MKT 367 Ch 6 Exam 2

Early supply involvement means:

supply considerations are included during need identification and specification.

A specification is a loose description of a requirement that leaves room for supplier enhancements and contributions.

False

Capital items cannot be depreciated, are often bought under a separate budgetary allocation, and may require special financing arrangements.

False

Quality as a term covers functionality: "Does it do the job we want done?" but not conformance to specification: "Does it fit the specification agreed to?"

False

Standardization, a selective and commercial problem, means a reduction in the number of sizes and designs.

False

A corporate travel department determines that employees have been staying in 15 different hotel chains. the Director of Corporate Travel mandates that travelers may only stay in four designated hotel chains. This action is an example of:

Simplification

Buying capital equipment differs from other types of purchases because determination of final cost includes estimates over the life of the equipment.

True

For repetitive requirements, a system or process of acquisition can be designed.

True

MRO stands for Maintenance, Repair, and Operating Supplies.

True

Packaging may be a difficult category to buy because it has disposal, environmental, and transportation implications.

True

The price of a semiprocessed material—steel sheets instead of ingots, frozen pork bellies instead of hogs, cocoa butter instead of beans—tends to move in the same direction as the price of the basic raw material.

True

An advantage of buying by performance or function over other specification methods is that it provides:

the opportunity for the potential supplier to establish how to make the most suitable product/service.

Equipment, real estate, construction, and information technology are examples of capital acquisitions.

True

Purchasing by specification typically occurs when:

a high degree of supplier expertise is required and difficult to define.

Capital assets:

are not bought and sold in the regular course of business.

New technology:

frequently enables competitive advantage from product/service differentiation at lower cost.

To assist in determining what represents acceptable value, a buyer is likely to:

identify the function of a good or service.

A request for quotation that asks for a "brand or equal":

shifts responsibility for establishing equality or superiority to the bidder.

When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:

standard specification.

Supply's growing involvement in the acquisition of services may be explained by:

the high dollars spent on services and the opportunities to reduce costs.