Disruptors d. Sources of employees e. Partners

Disruptors

35. Which is the fourth step to a multi-criteria analysis? a. Set weights b. Evaluate results d. Calculate results d. Define scoring system e. Decide on criteria

Evaluate results

36. In managing internal relations, what is your main role as a purchasing professional? a. Determine the lowest cost to procure necessary company supplies b. Act as the gatekeeper to ensure only the best materials are bought c. Initiate process by finding out what the needed components are d. Figure out how to work with and influence the members of the buying center e. All of the above

Figure out how to work with and influence the members of the buying center

13. There is a "line" for which some costs fall above and others fall below. This "line" is an important determinant of....? a. COGS b. Operating expenses c. Bonuses d. Gross profit e. None of the above

Gross profit

6. Sales minus costs is equal to what? a. COGS b. Gross profit c. Net profit d. Interest and Taxes e. None of the above

Gross profit

4. What is the environmental bottom line concerned with? a. Fair wages b. Harming the environment as little as possible c. Profitability d. Safe working conditions e. Supporting diverse suppliers

Harming the environment as little as possible

21. Risk severity and risk probability can be graphically depicted using what? a. Risk acceptance pyramid b. Heat map c. Risk mitigation graph d. Supplier segmentation pyramid e. Risk management plot

Heat map

25. The purchase of future contracts is also referred to as what? a. Backward buying b. Forward integration c. Outsourcing d. Postponement e. Hedging

Hedging

1. All are reasons for outsourcing except? a. Internal capabilities b. High internal capacity c. Accessing qualified personnel d. Capital investment and innovation e. Taking out cost f. All of the above

High internal capacity

8. What are capital goods? a. Not used in factories b. Low-dollar, multiple purchases c. High-dollar, infrequent purchases d. Short-lived e. Items which go directly into the final product

High-dollar, infrequent purchases

18. The balance sheet helps you answer particular questions about your supplier. Which of the following is not one of those questions? a. What assumptions is the supplier making? b. Do total assets outweigh total liabilities? c. How much money is the supplier making? d. Can the supplier pay its bills? e. All of the above are found on the balance sheet

How much money is the supplier making?

24. Why are price, quality, and delivery the first supplier selection criteria you should assess? a. Federal law requires that these be assessed first to ensure non-discrimination b. If a supplier cannot meet your needs on these, it's not worth evaluating them further c. They are the least important criteria; start here and build up d. Because they are the only criteria you should assess e. They are the best way to separate domestic versus international suppliers

If a supplier cannot meet your needs on these, it's not worth evaluating them further

3. For a purchasing professional, what does "Caveat Emptor" ("Let the Buyer Beware") mean? a. Avoid doing business with anyone but friends and relatives b. Pay the highest price to always ensure the best item is delivered c. Paying too much is just a fact of life d. If the price is too low, it's possible you're buying a low-quality item e. You can't trust your internal customers

If the price is too low, it's possible you're buying a low-quality item

6. Which financial statement shows you how your efforts contribute to profit? a. Cash flow statement b. Balance Sheet c. 401K d. Income Statement e. None of the above

Income Statement

15. How can you increase your attractiveness as a customer—i.e., become a customer of choice? a. Increase the amount you spend b. Increase the amount of service you ask for c. Increase the demands on the supplier d. Call the supplier more frequently to talk e. None of the above

Increase the amount you spend

30. Which of the following is NOT one of the advantages of a centralized sourcing structure? a. Standardization b. Duplication c. Talent development d. Increased bureaucracy e. Economies of scale

Increased bureaucracy

1. To which supply chain design issue does the mantra faster, better, cheaper refer to? a. Increasing customer demands b. Increasing clockspeeds c. Greater levels of outsourcing d. Globalization e. Lean production

Increasing customer demands

8. What are the materials that do not go directly into the product, but rather facilitate its creation? a. Direct materials b. Indirect materials c. Critical materials d. Routine materials e. Unnecessary materials

Indirect materials

28. On the asset portion of the strategic profit model, which of the following does purchasing generally affect? a. Inventory b. Accounts receivable c. Cash d. Sales revenue

Inventory

16. What's a possible disadvantage of forward-buying inventory in bulk? a. Prices will be better when buying in bulk b. There will be plenty of stock when needed c. You'll be ready for an unexpected upsurge in customer demand d. There are no disadvantages to forward buying e. Inventory costs will rise

Inventory costs will rise

5. Long lead times contribute to which risk? a. Quality risk b. Economics risks c. Risks of natural disasters d. Inventory risk e. Risk of terrorism

Inventory risk

29. Which of the following is true about a PO? a. PO and requisition mean the same thing b. It becomes a legal contract once accepted by the supplier c. Everyone is authorized to create a PO d. A supplier will refuse to accept a PO if it isn't signed by the buying firm's purchasing manager e. A PO has no legal significance, it is only used for auditing firm records

It becomes a legal contract once accepted by the supplier

35. What is the advantage to a multi-criteria analysis? a. It has only 4 steps b. It does not require any math c. It is easily adaptable to as many suppliers as you need to evaluate d. All of the above e. None of the above

It is easily adaptable to as many suppliers as you need to evaluate

16. A week after John started working at the bakery, it took him two hours to make one batch of bread. Two months later he had increased his batch making speed, taking only 45 min. to make one batch of bread. What is this scenario an example of_ a. Economies of scale b. The pointer effect c. Crash course learning d. Learning curve e. Both a & d

Learning Curve

12. Which of the following is an MRO purchase? a. Copier paper for the marketing department b. Paper cups for a coffee shop c. An injection-molding machine to make bottle caps for bottled water d. Lubricating oil for a machine on the assembly line e. Steel for a factory making dishwashers

Lubricating oil for a machine on the assembly line

29. Hurricanes Rita and Katrina are examples of which type of risk? a. Inventory risk b. Natural disasters c. Economic risk d. Quality risk e. Intellectual property risk

Natural disasters

2. Single sourcing is a strategy used by some organizations. Which of the following is not a benefit of single sourcing? a. Volume consolidation b. Strategic versus transactional relationship c. Synergies between multiple suppliers benefit the buyer d. Market competition between suppliers drives down price e. Neither C nor D are benefits of single sourcing

Neither C nor D are benefits of single sourcing

35. What should you do if an item is not critical to competitive advantage and you are very capable of performing the task? a. Perform internally b. Invest to perform internally c. Keep internal d. Offshore e. Reshore f. None of the above - need more information

None of the above - need more information

27. Which of the following is not a reason that companies use to offshore? a. Access to resources b. Access to innovation c. Increased flexibility d. Access to customers e. B & C are not reasons f. None of the above—they are all reasons

None of the above—they are all reasons

21. Which of the following are two types of offshoring? a. Offshore production, Global sourcing b. Insourcing, Offshore production c. Global sourcing, Outsourcing d. Insourcing, Outsourcing e. None of the above

Offshore production, Global sourcing

11. In what ways do you, the purchasing professional help in making great outsourcing decisions? a. Knowledge of material costs and production processes allows you to estimate the true cost of in- house production? b. Category expertise and knowledge of the market allows you to identify and assess prospective supplier capabilities. c. Knowledge of the P&L implications helps you to gather vital information d. All of the above e. Only A & B

Only A & B

35. In Stage 1 of the outsourcing/offshoring process, what is/are the decisions that we need to think about? a. Is the process that we want to outsource critical to our competitive advantage? b. Are you giving up any relative capability position? c. Are you giving the supplier too much power? d. Does the location of your future supplier have the right culture? e. All of the above f. Only A & B

Only A & B

11. Which of the following is not an outsourcing pitfall that you want to avoid? a. Pick a service provider that your competitor is using. b. Outsource a part of our core. c. Shrink your workforce as much and as fast as you can. d. Involve your people in the decision-making process. e. None of the above—they are all pitfalls f. Only A, B, & C

Only A, B, & C

11. How do you avoid the outsourcing mistake LEGO made when they outsourced to Flextronics? a. Dig into the details and understand your company's value proposition and value-added processes. b. Evaluate and understand the transaction costs of outsourcing. c. Make sure HR is on board with your decision to outsource d. Involve the right decision makers e. All of the above f. Only A, B, & D

Only A, B, & D

24. Why would you typically look at countries with a strong manufacturing base? a. Advanced manufacturing techniques b. Highly skilled workers c. Lower production costs d. Established infrastructure e. All of the above f. Only A, B, & D

Only A, B, & D

1. The "make" decision is most clearly related to which of the following? a. Outsourcing b. Reshoring c. Shared Services d. Insourcing e. Onshoring f. None of the above

Onshoring

21. What will be affected if purchasing pushes a just-in-time approach with suppliers? a. Operations and inventory management b. Sales and marketing c. R&D d. R&D and Sales e. Human Resources

Operations and inventory management

18. If something happens to your primary supplier, which of the following practices can help you quickly find an alternative supplier? a. Near-sourcing b. Postponement c. Supplier segmentation d. Hedging e. Part standardization

Part standardization

21. Which is usually not part of an FMEA? a. Severity b. Detectability c. Likelihood d. Potential effects e. None of the above; that is, they are all part of an FMEA

Potential effects

24. MATH: The salesforce sold $30M in additional products; purchasing negotiated $10M in material costs savings. If operating profit is 12%, how did their impacts on operating profit compare? a. Sales had almost three times the impact on operating profit b. Sales had slightly more impact on operating profit c. They had the same impact on operating profit d. Purchasing had slightly more impact on operating profit e. Purchasing had almost three times the impact on operating profit

Purchasing had almost three times the impact on operating profit

32. For specific activities and processes you should evaluate these two dimensions ______ and ______. a. Purchasing's services, purchasing's people b. Purchasing's time, purchasing's services c. Purchasing's revenue, purchasing's costs d. Purchasing's people, purchasing's metrics e. None of the above

Purchasing's services, purchasing's people

8. Since WWII what has been true about purchasing? a. Purchasing has been viewed as a top strategic function b. Purchasing's strategic importance has been decreasing c. Purchasing's strategic importance has been increasing d. Purchasing's tactical importance has been increasing while its strategic importance has decreased e. There has been little change in how purchasing is perceived

Purchasing's strategic importance has been increasing

18. What is a potential conflict between purchasing and R&D? a. Purchasing encourages suppliers to participate in the new product development process, angering R&D scientists b. R&D specifications may limit the supplier pool to one supplier, limiting purchasing's ability to negotiate the best deal c. Purchasing replaces the R&D department with a supplier of its own choosing d. Purchasing managers cross-train for lab work, replacing engineers and scientists in this function e. There are no conflicts; personnel in these functions rarely interact, except socially

R&D specifications may limit the supplier pool to one supplier, limiting purchasing's ability to negotiate the best deal

1. What does hollowing out of corporations mean? a. Too much has been reshored b. Too much flesh and not enough bone c. Relinquished too much of your core capability d. None of the above

Relinquished too much of your core capability

26. The Strategic Profit Model ends with what financial ratio? a. Net profit b. Inventory turns c. Return on assets (ROA) d. Asset turnover e. Times interest earned

Return on assets (ROA)

8. In which step of the risk management process do you develop a heat map? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk assessment e. Risk monitoring

Risk assessment

8. In which step of the risk management process do you calculate the risk exposure value? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk exposure e. Risk monitoring

Risk consequence

8. In which step of the risk management process do you classify risks from trivial to severe? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk exposure e. Risk monitoring

Risk consequence

8. In which phase of the risk management process is supply chain process mapping is especially useful? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk exposure e. Risk monitoring

Risk identification

8. Which is usually the last step in a risk management process? a. Risk consequence b. Risk identification c. Risk mitigation d. Risk exposure e. Risk monitoring

Risk mitigation

12. Which of the following is an indirect material buy? a. Lumber for framing a house b. Whole grains for the cereal factory c. Safety goggles for the car factory d. Rubber for the sneaker factory e. Chemicals for the shampoo factory

Safety goggles for the car factory

22. Which of the following is true when comparing the profit impact of sales versus purchasing efforts? a. Purchasing efforts don't impact profits b. A sales dollar is typically more impactful on profit than a dollar saved by purchasing c. Sales have no impact on profit, only on revenue growth d. Sales dollars hit the top line (revenues), purchasing savings go straight to operating profit e. They have the same impact

Sales dollars hit the top line (revenues), purchasing savings go straight to operating profit

35. Which is the second step to a Multi-criteria analysis? a. Set weights b. Evaluate results d. Calculate results d. Define scoring system e. Decide on criteria

Set weights

26. Which of the following is true about the supplier selection process? a. Should be executed the exact same way for every buy b. Needs to be circumvented a lot - it's just too restricting to follow a formal process c. Should be tailored to the type of buy: routine buys should be kept simple, strategic buys should involve careful planning d. Is only relevant for large companies e. Is an out-of-date holdover from the pre-WWII "clerical" era of purchasing

Should be tailored to the type of buy: routine buys should be kept simple, strategic buys should involve careful planning

22. The tragedy that happened at one of Apple's suppliers, Foxconn, in 2010, when several workers committed suicide, calls importance to which bottom line? a. Economic bottom line b. Environmental bottom line c. Social bottom line d. Both economic and social bottom lines e. None of the above

Social bottom line

49. The single most important cost savings available from centralization come from ______. a. Spend aggregation b. Decentralization c. Focused target markets d. Standardization e. All of the above

Standardization

11. Which legislation was developed in 2002 in response to several corporate scandals, including Enron and Worldcom? a. The Uniform Commercial Code b. The Sarbanes-Oxley Act c. The Dodd-Frank Act d. Customs-Trade Partnership Against Terrorism e. Foreign Corrupt Practices Act

The Sarbanes-Oxley Act

3. Why is the most important purchasing right picking the right supplier? a. Customers will judge you for choosing poorly b. The right supplier will always have the lowest possible price c. The choice of supplier affects all the other rights d. The right supplier is the one with closest ties to your CEO e. The right supplier is the only one with whom it is possible to do business

The choice of supplier affects all the other rights

27. What is the downside of subcontracting? a. The loss of some control over production b. The hassle of getting the business up and running c. The high levels of technological support that is needed d. All of the above e. Only A & C

The loss of some control over production

49. The learning curve is based off of what simple idea? a. The time it takes to perform a task increases as you work longer b. The time it takes to perform a task decreases as you gain experience with the task c. The time it takes to perform a task only decreases if the job is simple d. The time it takes to perform a task increases if the job is complex e. The time it takes to perform a task increases as you gain experience with the task

The time it takes to perform a task decreases as you gain experience with the task

25. In a risk heat map, which area is of most concern? a. The diagonal b. The top left corner c. The top right corner d. The bottom left corner e. the bottom right corner

The top right corner

16. What does it mean for a process to have diminishing returns? a. There is a limit to learning b. There is no limit to learning c. Most of your learning takes place in your later efforts d. The longer you work, the more tired you become and the task becomes easier

There is a limit to learning

13. You need to give the most careful attention to the price and quality on which purchased inputs? a. Those that are made of metal b. Those coming from larger suppliers c. Those that are physically smaller d. Those that directly affect the customer's experience e. Those that you find the most interesting to buy

Those that directly affect the customer's experience

16. What of the following is an objective of lean production? a. To reduce supply disruptions b. To become more innovative c. To eliminate waste, including to strive for zero inventory d. To mitigate the risk of global sourcing e. To aim for greater diversification

To eliminate waste, including to strive for zero inventory

1. A purchasing professional's primary job is managing what? a. Upstream portion of your company's supply chain b. Downstream portion of your company's supply chain c. Whole supply chain from end-to-end d. Internal functions of your company e. Company customer interface

Upstream portion of your company's supply chain

8. Which conflict first brought a significant change in how purchasing was perceived? a. WWI b. WWII c. The Crimean War d. Gulf War 1 e. The War of the Roses

WWII

8. Which of the following does risk identification address? a. How are we doing? b. How likely is the risk? c. How severe is the impact? d. What can go wrong? e. How acceptable is the risk?

What can go wrong?