The development of strategic purchasing b.

False
practices can only help a company maintain its ANSWER: True DIFFICULTY: Easy
competitive position in a rapidly changing
business environment. The traditional approach to purchasing and
a. True supply management is to build relations with
b. False suppliers to
jointly pull costs out of the product or service
Global sourcing is a requirement and no longer and expect suppliers to contribute innovate
a luxury for most firms. ideas that
a. True continually add value to a firms products and
b. False services.
ANSWER: True DIFFICULTY: Easy a. True
b. False
Sophisticated customers, both industrial and ANSWER: False DIFFICULTY: Moderate
consumer, no longer talk about price increases;
they demand price reductions Most of the features that make their way into
a. True final products originate with suppliers.
b. False a. True
ANSWER: True DIFFICULTY: Easy b. False
ANSWER: False DIFFICULTY: Easy
An abundance of competitors and choices
have conditioned customers to want higher Purchasing and supply management has a
quality, faster delivery, and products and major impact on product and service quality.
services tailored to their individual needs at a a. True
higher total cost. b. False
a. True ANSWER: True DIFFICULTY: Easy
b. False
ANSWER: False DIFFICULTY: Easy Supply management is a broader concept than
purchasing.
The availability of low cost domestic supplier a. True
alternatives has led to the shift away from b. False
outsourcing and offshoring. ANSWER: True DIFFICULTY: Easy
a. True
b. False The routine ordering and follow up of basic
ANSWER: False DIFFICULTY: Easy operational supplies is a strategic
responsibility.
Competition today is no longer between firms; a. True
it is between the supply chains of those firms. b. False
a. True ANSWER: False DIFFICULTY: Easy
b. False
ANSWER: True DIFFICULTY: Moderate Supply chain management does not require the
coordination of activities and flows that do not
In the manufacturing sector, the percentage of extend across boundaries.
purchases to sales averages 55 percent. a. True
a. True b. False
ANSWER: False DIFFICULTY: Moderate The _____ is a change index, and generally a
rating over 50 indicates that the economy is
According to Porter, a firm’s value chain is expanding.
composed of primary and support activities that a. Consumer Price Index
can lead to competitive advantage when b. Producer Price Index
configured properly. c. ISM Report on Business
a. True d. rate of inflation
b. False e. None of the above.
ANSWER: True DIFFICULTY: Moderate ANSWER: c DIFFICULTY: Easy

Purchasing is becoming less responsible for According to the Institute for Supply
sourcing indirect goods and services required Management, _____ is the identification,
by internal groups. acquisition,
a. True access, positioning, and management of
b. False resources and related capabilities an
ANSWER: False DIFFICULTY: Moderate organization needs or
potentially needs in the attainment of its
Distribution management involves the strategic objectives.
management of packaging, storing, and a. supply chain management
handling of materials at receiving docks, b. procurement
warehouses, and retail outlets. c. logistics
a. True d. supply management
b. False e. distribution
ANSWER: True DIFFICULTY: Easy ANSWER: d DIFFICULTY: Easy

Today’s emphasis on supplier quality has Instead of adversarial relationships which

shifted from detecting defects at the time of characterize features a longterm, winwin
receipt or use to prevention early in the relationship between a buying company and
materials sourcing process. specially selected suppliers.
a. True a. traditional purchasing....supply
b. False management
ANSWER: True DIFFICULTY: Moderate b. traditional purchasing....logistics
management
The key to the success of any company is the c. supply management....traditional purchasing
quality of its employees. d. strategic sourcing....supply management
a. True e. supply chain management....strategic
b. False sourcing
ANSWER: True DIFFICULTY: Easy ANSWER: a DIFFICULTY: Moderate

A _____ is a set of three or more organizations

d. Logistics linked directly by one or more of the upstream
e. Treasury operations or
ANSWER: b DIFFICULTY: Easy downstream flows of products, services,
<ol start="26"> finances, and information from a source to a
customer.
a. process d. Internal materials
b. manufacturing system e. Vendor managed inventories
c. value chain ANSWER: a DIFFICULTY: Easy
d. social media chain
e. supply chain Which of the following is an example of a
ANSWER: e DIFFICULTY: Easy purchased direct item for a manufacturing firm?
a. Parts and components.
All of the following are typical processes b. Travel.
involved in supply chain management except c. Office and janitorial supplies.
_____. d. Advertising and media.
a. new product development e. Personal computers.
b. customer order fulfillment ANSWER: a DIFFICULTY: Easy
c. supplier evaluation and selection
d. demand and supply planning Within the downstream portion of a supply
e. cash flow management chain, _____ are responsible for the actual
ANSWER: e DIFFICULTY: Easy movement of
materials between locations.
a. buyers
According to Michael Porter, a firms _____ is b. trucking firms
composed of primary and secondary support c. logistics managers
activities that can lead to competitive d. accountants
advantage when configured properly. e. purchasing managers
a. supply chain ANSWER: c DIFFICULTY: Easy
b. process
c. value chain Which of the following is not an example of a
d. marketing channel typical resource shared between a buyer and
e. core competency supplier?
ANSWER: c DIFFICULTY: Easy a. Dedicated capacity.
b. Specific information.
The _____ states that success is a function of c. Technological capabilities.
effectively managing a linked group of firms d. Direct financial support.
past first-level suppliers or customers. e. Advertising and media

a. supply chain orientation b. Capable human resources.

b. value chain concept c. Proper organizational design.
c. traditional purchasing perspective d. Realtime collaborative technology
d. extended enterprise concept capabilities.
e. process orientation e. Right measures and measurement systems.
ANSWER: d DIFFICULTY: Moderate ANSWER: a DIFFICULTY: Easy
_____ are those items provided by suppliers 43. Recent research indicates that all of the
and used directly during production or service following are top knowledge areas for
delivery. purchasers except
a. Direct materials _____.
b. Indirect materials a. supplier relationship management
c. Indirect services b. total cost analysis
c. supplier analysis
d. consumer behavior Question 1
e. competitive market analysis Question
What are the 5 rights of purchasing?
ANSWER: d DIFFICULTY: Moderate Answer

o Product place promotion price quantity

o Price place Quality Quantity Time
_____ refers to the process of assessing and o Supplier Quality Quantity price Product
selecting the structure and formal system of o Cost Quality Quantity Time Product
communication, division of labor, coordination,
control, authority, and responsibility required to Question 2
Question
achieve organizational goals and objectives, Which of the following is defect detection
including supply chain objectives. Answer

a. Supply chain orientation o qc

b. Human resource management o qa
c. Demand planning o tqm
d. Organizational design o 5S

e. Extended value chain

ANSWER: d DIFFICULTY: Easy Question 3
Question
What the International Standard standard for
_____ seeks to improve forecast accuracy, environmental management?
Answer
optimize production scheduling, reduce
working capital o ISO14001
o ISO9001
costs, shorten cycle times, cut transportation
o ISO27000
costs, and improve customer service; while o ISO20400
_____ helps
obtain materials and manage physical flows Question 4
from suppliers through downstream distribution Question
The [blank_start]equilibrium price[blank_end] is where
to ensure that customers receive the right demand and supply are equal.
products at the right location, time, and cost. Answer

a. RFID....GPS o Equilibrium price

b. Execution software....planning software o Best price
c. Customer service....inbound transportation o Lowest price
o Efficient price
d. The process approach....cost management
e. Planning software....execution software
ANSWER: e DIFFICULTY: Easy Question 5
Question
What will happen to price in a market where demand
exceeds suuply?
All of the following are roadblocks between Answer
measurement and improved performance
except _____. o Prices will increase
a. uptodate information technology o Demand will decrease
o Price will fall
b. too many metrics
o Demand will not change
c. debate over the correct metrics
d. constantly changing metrics
e. old data
ANSWER: a DIFFICULTY: Easy
o Information Systems Management across locations with select suppliers
defines Supply Managements as: that are best suited to create knowledge
o The identification, acquisition, access, and value in customer-suppleir interface
positioning, and management of o In Strategic Sourcing, we want to figure
resources and related capabilities the out what to buy from whom to achieve:
organization needs or potentially needs o -Quality
in the attainment of its strategic -Timeliness
objectives -Lower Cost
o Strategic Sourcing o Strategic Sourcing Information
o An institutional procurement process o -Data-Driving Decision Making
that continuously improves and re- -Focuses on improving supplier
evaluates the purchasing activities of a relationships
company ---Reduced number of suppliers and
o Procurement awards
o The purchase of merchandise or ---More communication, face to face
services at the optimum possible total meetings
cost in the correct amount and quantity o T/F Strategic sourcing transforms
o Goals of Supply Management purchasing from a transaction-oriented
o -Buy products and services AT the right process to a driver for optimal quality
price FROM the right source AT the right and performance at more beneficial life-
specification IN the right quantity FOR cycle costs.
delivery at the right time To the right o True
internal customer
o Importance of Supply Management
o Reason Why to Strategic Source
o Ability to generate a sustainable
o -Price
advantage through lower costs, higher
quality, and better service from our -Capacity
global supply base of trading partners -Capability
o Supply Management- The Products and -Cost Reductions
-Management Focus
Priorities o Reasons Why Not to Strategic Source
o -Production Purchases
o -Cost
---Direct Materials
---Indirect Materials -Knowledge Protection
-Services -Leverage
-Capital Equipment -Lack of External Knowledge
-Finished Goods -Core Competency
o Procurement Process o Make or Buy Analysis
o 1. Identify material and service needed o The process of determining the most
2. Evaluate supplier options attractive alternative involves comparing
3. Select supplier the costs avoided to costs of
4. Release orders and receive products outsourcing
o Three Focal Points
5. Measure and manage performance
o Why have a Procurement Process? o -The growing importance of purchasing
o In case of major purchases, you don't has shifted the role from a tactical
want to haphazardly evaluate options or process to a strategic one
make a decision based on incomplete -Use an efficient and consistent process
information that are appropriate for the given
o Strategic Sourcing Definiton situation- match the value and volume of
o An organized and collaborative the purchase to the process that you
use
approach to leveraging targeted spend -Don't take outsourcing lightly. Done
 right, it'll help you take advantage of D) process and capacity design.
exceptional supplier capacity E) all of the above.
E) all of the above.
Who among the following is associated with
Operations management is applicable: contributions to quality control in operations
A) mostly to the manufacturing sector. management?
B) to the manufacturing sector exclusively. A) Henry Ford
C) to all firms, whether manufacturing or B) Henri Fayol
service. C) W. Edwards Deming
D) to services exclusively. D) Charles Babbage
E) mostly to the service sector.. E) Frank Gilbreth
C) to all firms, whether manufacturing or C) W. Edwards Deming
service. Which of the following is NOT a typical service
Which of the following are the primary functions attribute?
of all organizations? A) intangible product
A) marketing, human resources, and B) simultaneous production and consumption
finance/accounting C) difficult to resell
B) production/operations, marketing, and D) easy to store
human resources E) customer interaction is high
C) marketing, production/operations, and D) easy to store
finance/accounting The total of all outputs produced by the
D) research and development, transformation process divided by the total of
finance/accounting, and purchasing the inputs is:
E) sales, quality control, and A) greater in manufacturing than in services.
production/operations B) utilization.
C) marketing, production/operations, and C) single-factor productivity.
finance/accounting D) multifactor productivity.
What is a global network of organizations and E) defined only for manufacturing firms.
activities that supply a firm with goods and D) multifactor productivity.
services? Three commonly used productivity variables
A) supply chain are:
B) supply tree A) quality, efficiency, and low cost.
C) vendor network B) quality, external elements, and precise units
D) vendor tree of measure.
E) provider network C) education, diet, and social overhead.
A) supply chain D) technology, raw materials, and labor.
What are the five elements in the management E) labor, capital, and management.
process? E) labor, capital, and management.
A) accounting, finance, marketing, operations, The service sector has lower productivity
and management improvements than the manufacturing sector
B) plan, lead, organize, manage, and control because:
C) plan, direct, update, lead, and supervise A) services usually are labor-intensive.
D) plan, organize, staff, lead, and control B) the quality of output is lower in services than
E) organize, plan, control, staff, and manage manufacturing.
D) plan, organize, staff, lead, and control C) the service sector is often easy to
The 10 strategic operations management mechanize and automate.
decisions include: D) the service sector uses less skilled labor
A) managing quality. than manufacturing.
B) maintenance. E) service sector productivity is hard to
C) layout strategy. measure.