Test Database
Chapter 11 – Procurement and Supplier Management
True or False
1.
When performing an outsourcing cost analysis, it is critical that both direct
and indirect costs be considered.
a. True
b. False
2.
Purchasers attempting to reduce purchased quantity variability would benefit
by using multiple suppliers.
a. True
b. False
3.
The primary objective of effective supplier performance is to track price performance.
a. True
b. False
4.
An essential objective of purchasing is to always buy at the lowest price.
a. True
b. False
5.
The best use of buyers’ time is sourcing, negotiating, value analysis, and contracting.
a. True
b. False
6.
A purchasing department would pursue a matrix-type organization to meet the
needs of a single or multiple projects.
a. True
b. False
7.
If an enterprise offers a wide range of products, but strictly segregates them
by geographical region, a centralized approach to purchasing would be more
effective.
a. True
b. False
8.
A certified supplier normally engages with the buyer in joint research and development.
a. True
b. False
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9.
A key role of a purchasing planner is to purchase products competitively.
a. True
b. False
10. Strategically sourced items are subject to wide market fluctuations and
changes in customer and competitor trends and pricing.
a. True
b. False
Multiple Choice
11. Which of the following is the next step in the purchasing cycle after a requisition is generated?
a. Follow up
b. Approve payment
c. Issue purchase order
d. Receive goods
12. Which of the following is the most important responsibility of a purchasing
officer?
a. Getting the best price
b. Getting the best quality
c. Selecting the best source
d. Ensuring goods are delivered on time
13. Which of the following is a function of supplier scheduling and follow-up?
a. Selecting suppliers
b. Establishing specifications
c. Releasing orders
d. Price determination
14. Which of the following statements about purchasing is true?
a. In contract buying, price and delivery are negotiated each time an order is
released.
b. Contract buying assures suppliers that they have a given amount of business and commits them to allocating that amount of their capacity to the
customer
c. Contract buying is useful for short-term purchases
d. EDI does not eliminate much of the paper work associated with buying
15. The use of supply chain partners to provide products or services is called:
a. Outsourcing
b. Insourcing
c. Offshoring
d. Partnering
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16. A key advantage provided by outsourcing is that it:
a. Increases company control over internal processes
b. Increases the company’s access to state-of-the-art products and processes
c. Protects the company’s proprietary designs and processes
d. Encourages the development of the company’s core competencies
17. Which of these costs would be directly incurred by a firm engaged in outsourcing?
a. Direct material
b. Direct labor
c. Variable overhead
d. Price from invoice
18. Engaging in competitive bidding, active sourcing, and using industry standards are all actions that are appropriate if the sourcing strategy is to:
a. Form partnerships with suppliers
b. Leverage marketplace advantage
c. Simplify the acquisition process
d. Ensure supply continuity
19. The following are all functional responsibilities of the buyer EXCEPT
a. Sourcing
b. Following up on supply deliveries
c. Negotiating prices
d. Coordinating supplier evaluation
20. Buyers can assure the timely supply of quality goods and services through
a. Managing inventory investment
b. Timely purchase order release
c. Alternate sourcing
d. Communicating accurate schedules to suppliers
21. An advantage gained by outsourcing a good or service is that it:
a. Gives the company a high degree of control over its operations.
b. Increases the company’s access to state-of-the-art products and processes.
c. Protects the company’s proprietary designs and processes.
d. Encourages the development of the company’s core competencies.
22. Tactical buying is used for which type of materials?
a. Strategic
b. High value
c. Customized
d. Highly standardized
23. Which of the following statements best applies to make-or-buy decisions?
a. Only short-term costs need to be considered
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b.
c.
d.
Make-or-buy decisions need to be re-evaluated periodically
Workforce stability should not factor into the decision
Level of current capacity is a minor issue
24. Which purchasing method assumes the lowest level of operational integration
between supplier and customer?
a. Blanket order releases
b. Purchase order
c. Lean/JIT purchasing
d. Consignment inventory
25. The goal of a supplier evaluation system is to:
a. Ensure suppliers are meeting the needs of the buyer
b. Provide a basis for cost reductions
c. Emphasize price-oriented measures
d. Focus on “on-time” delivery
26. Which of the following is true of a supplier rating system?
a. It should be based on subjective, but measureable data
b. It should permit the use of objective measurable data
c. It works against a program of continuous improvement
d. It breaks down the trust between buyer and seller
27. Hedging is used to
a. Protect against currency fluctuations
b. Compensate for counter trade
c. Back up a letter of credit
d. Address contingencies in a contract
28. The most desirable attribute in suppliers of companies that adopt JIT production is
a. On-time delivery
b. Quantity received to quantity ordered
c. Consistent quality
d. Competitive pricing
29. In this purchasing method, the buyer commits to purchase a fixed percentage
of the company’s inventory requirements in exchange for quality, price, availability, and delivery considerations.
a. Requirements contract
b. Blanket purchase order
c. Discrete purchase order
d. Direct-ship purchase order
30. Which of the following activities is part of purchasing organizational performance measurement?
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a.
b.
c.
d.
Product quality
Cost reduction and cost containment
Flexibility
Price
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Answer Key
1. T
2. F
3. F
4. F
5. T
6. T
7. T
8. T
9. F
10. T
11. c
12. c
13. c
14. b
15. a
16. b
17. d
18. b
19. b
20. c
21. b
22. d
23. b
24. b
25. a
26. b
27. a
28. c
29. a
30. b