Chapter 1

True / False

1. The development of strategic purchasing practices can only help a company maintain its competitive position in a
rapidly changing business environment.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

2. Global sourcing is a requirement and no longer a luxury for most firms.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. Sophisticated customers, both industrial and consumer, no longer talk about price increases – they demand price
reductions!
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

4. An abundance of competitors and choices have conditioned customers to want higher quality, faster delivery, and
products and services tailored to their individual needs at a higher total cost.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

Cengage Learning Testing, Powered by Cognero Page 1

5. The availability of low-cost domestic supplier alternatives has led to the shift away from outsourcing and offshoring.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

6. Competition today is no longer between firms; it is between the supply chains of those firms.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

7. In the manufacturing sector, the percentage of purchases to sales averages 55 percent.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

8. The traditional approach to purchasing and supply management is to build relations with suppliers to jointly pull costs
out of the product or service and expect suppliers to contribute innovate ideas that continually add value to a firm’s
products and services.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

9. Most of the features that make their way into final products originate with suppliers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 2
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

10. Purchasing and supply management has a major impact on product and service quality.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

11. Supply management is a broader concept than purchasing.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

12. The routine ordering and follow-up of basic operational supplies is a strategic responsibility.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

13. Supply chain management does not require the coordination of activities and flows that do not extend across
boundaries.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

14. According to Porter, a firm’s value chain is composed of primary and support activities that can lead to competitive
advantage when configured properly.
Cengage Learning Testing, Powered by Cognero Page 3
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

15. Purchasing is becoming less responsible for sourcing indirect goods and services required by internal groups.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

16. Distribution management involves the management of packaging, storing, and handling of materials at receiving
docks, warehouses, and retail outlets.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

17. Today’s emphasis on supplier quality has shifted from detecting defects at the time of receipt or use to prevention
early in the materials-sourcing process.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

18. The key to the success of any company is the quality of its employees.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
Cengage Learning Testing, Powered by Cognero Page 4
OTHER:   Analytic
NOTES:   4

19. Cost management is no longer an integral part of purchasing and supply chain management.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

20. Formal organizational charts portray the entirety of the workings of an organization.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

21. There is a definitive and prescriptive set of supply chain measures that result in one best way to measure supply chain
performance.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

22. In Period 4 of the evolution of purchasing and supply chain management, firms faced stable competition and had
access to abundant material – conditions that historically have diminished the overall importance of purchasing.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

Multiple Choice

Cengage Learning Testing, Powered by Cognero Page 5

23. Which of the following is not one of the features of the new model of progressive purchasing?
  a. Developing closer relationships with important suppliers.
  b. Performing due diligence on suppliers before awarding longer-term contracts.
  c. Focusing primarily on price analysis and short term contracts.
  d. Conducting worldwide Internet searches for the best sources of supply.
  e. Inviting key suppliers to participate in product and process development.
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

24. Which of the following is not one of the factors driving an emphasis on supply chain management?
  a. An increasing emphasis on domestic sourcing due to the longer lead times and higher levels of pipeline
inventories associated with global sourcing.
  b. The cost and availability of information resources among entities in the supply chain that allow easy linkages
that eliminate time delays in the network.
  c. The level of competition in both domestic and international markets requires organizations to be fast, agile,
and flexible.

  d. Customer expectations and requirements that are becoming much more demanding.
  e. The ability of an organization’s supply chain to identify and mitigate risk minimizes disruptions in both supply
and downstream product or services to mitigate the impact on lost sales.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

25.  _____ is a functional group (i.e., a formal entity on the organizational chart as well as a functional activity (i.e.,
buying goods and services).
  a. Engineering
  b. Purchasing
  c. Quality assurance
  d. Logistics
  e. Treasury operations
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

26. The _____ is a change index, and generally a rating over 50 indicates that the economy is expanding.
  a. Consumer Price Index
Cengage Learning Testing, Powered by Cognero Page 6
  b. Producer Price Index
  c. ISM Report on Business
  d. rate of inflation
  e. None of the above.
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

27. According to the Institute for Supply Management, _____ is the identification, acquisition, access, positioning, and
management of resources and related capabilities an organization needs or potentially needs in the attainment of its
strategic objectives.
  a. supply chain management
  b. procurement
  c. Logistics
  d. supply management
  e. Distribution
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

28. Instead of adversarial relationships which characterize _____, _____ features a long-term, win-win relationship
between a buying company and specially selected suppliers.
  a. traditional purchasing….supply management
  b. traditional purchasing….logistics management
  c. supply management….traditional purchasing
  d. strategic sourcing….supply management
  e. supply chain management….strategic sourcing
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

29. A _____ is a set of three or more organizations linked directly by one or more of the upstream or downstream flows of
products, services, finances, and information from a source to a customer.
  a. process
  b. manufacturing system
  c. value chain
  d. social media chain
Cengage Learning Testing, Powered by Cognero Page 7
  e. supply chain
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

30. All of the following are typical processes involved in supply chain management except _____.
  a. new-product development
  b. customer-order fulfilment
  c. supplier evaluation and
selection
  d. demand and supply planning
  e. cash flow management
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

31. According to Michael Porter, a firm’s _____ is composed of primary and secondary support activities that can lead to
competitive advantage when configured properly.
  a. supply chain
  b. process
  c. value chain
  d. marketing channel
  e. core competency
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

32. The _____ states that success is a function of effectively managing a linked group of firms past first-level suppliers or
customers.
  a. supply chain orientation
  b. value chain concept
  c. traditional purchasing perspective
  d. extended enterprise concept
  e. process orientation
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
Cengage Learning Testing, Powered by Cognero Page 8
OTHER:   Analytic
NOTES:   2

33. _____ are those items provided by suppliers and used directly during production or service delivery.
  a. Direct materials
  b. Indirect materials
  c. Indirect services
  d. Internal materials
  e. Vendor managed inventories
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

34. Which of the following is an example of a purchased direct item for a manufacturing firm?
  a. Parts and components.
  b. Travel.
  c. Office and janitorial supplies.
  d. Advertising and media.
  e. Personal computers.
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

35. Within the downstream portion of a supply chain, _____ are responsible for the actual movement of materials between
locations.
  a. Buyers
  b. trucking firms
  c. logistics managers
  d. Accountants
  e. purchasing managers
ANSWER:  c

36. Which of the following is not an example of a typical resource shared between a buyer and supplier?
  a. Dedicated capacity.
  b. Specific information.
  c. Technological capabilities.
  d. Direct financial support.
  e. Advertising and media.
ANSWER:  e
Cengage Learning Testing, Powered by Cognero Page 9
37. All of the following are examples of demand planning activities except _____.
  a. forecasts of anticipated demand
  b. accounts payable
  c. inventory adjustments
  d. orders taken but not filled
  e. spare parts and aftermarket requirements
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

38. _____ schedules the firm’s output; while _____ is the process of taking demand data and developing a supply,
production, and logistics network capable of satisfying demand requirements.
  a. Inventory control….quality control
  b. Quality control….supply planning
  c. Order processing….material control
  d. Demand planning….customer service
  e. Demand planning….supply planning
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

39. _____ involves generating the materials release, contacting a supplier directly concerning changes, and monitoring the
status of inbound shipments.
  a. Order processing
  b. Material control
  c. Warehousing
  d. Customer service
  e. Quality control
ANSWER:  b

40. _____ helps ensure that customers receive material when and where they require it and represents the key link
between the producer and the external customer.
  a. Order processing
  b. Inbound transportation
  c. Customer service
  d. Scheduling
  e. Inventory control

Cengage Learning Testing, Powered by Cognero Page 10

ANSWER:   a
DIFFICULTY:  Easy

41. The _____ activity involves physically getting a product ready for distribution to the customer.
  a. customer service
  b. material control
  c. materials handling
  d. quality control
  e. shipping
ANSWER:  e

42. Which of the following is not one of the four enablers of purchasing and supply chain management?
  a. Sufficient cash flow and large on-hand cash deposits.
  b. Capable human resources.
  c. Proper organizational design.
  d. Real-time collaborative technology capabilities.
  e. Right measures and measurement systems.
ANSWER:  a

43. Recent research indicates that all of the following are top knowledge areas for purchasers except _____.
  a. supplier relationship management
  b. total cost analysis
  c. supplier analysis
  d. consumer behavior
  e. competitive market analysis
ANSWER:  d

44. _____ refers to the process of assessing and selecting the structure and formal system of communication, division of
labor, coordination, control, authority, and responsibility required to achieve organizational goals and objectives,
including supply chain objectives.
  a. Supply chain orientation
  b. Human resource management
  c. Demand planning
  d. Organizational design
  e. Extended value chain
ANSWER:  d

45. _____ seeks to improve forecast accuracy, optimize production scheduling, reduce working capital costs, shorten
cycle times, cut transportation costs, and improve customer service; while _____ helps obtain materials and manage
physical flows from suppliers through downstream distribution to ensure that customers receive the right products at the
right location, time, and cost.
  a. RFID….GPS
  b. Execution software….planning software

Cengage Learning Testing, Powered by Cognero Page 11

  c. Customer service….inbound transportation
  d. The process approach….cost management
  e. Planning software….execution software
ANSWER:  e

46. All of the following are roadblocks between measurement and improved performance except _____.
  a. up-to-date information technology
  b. too many metrics
  c. debate over the correct metrics
  d. constantly changing metrics
  e. old data
ANSWER:  a

Chapter 2
True / False

1. Enterprises are relying increasingly on external suppliers to provide only materials and products, not information
technology, services, and design activities.
  a. True
  b. False

2. The objectives of a world-class purchasing organization do not need to evolve beyond the traditional mantra of ensuring
we “get a good price!”
  a. True
  b. False

3. Organizations are constantly looking for people who have developed the skills necessary to deal with the narrow variety
of tasks faced by purchasing.
  a. True
  b. False

4. If a supplier’s components are defective and causing problems for manufacturing, then purchasing must find ways to
improve supplier quality.
  a. True
  b. False

Cengage Learning Testing, Powered by Cognero Page 12

5. Purchasing can directly affect (positively or negatively) the long-term growth, revenue, and operating outcomes and
plans of stakeholders and business units.
  a. True
  b. False

6. The authority to review and challenge specifications (for products or for services) is within purchasing’s span of control
in managing demand, although internal stakeholders sometimes dispute this right.
  a. True
  b. False

7. Purchasing’s right to evaluate and select suppliers means that sales representatives are not allowed to talk with non-
purchasing personnel.
  a. True
  b. False

8. Contract management should be used to trigger proactive sourcing events only after a contract expires.
  a. True
  b. False

9. When creating a forecast for a needed product or service, internal customers may not always be able to express exactly
what it is they will need at a future point in time.
  a. True
  b. False

10. For routine, off-the-shelf items, the purchase requisition may contain all the information that purchasing requires.
  a. True
  b. False

11. When purchasing works directly with internal stakeholders to anticipate future requirements, such as during new-
product development, or with physician councils in a health care provider, purchasing is acting reactively.
  a. True
  b. False

Cengage Learning Testing, Powered by Cognero Page 13

12. The process that buyers use to select suppliers does not vary widely depending on the required item and the
relationship that a buyer has with its suppliers.
  a. True
  b. False

13. Buyers use competitive bidding when price is a minor criteria and the required item (or service) has complex material
specifications.
  a. True
  b. False

14. For standard items, the negotiation process is an efficient method to purchase relatively straightforward requirements.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

15. If the requested item is complex or requires an untested or new production process, purchasing can include additional
information or attachments on its RFQ to assist the supplier, which might include detailed blueprints, samples, or
technical drawings.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

16. In drafting a purchase order, purchasing must include a large number of details regarding policies because it is a
legally binding document.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

17. Almost all firms establish blanket purchase orders with their suppliers.
Cengage Learning Testing, Powered by Cognero Page 14
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

18. Buyers use material purchase releases to order items covered by blanket purchase orders.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

19. Responsibility for concealed damage is often simple and easy to detect.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

20. Material discrepancies usually result from incorrect quantity shipments.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

21. The buyer should assume that the purchasing cycle ends with the receipt of an ordered item or the selection of a
supplier.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 15
NOTES:   3

22. Managing the purchase of semifinished components is not a critical purchasing responsibility because components
rarely affect product quality and cost.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

23. Historically, most organizations have paid minimal attention to MRO items.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

24. The way MRO items are typically dispersed throughout an organization makes monitoring MRO inventory relatively
simple.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

25. Capital equipment purchasing involves buying assets intended for use less than one year.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

26. It is a common and preferred current practice for suppliers to arrange shipment to a purchaser and simply include the
transportation cost as part of the purchase cost.
  a. True
Cengage Learning Testing, Powered by Cognero Page 16
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

27. Most companies spend too much time and too many resources managing the ordering of goods and services,
particularly lower-value items.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

28. The dollar value of the items covered by procurement cards is relatively high.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

Multiple Choice

29. The _____ is used to identify user requirements, evaluate the user needs effectively and efficiently, identify suppliers
who can meet that need, develop agreements with those suppliers, develop the ordering mechanism, ensure payment
occurs promptly, ascertain that the need was effectively met, and drive continuous improvement.
  a. demand management process
  b. backdoor buying process
  c. materials budgeting process
  d. forecasting process
  e. purchasing process
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

30. All of the following are objectives of a world-class purchasing organization except _____.
Cengage Learning Testing, Powered by Cognero Page 17
  a.  ensure that all hard copies of purchase orders and other paper documents are filed correctly in a secure
area
  b.  develop integrated supply strategies that support business goals and objectives
  c.  manage the sourcing process efficiently and effectively
  d.  supplier performance management
  e.  supply assurance
ANSWER:  a

31. Failing to respond to the needs of internal customers will diminish the confidence these users have in purchasing, and
they may try to negotiate contracts themselves (a practice known as _____).
  a. strategic sourcing
  b. spend management
  c. maverick buying
  d. outsourcing
  e. internal sourcing
ANSWER:  c

32. One of the most important objectives of the purchasing function is the selection, development, and maintenance of
suppliers, a process that is sometimes described as _____.
  a. supplier performance management
  b. category management
  c. customer service
  d. procure-to-pay
  e. maverick buying
ANSWER:  a

33. Which of the following is not one of the objectives in supplier performance management?
  a. Selecting suppliers that are competitive.
  b. Identifying new suppliers that have the potential for excellent performance and developing closer relationships
with these suppliers.
  c. Improving existing suppliers.
  d. Developing new suppliers that are not competitive with current suppliers.
  e. Ensuring timely and accurate payment of supplier invoices.

34. Effective supply market intelligence involves all of the following except _____.
  a. updating supply markets and trends and translating their impacts on key business outcomes
  b. ensuring that purchasing does not exceed its annual operating budget
  c. identifying emerging materials and service technologies to support company strategies in key performance
areas
  d. developing supply options and contingency plans to reduce risk
  e. supporting the organization’s requirements for a diverse and globally competitive supply base

Cengage Learning Testing, Powered by Cognero Page 18

35. _____ is the process of collecting historical data by commodity, relative to demand from the lines of business, with the
exception of personnel expenses, occupancy, and corporate spend.
  a. Demand management
  b. Supply analysis
  c. Category management
  d. Contract management
  e. Spend analysis
ANSWER:  e
NOTES:   2

36. _____ is the process of using unit and rate consumption levels to forecast and estimate future consumption in an
internal functional customer and providing guidance and input on how to optimize usage and educating the user on the
trade-offs.
  a. Specification management
  b. Demand management
  c. Category management
  d. Supply market intelligence
  e. Cost management
ANSWER:  b

37. _____ is the process of developing insights into stakeholder requirements, comparing these to external industry
intelligence, supply base capabilities and operational risks, and developing a strategy to align internal requirements with
external supply market conditions.
  a. Spend analysis
  b. Cost management
  c. Contract management
  d. Category management
  e. Procure-to-pay
ANSWER:  d

38. _____ is a situation that occurs when sellers seek to “go around” purchasing and instead directly contact and attempt
to sell directly to end users (stakeholders).
  a. Insourcing
  b. Bidding
  c. Maverick buying and selling
  d. Negotiating
  e. Outsourcing
ANSWER:  c

39. _____ is a process associated with defining the contract, defining roles and responsibilities of both parties, and
advising when to modify and ensure appropriate escalation.

Cengage Learning Testing, Powered by Cognero Page 19

  a. Spend analysis
  b. Contract management
  c. Cost management
  d. Supplier selection
  e. Category management
ANSWER:  b

40. _____ involves unbundling the price paid and understanding the total cost of ownership over the life cycle of a
product or service to deliver a target cost and a unit rate to determine if it is priced competitively in the marketplace.
  a. Cost management
  b. Procure-to-pay
  c. Supplier relationship management
  d. Category management
  e. Spend management
ANSWER:  a

41. _____ is the end-to-end process of managing a supplier through the entire sourcing life cycle, which includes first
identifying the abilities of a particular company with regard to performing a service for the internal customer, completing
a sourcing event, negotiating a contract, executing an order, and determining payment.
  a. P2P
  b. CRM
  c. Outsourcing
  d. Competitive
bidding
  e. SRM
ANSWER:  e

42. Which of the following is not one of the characteristics of a mature, well-developed supply strategy?
  a. A repeatable and well-defined process for building strategy and governance around defining, planning,
managing, and receiving products and services for a business.
  b. Clear alignment with executive vision and internal user-specific business goals.
  c. Established goals and metrics for short-term project plans, as well as a definite five-year plan that provides
year over year performance improvements.
  d. Established communication plan to inform senior management and all lines of business updated and reviewed
quarterly against defined goals and objectives.
  e. Required use of an online catalog.
ANSWER:  e

43. All of the following are benefits of electronically generating and transmitting purchasing-related documents except
_____.
 a.  a reduction in the need to ensure higher levels of quality from suppliers
Cengage Learning Testing, Powered by Cognero Page 20
 b.  a virtual elimination of paperwork and paperwork handling
 c.  improved communication both within the company and with suppliers
 d.  a reduction in errors
 e.  a reduction in the time spent in by purchasing personnel on processing purchase orders and invoices and more
time spent on strategic value-adding purchasing activities
ANSWER:  a
NOTES:   3

44. The purchasing cycle begins with the _____.

  a. selection of an appropriate supplier
  b. issuance of a purchase order
  c. receipt of a supplier’s acknowledgement
  d. identification of a need (a requirement)
  e. determination of who can authorize the
purchase
ANSWER:  d

45. When a situation arises when an internal customer has a need that comes up suddenly, which is not planned for and for
which there is no pre-existing supplier identified to provide the product or service required, purchasing should use a/an
_____ approach.
  a. spot buy
  b. long term agreement
  c. P2P
  d. e-procurement
  e. None of the above.
ANSWER:  a

46. Which of the following is not one of the common ways that internal customers should communicate their needs to
purchasing?
  a. Purchase requisitions from internal users.
  b. Chance meeting in the company cafeteria.
  c. Forecasts and customer orders.
  d. Material requirements identified during new-product development.
  e. Routine reordering systems.
ANSWER:  b

47. All of the following are required elements in a purchase requisition except _____.
  a. quantity and date required
  b. estimated unit cost
Cengage Learning Testing, Powered by Cognero Page 21
  c. operating account to be charged
  d. authorized signature
  e. identification and approval of a supplier by the end user
ANSWER:  E

48. When marketing wants to purchase an advertising media campaign, the _____ should specify the work that is to be
completed, when it is needed, and what type of service provider is required.
  a. reorder point
  b. Acknowledgement
  c. traveling purchase
requisition
  d. statement of work
  e. sales forecast
ANSWER:  D

49. In a _____, when inventory is depleted to a given level, the system notifies the materials control department (or the
buyer in some organizations) to issue a request to a supplier for inventory replenishment.
  a. reorder point system
  b. traveling purchase requisition
system
  c. customer service system
  d. forecasting system
  e. just-in-time system
ANSWER:  a

50. A _____ involves the physical checking of inventory to verify that system records match actual on-hand inventory
levels.
  a. reorder point system
  b. stock check
  c. just-in-time system
  d. forecasting system
  e. p-card system
ANSWER:  b

51. _____ is used when a product or service is proprietary or when there is a perceived advantage to using a particular
supplier’s products or services.
  a. Description by market grade
  b. Description by industry standard
  c. Description by specification
  d. Description by performance characteristics
  e. Description by brand
ANSWER:  e

52. _____ is might be the best choice for standard items, where the requirements are well understood and there is common
Cengage Learning Testing, Powered by Cognero Page 22
agreement between supply chain partners about what certain terms mean.
  a. Description by market grade
  b. Description by brand
  c. Description by performance
characteristics
  d. Use of prototypes
  e. Description by specification
ANSWER:  a

53. _____ can cover such characteristics as the materials used, the manufacturing or service steps required, and even the
physical dimensions of the product.
  a. Description by market grade
  b. Description by specification
  c. Description by brand
  d. Description by industry standard
  e. Description by performance characteristics
ANSWER:  b

54. _____ focuses attention on the outcomes the customer wants, not on the precise configuration of the product or
service.
  a. Description by industry standard
  b. Description by brand
  c. Description by specification
  d. Description by performance characteristics
  e. Description by market grade
ANSWER:  d

55. A/An _____ has demonstrated its performance capabilities through previous purchase contracts and therefore receives
preference during the supplier selection process.
  a. internal supplier
  b. new supplier
  c. capable supplier
  d. final supplier
  e. preferred
supplier
ANSWER:  e

56. All of the following are conditions under which competitive bidding is effective except _____.
  a. the buyer has a preferred supplier for the item
  b. volume is high enough to justify this method
  c. the marketplace is competitive
  d. the specifications or requirements are clear to the seller
  e. adequate time is available for suppliers to evaluate the
RFQs
Cengage Learning Testing, Powered by Cognero Page 23
ANSWER:  A

57. Which of the following is not one of the conditions under which negotiation is effective?
  a. When the purchase requires agreement about a wide range of performance factors, such as price, quality,
delivery, risk sharing, and product support.
  b. When the buyer requires early supplier involvement.
  c. When the specifications or requirements are clear to the seller.
  d. When the supplier cannot determine risks and costs.
  e. When the supplier requires a long period of time to develop and produce the items purchased.
ANSWER:  C

58. Which of the following is not an appropriate performance criterion to be used when evaluating suppliers?
  a. Ability to develop process and product technology.
  b. Commitment to quality.
  c. Management capability and commitment.
  d. Cost performance.
  e. Commitment to effective marketing and
promotion.
ANSWER:  e

59. Good reasons for allowing other departments to view purchase orders and incoming receipts does not include which of
the following?
  a. The accounting department gains visibility to future accounts payable obligations.
  b. The requestor can refer to the purchase order number when inquiring into the status of an order.
  c. Receiving has a record of the order to match against the receipt of the material.
  d. Traffic becomes aware of inbound delivery requirements and can make arrangements with carriers or use the
company’s own vehicles to schedule material delivery.
  e. There is never a good reason for purchasing to allow other departments access to purchase orders and
incoming receipts due to the confidential nature of the price and delivery terms.
ANSWER:  e

60. A/An _____ is an open order, usually effective for one year, covering repeated purchases of an item or family of
items.
  a. outstanding order
  b. pending order
  c. blanket purchase order
  d. completed order
  e. order acceptance
ANSWER:  C

61. When using negotiating a/an _____, it is necessary to include a/an _____ that allows a buyer to terminate the contract
in the event of persistently poor quality, delivery problems, and so on.
  a. spot buy contract….evergreen clause
  b. RFP….RFQ
Cengage Learning Testing, Powered by Cognero Page 24
  c. purchase order….purchase agreement
  d. blanket purchase order….escape
clause
  e. online catalog….RFP
ANSWER:  D

62. In a _____, the price stated in the agreement does not change, regardless of fluctuations in general overall economic
conditions, industry competition, levels of supply, market prices, or other environmental changes.
  a. blanket purchase order
  b. RFQ
  c. cost-based contract
  d. material purchase release
  e. fixed-price contract
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering

63. In a _____, the supplier is reimbursed all of their actual costs plus some agreed on operational margin and overhead
amount.
  a. RFP
  b. cost-based contract
  c. material purchase release
  d. fixed-price contract
  e. reverse auction
ANSWER:  B

64. The _____, which the supplier provides, details the contents of a shipment and contains the description and quantity of
the items in a shipment.
  a. material packing slip
  b. purchase requisition
  c. bill of lading
  d. electronic funds transfer
  e. request for quotation
ANSWER:  A

65. Transportation carriers use a/an _____ to record the quantity of goods delivered to a facility.
  a. electronic transfer of funds
  b. material packing slip
  c. receiving discrepancy report
  d. bill of lading

Cengage Learning Testing, Powered by Cognero Page 25

  e. purchase order
ANSWER:  d

66. The _____ helps protect the carrier against wrongful allegations that the carrier somehow damaged, lost, or otherwise
tampered with a shipment.
  a. bill of lading
  b. material packing slip
  c. Invoice
  d. material purchase release
  e. blanket purchase order
ANSWER:  a

67. Which of the following is false regarding concealed damage?

  a. A user may discover concealed damages after opening a shipping container.
  b. Responsibility for concealed damage is often difficult to establish.
  c. The carrier may blame the supplier or maintain that the damage occurred after delivery of the
material.
  d. The supplier may maintain total innocence and implicate the carrier.
  e. The bill of lading protects the carrier against charges of concealed damage.
ANSWER:  e

68. A _____ details any shipping or receiving discrepancies noted by the receiving department.
  a. receiving discrepancy report
  b. bill of lading
  c. material packing slip
  d. change notice
  e. RFP
ANSWER:  a

69. The _____ purchase category includes such items are petroleum, coal, lumber, and metals such as copper and zinc.
  a. semifinished products and
components
  b. finished products
  c. MRO items
  d. raw materials
  e. capital equipment
ANSWER:  d

70. A key characteristic of a/an _____ is a lack of processing by the supplier into a newly formed product.
  a.  Component
Cengage Learning Testing, Powered by Cognero Page 26
  b.  semifinished product
  c.  finished good
  d.  MRO item
  e.  raw material
ANSWER:  e

71. Suppliers are more often being paid through _____, which is the automatic transfer of payment from the buyer’s bank
account to the supplier’s bank account.
  a. RFQ
  b. EFT
  c. MRO
  d. PO
  e. None of the above.
ANSWER:  b
NOTES:   3

72. _____ include anything that does not go directly into an organization’s product.
  a. MRO items
  b. Raw materials
  c. Production support items
  d. Services
  e. Semifinished products and components
ANSWER:  a

73. _____ include(s) the materials required to pack and ship final products, such as pallets, boxes, master shipping
containers, tape, bags, wrapping, inserts, and other packaging material.
  a. Raw materials
  b. Production support items
  c. Semifinished products
  d. Components
  e. Work-in-process inventory

74. Which of the following is not a feature that separates capital equipment purchases from other purchases?
  a. Capital equipment purchases do not occur with regular frequency.
  b. Capital equipment investment requires large sums of money.
  c. For accounting purposes, most capital equipment is not depreciable over the life of the item.
  d. Buyers can rarely switch suppliers in the middle of a large-scale project or dispose of capital equipment after
delivery because of dissatisfaction.
  e. Capital equipment is highly sensitive to general economic conditions.
ANSWER:  c
Cengage Learning Testing, Powered by Cognero Page 27
75. All the following are expected growth areas in e-commerce except _____.
  a. transmitting purchase orders to suppliers
  b. submitting requests for quotes to suppliers
  c. placing orders with suppliers
  d. making electronic funds transfer payments
  e. submitting written check requests to accounts
payable
ANSWER:   E
DIFFICULTY:  Moderate

76. Once a purchaser and a supplier reach agreement on a longer-term purchase contract, material releasing responsibility
should shift to _____.
  a. Marketing
  b. Purchasing
  c. the supplier
  d. user groups
  e. accounts payable
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

77. While similar in concept, blanket purchase orders are typically used more often for _____ purchases.
  a. Unique
  b. lower-value
  c. Complex
  d. spot buy
  e. There are no differences in the types of products or amounts purchased in either method.
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

78. Which of the following is not an advantage of online ordering systems?

  a. Immediate visibility to back-ordered items.
  b. Longer order cycle time from input to delivery.
  c. Faster order input time.
  d. Reduced ordering errors.
  e. Ability to batch multiple items from multiple users on a single order.
ANSWER:   B
Cengage Learning Testing, Powered by Cognero Page 28
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

79. [A/An] _____ involves a communications standard that supports inter-organizational electronic exchange of common
business documents and information.
  a. electronic catalog
  b. cloud-based ordering system
  c. Procure-to-pay
  d. Electronic data interchange
  e. blanket purchase order
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

Chapter 4
True / False

1. Purchasing offices were once corporate backwaters, filled with people who didn’t dream of advancing to the top rungs
of their organization.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

2. Integration does not require that people create a common understanding of the end goal or purpose.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. Outsourcing products through low cost country sourcing environments or contract manufacturers is very much the same

Cengage Learning Testing, Powered by Cognero Page 29

as sourcing in North American buyer-seller situations.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

4. Because the links between operations and supply management have been so close, it is not unusual for supply
management to report directly to operations.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

5. Many firms are now colocating supply management personnel directly at operating locations so supply management
can respond quickly to operation’s needs.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

6. Perhaps the most important and challenging linkages exist between supply management and marketing/sales.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

7. Many supply management groups are recruiting commodity managers with very strong technical backgrounds, who are
able to talk the talk and walk the walk alongside their engineering counterparts.
  a. True
  b. False
ANSWER:   True
Cengage Learning Testing, Powered by Cognero Page 30
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

8. Supply management usually maintains significant data about individual activity costs that can increase total cost.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

9. In collaboration, the relationship is bilateral; both parties have the power to shape its nature and future direction over
time.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

10. A long-term contract does not provide an incentive for a supplier to invest in new plants and equipment.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

11. The need for confidentiality regarding financial, product, and process information is the most frequently cited reason
for not developing closer supplier relationships.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

Cengage Learning Testing, Powered by Cognero Page 31

12. Closer buyer-supplier relationships interest all suppliers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

13. A shift to a more trusting buyer-supplier relationship is easy.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

14. External relationship management begins with internal relationship management: internal alignment is key.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

15. Experience reveals that cross-functional sourcing teams are usually part-time/continuous assignments, making the use
of sourcing teams a challenging way to work.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

16. A primary objective of using teams is to bring together individuals with common perspectives and expertise to
perform better on a task compared to individuals or departments acting along.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
Cengage Learning Testing, Powered by Cognero Page 32
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

17. Perhaps the greatest benefit of team interaction is that once a team makes a decision, implementing the decision often
becomes easier due to group buy-in.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

18. The use of cross-functional sourcing teams guarantees a successful outcome to a project or assignment.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

19. Membership on a team can have negative effects on individuals.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

20. A team may pressure an individual to support or conform to a lower production norm than the individual’s personal
norm.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

21. Successfully using teams does not require extensive planning before a team should be allowed to pursue an
Cengage Learning Testing, Powered by Cognero Page 33
assignment.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

22. Organizations should use teams selectively due to limited resource availability.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

23. Interacting as a team requires the same set of skills as the skills required for traditional work.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

24. If team members receive delayed reinforcement, they will exert greater effort than if the reinforcement is immediate.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

25. If positive work is never recognized or reinforced through rewards, the positive effort will likely be extinguished.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 34
NOTES:   2

26. The effectiveness of the sourcing team leader is one of the weakest predictors of team success.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

27. Being an effective team leader means satisfying a demand set of essential operating responsibilities and requirements
while still promoting the creativity, leadership ability, and cohesiveness of team members.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

28. Goal setting is not a critical cross-functional team requirement.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

29. Cross-functional sourcing teams are a less-than-ideal way to promote cross-organizational cooperation.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

30. Cross-functional sourcing teams that incorporate supplier participation report fewer problems coordinating work
activity between the team and key suppliers.
  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 35
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

31. In forward-thinking enterprises, supply management seldom plays a key role in the development of new products and
services.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

32. On supplier assessments, performance data should be weighted in such a manner that they are aligned with customer
performance requirements.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

33. Supplier selection should never occur before a new part is actually designed or reaches production.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

34. If given the opportunity, suppliers seldom have a major impact on the overall timing and success of a new product.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3
Cengage Learning Testing, Powered by Cognero Page 36
35. According to research, the sharing of technology roadmaps often strongly influences the type of buyer-supplier
relationship that resulted in the integration process.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

36. The physical co-location of a supplier engineer at a buying company is increasingly becoming a part of the normal
product development process structure.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

37. Suppliers of critical nonstandard commodities are involved much later in the product development initiative.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

38. Early visibility to product requirements allows supply management to share critical information with suppliers that can
help avoid delays.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

39. Suppliers are never an invaluable source of ideas for process improvement.

  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 37
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

40. Many companies are encouraging suppliers to provide a permanent on-site representative who can aid the company in
improving customer order fulfillment processes.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

Multiple Choice

41. _____ involves professionally managing suppliers and developing close working relationships with different internal
groups.
  a. Purposeful cooperation
  b. Program management
  c. Credible commitment
  d. Supply integration
  e. Relationship management
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

42. _____ is the process of incorporating or bringing together different groups, functions, or organizations, either formally
or informally, physically or by information technology, to work jointly and often concurrently on a common business-
related assignment or purpose.
  a. Cooptation
  b. Program management
  c. Collaboration
  d. Collusion
  e. Integration
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 38
NOTES:   1

43. Which of the following are not considered relationship management skills?

  a. Ability to conduct detailed price and cost
analyses
  b. Ability to act ethically.
  c. Ability to listen effectively.
  d. Ability to communicate.
  e. Ability to use creative problem-solving.
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

44. All of the following are examples of the different methods that supply management will apply to achieve integration
except _____.
  a. Cross-functional or cross-organizational committees and teams
  b. Hiring English majors into supply management to correct document language
  c. Information systems such as videoconferencing and webmail
  d. Process-focused organizations that are dedicated to certain processes
  e. Colocation of suppliers and customers
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

45. _____ is defined as the process by which two or more parties adopt a high level of purposeful cooperation to maintain
a trading relationship over time to achieve specific goals.
  a. Supply base management
  b. Collaboration
  c. KPI
  d. Supply integration
  e. SRM
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

46. All of the following are characteristics that define a collaborative buyer-supplier relationship except _____.
  a. one or a limited number of suppliers for each purchased item or family of
Cengage Learning Testing, Powered by Cognero Page 39
 items
  b. a win-win approach to reward sharing
  c. open exchange of information
  d. a credible commitment to work together during difficult times
  e. the buyer unilaterally resolving disputes
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

47. Which of the following is not a common obstacle to closer buyer-seller relationships?

  a. Long-term contracts.
  b. Confidentiality.
  c. Limited interest by
suppliers.
  d. Legal barriers.
  e. Resistance to change.
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

48. [A/An] _____ consists of personnel from different functions and increasingly from suppliers who are brought together
to achieve supply management or supply chain-related tasks.
  a. Big R
  b. External RM
  c. cross-functional sourcing
team
  d. Little r
  e. Internal RM
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

49. Which of the following is not a benefit of using a cross-functional sourcing team?

  a. Reduced time to complete a task.
  b. Increased innovation.
  c. Joint ownership of decisions.
  d. Enhanced communication among functions or organizations.
Cengage Learning Testing, Powered by Cognero Page 40
  e. Groupthink.
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

50. Which of the following is not a potential drawback of using a cross-functional sourcing team?
  a. Team process loss.
  b. Reduced innovation.
  c. Negative effects on individual
members.
  d. Poor team decisions.
  e. Groupthink.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

51. _____ is a function of the professional’s ability to translate supply market data into compelling insights that solve
business problems and to enable organizational connections and networking that accelerate business success.
  a. SRM
  b. Groupthink
  c. Reciprocity
  d. Process gain
  e. Relationship capital
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

52. _____ occurs when a team does not complete its task in the best or most efficient manner or members are not
motivated to employ their resources to create a successful outcome.
  a. Groupthink
  b. KPI
  c. Collaboration
  d. Process loss
  e. Synergy
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
Cengage Learning Testing, Powered by Cognero Page 41
OTHER:   Analytic
NOTES:   2

53. When _____ is present, the total group effort is _____ the expected sum of the individual parts.
  a. process loss….less than
  b. groupthink….more than
  c. process loss….more
than
  d. collaboration….less than
  e. synergy….the same as
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

54. _____ is the tendency of a rational group or team to arrive at a bad decision when other information is available.
  a. Serendipity
  b. Collusion
  c. Process loss
  d. Maverick spend
  e. Groupthink
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

55. Which of the following is not an example of an appropriate use of a cross-functional team?

  a. New product development.
  b. Preparing a RFQ for a routine commodity product.
  c. Locating a new production facility.
  d. Developing a commodity or purchase family strategy.
  e. Establishing a new business unit.
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

56. A _____ is one that requires members to use a variety of higher-level skills, supports giving members regular
feedback about performance, results in an outcome with a significant effect on the organization and others outside the
team, and provides members autonomy for deciding how they will do the work.
Cengage Learning Testing, Powered by Cognero Page 42
  a. gray box design
  b. statement of work
  c. technology roadmap
  d. meaningful task
  e. traditional buyer-supplier relationship
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

57. Which of the following is not a requirement of being an effective team member?

  a. Understands the team’s task – the member has task-relevant
knowledge.
  b. Has the time to commit to the team.
  c. Has the right corporate political connections.
  d. Has the ability to work with others in a group.
  e. Can assume an organizational rather than strict functional perspective.
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

58. Management can exert subtle control over a team’s tasks through all of the following except _____.
  a. authorizing the creation of the sourcing team
  b. selecting the team’s task
  c. selecting the team leader and members
  d. conducting performance reviews and holding teams accountable for performance
outcomes
  e. sitting in on all team meetings
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

59. Which of the following is not true regarding establishing sourcing team goals?
  a. Teams with established goals often use those goals as a basis for evaluating how well the team is performing.
  b. Teams will establish, on average, challenging rather than easy goals.
  c. External pressure on a team to set goals usually results in the setting of more challenging goals.
  d. Teams establish goals only because they have to.
  e. Teams with goals perform better, on average, than teams that are asked simply to perform their best without
Cengage Learning Testing, Powered by Cognero Page 43
 explicit end goals.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

60. All of the following are examples of how supply management should monitor and anticipate activity in its supply
market except _____.
  a. ensuring that cost accounting keeps track of historical prices paid
  b. forecasting long-term supply and prices for its basic commodities
  c. monitoring technological innovations that impact its primary materials or make substitute materials
economically attractive
  d. evaluating not only its existing suppliers but also other potential suppliers
  e. providing timely visibility to new-product requirements
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

61. All of the following questions are important in considering new or existing suppliers for integration except _____.
  a. Is the supplier capable of hitting affordable targets regarding cost, quality, conductivity, weight, and other
performance criteria?
  b. Does the supplier have sufficient marketing funds for promoting its new products?
  c. Will the supplier be able to meet product introduction deadlines?
  d. Will the supplier be able to increase capacity and production fast enough to meet our market share
requirements?
  e. Do the supplier’s personnel have the required training to start up required processes and debug them?
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

62. Using _____, the supplier is given blueprints and told to make the product from them.
  a. black box design
  b. gray box design
  c. red box design
  d. white box design
  e. shadow box design
ANSWER:   D
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 44
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

63. Using _____, the supplier’s engineers work cooperatively with the buying company’s engineers to jointly design the
product.
  a. shadow box design
  b. gray box design
  c. red box design
  d. white box design
  e. black box design
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

64. Using _____, suppliers are provided with functional specifications and are asked to complete all technical
specifications, including materials to be used, blueprints, and so on.
  a. shadow box design
  b. white box design
  c. gray box design
  d. red box design
  e. black box design
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

65. The term _____ refers to the set of performance criteria and products and processes an organization intends to develop
or manufacture.
  a. concurrent engineering
  b. early supplier involvement
  c. process loss
  d. technology roadmap
  e. R&D plan
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

Cengage Learning Testing, Powered by Cognero Page 45

66. Which of the following are not examples of technology roadmaps?
  a. Incorporation of new AICPA accounting standards into existing accounting systems.
  b. Projected performance specifications for a class of products or processes.
  c. An intention to integrate a new material or component.
  d. Development of a product to meet customer requirements that is currently unavailable in the
market.
  e. Integration of multiple complementary technologies that results in a radically new product.
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

67. All of the following are elements of successful supplier suggestion programs except _____.
  a. the savings from the suggestion are often shared 50/50, not kept solely by the buying company
  b. the program focuses on cost improvement, not simply cutting the supplier’s margins
  c. successful buying companies provide prompt feedback to the supplier on its suggestion and also implement
good suggestions promptly
  d. it is critical to acknowledge the supplier’s suggestion, through an awards program, newsletter, or
announcement at a supplier conference
  e. the supplier should be allowed to keep 100% of the savings since it came up with the idea
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

Chap 6
True / False

1. Increasing revenues involves either raising prices or keeping prices stable and increasing volume.
  a. True
  b. False

2. In general, the less important the category, the more critical it is that internal stakeholders will be involved.
  a. True
  b. False

Cengage Learning Testing, Powered by Cognero Page 46

3. Objectives drive goals, whether at the highest levels of an organization or at the functional or department level.
  a. True
  b. False

4. A category strategy is a decision process used to identify which suppliers should provide a group of products or
services, the form of the contract, the performance measures used to measure supplier performance, and the appropriate
level of price, quality, and delivery arrangements that should be negotiated.
  a. True
  b. False

5. In general, the more important the commodity, the less likely that cross-functional members and user groups will be
involved.
  a. True
  b. False

6. The problem with secondary data is that they are often outdated and may not provide the specific information for which
the team is looking.
  a. True
  b. False

7. SWOT analysis was created to describe the competitive forces in a market economy that help shape an industry.
  a. True
  b. False

8. As a strategic planning tool, a SWOT analysis can provide insight even with limited data.
  a. True
  b. False

9. The RFI constitutes a binding agreement by both the supplier and the purchaser.
  a. True
  b. False

Cengage Learning Testing, Powered by Cognero Page 47

10. Identifying the major suppliers in a market is an important first step of any supplier analysis.
  a. True
  b. False

11. A preferred supplier designation indicates that the selected supplier should receive the business for a critical
commodity under all possible conditions.
  a. True
  b. False

12. A supplier catalog allows users to order directly through the Internet using a company procurement card (just like a
credit card) with the delivery made directly to the site the next day.
  a. True
  b. False

13. In some cases, a firm may be looking to develop a long-term relationship with a potential supplier, particularly if the
supplier is in the “Routine” quadrant  of the Strategy Portfolio Matrix and the category of spend is low volume and routine
to the company’s business.
  a. True
  b. False

14. After the buyer-supplier relationship has been established, buyers no longer need to track supplier performance over
time.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

15. The strategic sourcing process ends when a contract is signed with a supplier.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 48
NOTES:   4

16. The insourcing/outsourcing decision cannot be applied to virtually every process conducted within the traditional
walls of an organization.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

17. Supply base optimization usually refers to increasing the number of suppliers used.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

18. Supply base optimization requires an analysis of the number of suppliers required currently and in the future for each
purchased item.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

19. Only recently have senior executives begun to realize the increased risk attributed to the higher probability of product
and service flow disruptions in global sourcing networks.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

20. One factor that is increasing the risk exposure to supply chain disruption is the decreasing propensity of companies to
outsource processes to global suppliers.
Cengage Learning Testing, Powered by Cognero Page 49
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

21. Global sourcing can be used to access new markets or to gain access to the same suppliers that are helping global
companies become more competitive.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

22. More complex logistics and currency fluctuations require measuring all relevant costs before committing to a
worldwide source.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

23. Longer-term relationships are sought with suppliers that have exceptional performance or unique technological
expertise.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

24. A longer-term relationship should never include a joint product development relationship with shared development
costs and intellectual property.
  a. True
  b. False

Cengage Learning Testing, Powered by Cognero Page 50

25. When purchasers find that suppliers’ capabilities are not high enough to meet current or future expectations, those
suppliers should always be eliminated from the supply base.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

26. Total cost of ownership typically includes costs associated with late delivery, poor quality, or other forms of supplier
nonperformance.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

27. An e-RA is an offline, static auction between a buying organization and a group of pre-qualified suppliers who
compete against each other to win the business to supply goods or services that have ill-defined specifications for design,
quantity, quality, delivery, and related terms and conditions.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

28. Organizations tend to evolve through four phases as they become mature and sophisticated in their supply
management strategy development.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

29. In the final and most advanced stage of supply management strategy development, supply management has assumed a
tactical orientation with reporting directly to lower-level management and a simple internal, rather than a strong external,
Cengage Learning Testing, Powered by Cognero Page 51
customer focus.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

30. In the initial stages of supply management strategy development, supply management adopts essentially a short-term
approach and reacts to complaints from its internal customers when deliveries are late, quality is poor, or costs are too
high.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

31. In the moderate development phase of supply management strategy development, supply management councils or lead
buyers may be responsible for entire classes of commodities, and companywide databases by region may be developed to
facilitate this coordination.
  a. True

Multiple Choice

32. A _____ refers to a specific family of products or services that is used in delivering value to the end customer.
  a. spend analysis
  b. decentralized structure
  c. Category
  d. centralized structure
  e. hybrid structure

33. Which of the following is not one of the primary ways that companies create shareholder value?
  a. Increase volume.
  b. Reduce cost of employees
(downsize).
  c. Reduce cost of process and waste.
  d. Reduce cost of goods and services.
  e. Lower prices.

Cengage Learning Testing, Powered by Cognero Page 52

34. A _____ is concerned with (1) the definition of businesses in which the corporation wishes to participate and (2) the
acquisition and allocation of resources to these business units.
  a. business unit strategy
  b. supply management strategy
  c. human resource management strategy
  d. corporate strategy
  e. functional strategy

35. A _____ is concerned with (1) the scope or boundaries of each business and the links with corporate strategy and (2)
the basis on which the business unit will achieve and maintain a competitive advantage within an industry.
  a. commodity strategy
  b. category strategy
  c. business unit strategy
  d. functional strategy
  e. supply management strategy

36. A _____ specifies how supply management will (1) support the desired competitive business-level strategy and (2)
complement other functional strategies.
  a. supply management strategy
  b. corporate strategy
  c. marketing strategy
  d. category strategy
  e. business unit strategy

37. A _____ specifies how a group tasked with developing the strategy for the specific category being purchased will
achieve goals that in turn will support higher level strategies.
  a. functional strategy
  b. corporate strategy
  c. business unit strategy
  d. category strategy

38. A _____ is an annual review of a firm’s entire set of purchases.

  a. cost analysis
  b. price analysis
  c. make-buy analysis
  d. technology roadmap
  e. spend analysis

Cengage Learning Testing, Powered by Cognero Page 53

39. Which of the following is not one of the questions to be addressed when conducting a spend analysis?
  a. What did the business spend its money on over the past year?
  b. Did the business receive the right amount of products and services given what it paid for them?
  c. What suppliers received the majority of the business, and did they charge an accurate price across all the
divisions in comparison to the requirements in the POs, contracts, nad statements of work?
  d. What was the on-time delivery performance for each supplier?
  e. Which divisions of the business spent their money on products and services that were correctly budgeted for?

40. Which of the following is not one of the steps in the strategic sourcing process?
  a. Build the team and the project charter.
  b. Conduct market intelligence research on suppliers.
  c. Increasing revenues.
  d. Strategy development.
  e. Supplier relationship management.

41. The _____ in the strategic sourcing process is a clear statement of the goals and objectives of the sourcing project,
which is officially announced shortly after the team’s first few meetings.
  a. triangulation phase
  b. optimization
process
  c. spend analysis
  d. project charter
  e. price analysis

42. The key to good market intelligence is to _____ data, which means to explore, compare, and contrast data from
multiple sources before it can be validated.
  a. triangulate
  b. minimize
  c. gather
  d. Collect
  e. assemble

43. The whole point of collecting _____ is to understand the prevailing market conditions and the ability of current or
potential new suppliers to deliver the product or service effectively.
  a. customer data

Cengage Learning Testing, Powered by Cognero Page 54

  b. secondary data
  c. internal data
  d. spend analysis data
 C e. market research

44. All of the following are examples of factors in Porter’s market internal competition force except _____.
  a. speed of industry growth
  b. buyer propensity to substitute
  c. exit barriers
  d. switching costs
  e. capacity utilization

45. Which of the following is not one of Porter’s five forces?

  a. Buyer bargaining power.
  b. Switching costs.
  c. Threat of new entrants.
  d. Market internal competition.
  e. Supplier bargaining power.

46. Which of the following is not one of the examples of Porter’s threat of new entrants?
  a. Capital markets.
  b. Economies of scale.
  c. Supplier concentration.
  d. Product life cycles.
  e. Brand equity and customer
loyalty.

47. Which of the following is not one of the examples of Porter’s threat of substitute products and services?
  a. Relative performance of substitutes.
  b. Relative price of substitutes.
  c. Switching costs.
  d. Buyer propensity to substitute.
  e. Economies of scale.

48. All of the following are examples of Porter’s power of buyers except _____.

Cengage Learning Testing, Powered by Cognero Page 55

  a. buyer concentration
  b. exit barriers
  c. price sensitivity
  d. brand identity
  e. buyer volume

49. Which of the following is not one of the examples of Porter’s power of suppliers?
  a. Prices of major inputs.
  b. Ability to pass along price increases.
  c. Supplier concentration.
  d. Availability of skilled workers.
  e. Threat of forward or backward integration.

50. In supplier analysis, _____ requires identifying critical performance criteria and identifying relative competitive
performance.
  a. Benchmarking
  b. make/buy analysis
  c. insourcing/outsourcing analysis
  d. Porter’s Five Forces analysis

51. The _____ is a solicitation document that is used by organizations to obtain general information about services,
products, or suppliers and is used generally before a specific requisition of an item is issued.
  a. e-RA
  b. PO
  c. RFP
  d. RFI 
  e. RFQ

52. The goal of _____ is to be able to understand, identify, and exploit cost savings opportunities that may have been
overlooked by business unit managers or even by suppliers in bringing the products and services to the appropriate
location.
  a. Marketing research
  b. Make-buy analysis
  c. Value chain analysis
  d. Price analysis
  e. Cost analysis

Cengage Learning Testing, Powered by Cognero Page 56

53. [A] _____ is required to identify the specific capabilities and financial health of key suppliers that are in the supply
base or that may not currently be in the supply base.
  a. Make-buy analysis
  b. supplier evaluation scorecard
  c. Price analysis
  d. Portfolio analysis
  e. Supplier research

54. [A] _____ is a tool to structure and segment the supply base and is used as a means of classifying suppliers into one of
four types.
  a. Supplier scorecard
  b. Portfolio analysis
  c. Make-buy analysis
  d. Price analysis
  e. Value chain analysis

55. Which of the following is not one of the four categories found in a portfolio analysis matrix?
  a. Critical.
  b. Routine.
  c. Leverage.
  d. Commodity.
  e. Bottleneck.

56. All of the following are goals for a strategic category except _____.
  a. develop a competitive advantage
  b. support and leverage the supplier’s core
competencies
  c. develop best-in-class suppliers
  d. support the company’s overall strategy
  e. simplification of the procurement process using
electronic tools

57. Which of the following is not one of the goals for sourcing a routine commodity?
  a. Reduce the number of items through substitution.
  b. Elimination of small volume spend.
  c. Conduct of a detailed negotiation to improve supplier capability.
  d. Elimination of duplicate SKUs.
  e. Simplification of the procurement process using electronic tools.
Cengage Learning Testing, Powered by Cognero Page 57
58. A _____ has a high volume of internal consumption, is readily available, is important to the business, and represents a
significant proportion of spend.
  a. leverage commodity
  b. portfolio commodity
  c. critical commodity
  d. routine commodity
  e. bottleneck commodity
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

59. A _____ has unique requirements or niche suppliers, yet is significant to the business.
  a. critical commodity
  b. bottleneck commodity
  c. matrix commodity
  d. routine commodity
  e. leverage commodity
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

60. In supplier evaluation, different aspects of _____ include management’s commitment to continuous process and
quality improvement, its overall professional ability and experience, its ability to maintain positive relationships with its
workforce, and its willingness to develop a closer working relationship with the buyer.
  a. management capability
  b. process and design capabilities
  c. financial condition and cost structure
  d. planning and control systems
  e. environmental regulation compliance
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

61. In supplier evaluation, a _____ includes those systems that release, schedule, and control the flow of work in an
organization.
Cengage Learning Testing, Powered by Cognero Page 58
  a. logistics system
  b. cost accounting system
  c. traffic management system
  d. planning and control system
  e. warehouse management system
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

62. In the _____ of the process of supplier segmentation, the supplier views the buyer as a core customer, as the size of
the account is significant to the supplier, and the account is also important from a strategic perspective.
  a. COMMODITY segment
  b. DEVELOP segment
  c. EXPLOIT segment
  d. NUISANCE segment
  e. CORE segment
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

63. In the _____ of the process of supplier segmentation, the attractiveness of the buyer as a customer is significant and
important to the supplier, but perhaps the historical volume of business with the buyer has been relatively low.
  a. EXPLOIT segment
  b. CORE segment
  c. DEVELOP segment
  d. PRICE segment
  e. NUISANCE segment
ANSWER:   C
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

64. In the _____ of the process of supplier segmentation, suppliers have a significant portion of the buyer’s spend but do
not view the buyer as an important customer.
  a. NUISANCE segment
  b. COMMODITY segment
  c. DEVELOP segment
  d. EXPLOIT segment
Cengage Learning Testing, Powered by Cognero Page 59
  e. CORE segment
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

65. In the _____ of the process of supplier segmentation, the supplier views the buyer as an unimportant customer, and to
make the situation worse, the volume the buyer has with this supplier is insignificant to the supplier.
  a. NUISANCE segment
  b. CORE segment
  c. EXPLOIT segment
  d. DEVELOP segment
  e. None of the above.
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

66. A/An _____ may be used as a decision support tool in which the sourcing team assigns a weight to the different
categories and develops a numerical score for each supplier in each category, thereby developing a final performance
score.
  a. make-buy analysis
  b. portfolio analysis matrix
  c. reverse auction
  d. e-catalog
  e. supplier selection scorecard
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

67. A/An _____ has demonstrated its performance capabilities through previous purchase contracts and, therefore,
receives preference during the supplier selection process.
  a. commodity supplier
  b. preferred supplier
  c. sole source supplier
  d. new supplier responding to a RFQ
  e. marginal supplier
ANSWER:   B
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 60
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

68. A/An _____ is a formal request for the suppliers to prepare bids, based on the terms and conditions set by the buyer.
  a. RFQ
  b. purchase order
  c. RFI
  d. supplier analysis
  e. e-RA
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

69. Buying firms use competitive bidding when _____ is a dominant criterion and the required items or services have
______ specifications.
  a. price….unique
  b. delivery….unique
  c. product
performance….straightforward
  d. design….unique
  e. price….straightforward
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

70. Competitive bidding is most effective when all of the following conditions apply except when _____.
  a. the buying firm can provide qualified suppliers with clear descriptions of the items or services to be
purchased
  b. volume is high enough to justify the cost and effort
  c. the firm does not have a preferred supplier
  d. the item is new or technically complex, with only vague specifications
  e. None of the above conditions apply to competitive bidding.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

Cengage Learning Testing, Powered by Cognero Page 61

71. Face-to-face negotiation is best when all of the following conditions apply except when _____.
  a. the item is new or technically complex, with only vague specifications
  b. the purchase requires agreement about a wide range of performance factors
  c. the firm does not have a preferred supplier
  d. the buyer requires the supplier to participate in the development effort
  e. the supplier cannot determine risks and costs without additional input from the
buyer
ANSWER:   C
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

72. A _____ is used in regularly scheduled review meetings with suppliers, so that deficiencies in performance can be
noted, discussed, and acted upon.
  a. supplier scorecard
  b. make-buy analysis
  c. competitive bidding
process
  d. portfolio analysis
  e. cost analysis
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

73. _____ is the process of determining the appropriate number and mix of suppliers to maintain.
  a. Make-buy analysis
  b. Competitive bidding
  c. Supply base optimization
  d. Portfolio analysis
  e. Price analysis
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

74. Which of the following is not true in regards to low-cost country sourcing?

  a. Low-cost country sourcing can be used to access new markets or to gain access to the same suppliers that are
helping global companies become more competitive.
  b. Although there has been a strong push to source from emerging BRIC countries in search of lower costs, there
has also been a strong push toward sourcing in these countries because of local content requirements
Cengage Learning Testing, Powered by Cognero Page 62
 established by governments in these areas.
  c. Global sourcing is an opportunity to gain exposure to product and process technology, increase the number of
available sources, satisfy countertrade requirements, and establish a presence in foreign markets.
  d. Some buyers source globally to introduce competition to domestic suppliers.
  e. Firms are highly experienced with global business processes and practices, and there are many personnel
qualified to develop and negotiate with global suppliers or manage material pipelines.
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

75. _____ is a simultaneous engineering approach that occurs between buyer and seller and seeks to maximize the benefits
received by taking advantage of the supplier’s design capabilities.
  a. Supplier development
  b. Early supplier design involvement
  c. Total cost of ownership
  d. Supplier relationship management
  e. Supply base optimization
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

76. _____ is the process of identifying cost considerations beyond unit price, transport, and tooling.
  a. Total cost of ownership
  b. Price analysis
  c. Make-buy analysis
  d. Portfolio analysis
  e. Low-cost country sourcing
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

77. Which of the following elements is false regarding Phase 1, Basic Beginnings, of supply management strategy
development?
  a. Quality/cost teams.
  b. Longer-term contracts.
  c. Volume leveraging.
  d. Supply-base consolidation.
Cengage Learning Testing, Powered by Cognero Page 63
  e. Early sourcing.
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

78. Which of the following elements is false regarding Phase 2, Moderate Development, of supply management strategy
development?
  a. e-RAs.
  b. Ad hoc supplier alliances.
  c. International sourcing.
  d. Global supply chains with external customer focus.
  e. Supply-base optimization.
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

79. Which of the following elements is false regarding Phase 3, Limited Integration, of supply management strategy
development?
  a. Supplier quality focus.
  b. Global sourcing.
  c. Ad hoc supplier
alliances.
  d. Volume leveraging.
  e. Long-term contracts.
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

80. Which of the following elements is true regarding Phase 4, Fully Integrated Supply Chains, of supply management
strategy development?
  a. Cross-functional sourcing teams.
  b. Cross-enterprise decision making.
  c. Quality/cost teams.
  d. International sourcing.
  e. Total cost of ownership.
ANSWER:   b
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 64
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

Chap 7
6
True / False

1. Most purchasing experts will agree that there is only one best way to evaluate and select suppliers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

2. The degree of effort associated with supplier selection is inversely related to the importance of the required
good or service.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. Progressive purchasing groups increasingly anticipate rather than react to supplier selection needs.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

4. The complexity and value of a required purchase does not influence the extent to which a buyer evaluates
potential supply sources.
  a. True
  b. False

Cengage Learning Testing, Powered by Cognero Page 65

ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

5. A major source of information on potential supply sources comes from current or existing suppliers.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

6. Using existing suppliers, because it is easier and quicker, is always the best long-term approach.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

7. Designation as a preferred supplier means that a supplier consistently satisfies the performance and service
standards defined by the buyer and responds to unexpected changes.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

8. Databases allow the purchaser to quickly identify suppliers potentially qualified to support a requirement and
may contain information on current products, the supplier’s future technology roadmap, process capability
ratios, and past performance.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding

Cengage Learning Testing, Powered by Cognero Page 66

OTHER:   Analytic
NOTES:   5

9. One argument against rotating buyers too frequently between product lines or types of purchases is that a
buyer may lose the expertise built up over the years.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

10. Suppliers seldom use trade journals to advertise their products or services.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

11. Trade shows are seldom an ineffective way to gain exposure to a large number of suppliers at one time.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

12. Today, buyers seldom use the Internet to help locate potential sources that might qualify for further
evaluation.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

13. The popularity of JIT and quick replenishment systems favor using fewer local suppliers.

Cengage Learning Testing, Powered by Cognero Page 67

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

14. Supplier size does become a factor when one firm decides to leverage its purchases from one or a few
suppliers.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

15. A buying firm frequently wants the seller to become more dependent on its business.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

16. Purchasing from competitors may limit information sharing between the parties.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

17. Supply departments that are building diversity into their supply base are likely to deal with a decreased
number of small suppliers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy

Cengage Learning Testing, Powered by Cognero Page 68

KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

18. Local suppliers are less responsive to the buying firm’s changing needs and cannot economically make
frequent smaller deliveries.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

19. Many purchasers prefer to focus on suppliers who have the “capability to do the job” regardless of size.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

20. Purchasers always want to select suppliers who are profitable and growing.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

21. Certain suppliers who may present the lowest cost seldom present greater risks.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

22. Traditional purchasers understand the risk/reward tradeoff and are prepared to manage it better to attain
Cengage Learning Testing, Powered by Cognero Page 69
overall lower costs.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

23. An in-depth evaluation of all potential supply sources should be conducted for every purchase.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

24. Purchasers often perform a first cut or preliminary evaluation of potential suppliers to narrow the list before
conducting an in-depth formal evaluation.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

25. Most purchasers fail to perform at least a cursory financial analysis of prospective suppliers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

26. Before committing time to evaluate a supplier in depth, suppliers should satisfy certain entry qualifiers.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy

Cengage Learning Testing, Powered by Cognero Page 70

KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

27. Buyers seldom receive and evaluate detailed information directly from potential suppliers for the purpose of
awarding a purchase contract.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

28. Although many sources exist to discover information about a potential supplier, visiting the actual facility
provides the most complete way to ensure an accurate assessment of the supplier.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

29. Supplier site visits are relatively inexpensive and require minimal buyer time in travel and information
collection.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

30. Due to resource constraints, the use of teams for supplier evaluation and selection is decreasing.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

Cengage Learning Testing, Powered by Cognero Page 71

31. Using third-party information can be a timely and effective way to gain insight into potential suppliers.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

32. The selection criteria used in a high-technology purchase will be the same as those used for a distributor.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

33. Many suppliers do not have a sophisticated cost accounting system and are unable to assign overhead costs
to products or processes.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

34. As some suppliers view cost data as highly proprietary, buyers will often develop reverse pricing models
that provide estimates of the supplier’s cost structure during the initial supplier evaluation.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

35. Few purchasers expect potential suppliers to have adopted quality systems based on MBNQA or ISO 9000
criteria.
  a. True
  b. False
ANSWER:   False
Cengage Learning Testing, Powered by Cognero Page 72
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

36. The supplier’s selection of a production process does little to define its required technology, human resource
skills, and capital equipment requirements.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

37. Sustainable carbon footprint reductions should be measured at product suppliers but not at service suppliers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

38. Professional purchasers should become familiar with financial ratios because they can provide quick and
valuable insights into a supplier’s financial health.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

39. A supplier’s willingness to move beyond a traditional purchasing relationship should be part of the
evaluation process for items and services where a longer-term relationship might be beneficial.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic

Cengage Learning Testing, Powered by Cognero Page 73

NOTES:   7

40. In supplier evaluation, reliability refers to the different individuals or groups reviewing the same items and
measurement scales will arrive at the same conclusion.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

41. The format of a supplier evaluation should not provide any flexibility across different types of purchase
requirements.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

42. A well-defined supplier evaluation scoring systems takes criteria that may be highly subjective and develops
a quantitative scale for measurement.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

43. Purchasers should set minimum acceptable performance requirements for a supplier to meet before they
become part of the supply base.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

44. Most purchase contracts address areas that are similar.

Cengage Learning Testing, Powered by Cognero Page 74
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

45. Progressive supply managers work with their legal group to develop pre-established contract language that
can be cut and pasted during a supplier negotiation.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

46. Progressive firms are working to increase the length of their purchase contracts.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

Multiple Choice

47. Which of the following is not a commonly accepted source of information regarding potential supply
sources?
  a.  Current suppliers.
  b. Sales representatives.
  c.  Television advertising.
  d. Organizational knowledge.
  e.  Second-party or indirect information.
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

Cengage Learning Testing, Powered by Cognero Page 75

48. Which of the following information is not generally maintained in a supplier informational database?
  a.  Current products.
  b. Supplier’s future technology roadmap.
  c.  Process capability ratios.
  d. Advertising campaign information.
  e.  Past performance.
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

49. The _____ buys from the OEM and resells, therefore incurring a transaction cost, and it must make a profit.
  a.  Vendo
  b. Customer
  c.  preferred supplier
  d. single source supplier
  e.  Distributor
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

50. _____ is a program that distributors market to manage their customers’ inventory for them.
  a.  Just-in-time
  b. Supplier managed inventory 
  c.  Self-managed inventory
  d. Countertrade
  e.  Preferred supplier inventory
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

51. Which of the following is not one of the criteria used to determine whether to buy direct vs. using a
distributor?
  a.  Size of the purchase.
  b. Manufacturer’s policies regarding direct sales.
  c.  Storage space available at the purchaser’s facility.
Cengage Learning Testing, Powered by Cognero Page 76
  d. Distance between the manufacturer and the distributor.
  e.  Extent of services required.
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

52. _____ are more responsive to the buying firm’s changing needs and can economically make frequent smaller
deliveries.
  a.  Local suppliers 
  b. International suppliers
  c.  Global suppliers
  d. National suppliers
  e.  There is no relationship with the location of the supplier and customer responsiveness.
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

53. Although _____ provides optimum leverage and power over the supplier, _____ provides improved
assurance of supply.
  a.  multiple sourcing … single sourcing
  b. single sourcing … multiple sourcing 
  c.  sole sourcing … single sourcing
  d. multiple sourcing … sole sourcing
  e.  There is no difference in the number of suppliers for these benefits.
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

54. A _____ is one that consistently satisfies the performance and service standards defined by the buyer and
responds to unexpected changes.
  a.  certified supplier
  b. sole source supplier
  c.  partnered supplier
  d. preferred supplier
  e.  disqualified supplier.

Cengage Learning Testing, Powered by Cognero Page 77

ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

55. A _____ has had its quality systems extensively audited by the buying firm and are capable of consistently
meeting or exceeding the buyer’s quality needs.
  a.  certified supplier
  b. disqualified supplier
  c.  single source supplier
  d. partnered supplier
  e.  None of the above.
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

56. A _____ is limited to a select group of suppliers who provide critical high value items to the firm.
  a.  disqualified supplier
  b. sole source supplier
  c.  preferred supplier
  d. single source supplier
  e.  partnered supplier 
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

57. A _____ is a supplier who no longer meets the buying organization’s standards and will not be considered
for future business until its problems are corrected.
  a.  preferred supplier
  b. disqualified supplier
  c.  certified supplier
  d. single source supplier
  e.  sole source supplier
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering

Cengage Learning Testing, Powered by Cognero Page 78

OTHER:   Analytic
NOTES:   2

58. _____ is the process of identifying potential negative events, assessing the likelihood of their occurrence,
heading off these events before they occur or reducing the probability that they will occur, and making
contingency plans to mitigate the consequences if they do occur.
  a.  Supplier selection
  b. Supplier evaluation
  c.  Supplier categorization
  d. Global sourcing
  e.  Risk management
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

59. _____ is defined as the continual monitoring of the strength of suppliers’ financial condition to ensure their
ability to meet the purchaser’s performance requirements for products or services.
  a.  Operational risk management
  b. Sole sourcing
  c.  Financial risk management
  d. Multiple sourcing
  e.  None of the above.
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

60. _____ focuses on the continued ability of the supplier’s human, intellectual, and physical capital to meet the
buying firm’s requirements with respect to quality and delivery.
  a.  Operational risk management 
  b. Global sourcing
  c.  Logistics risk management
  d. Total quality management
  e.  Financial risk management
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2
Cengage Learning Testing, Powered by Cognero Page 79
61. A/An _____ involves sending a preliminary survey to suppliers.
  a.  request for quotation
  b. request for information
  c.  purchase order
  d. order release
  e.  All of the above.
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

62. A/An _____ is a basic component that suppliers must possess before they proceed to the next phase of the
evaluation and selection process.
  a.  core competency
  b. technology roadmap
  c.  Internet website
  d. entry qualifier
  e.  triple bottom line
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

63. All of the following are examples of entry qualifiers that suppliers must possess before they proceed to the
next phase of the evaluation and selection process except _____.
  a.  appropriate sales and marketing activities 
  b. financial strength
  c.  proven manufacturing or service capability
  d. capable and supportive management
  e.  adequate facilities
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

64. Which of the following is not a method used to further evaluate and select suppliers once the initial
evaluation has taken place?
Cengage Learning Testing, Powered by Cognero Page 80
  a.  Evaluation of supplier-provided information.
  b. Supplier visits.
  c.  Use of preferred, certified, and partnered suppliers.
  d. Trade journals. 
  e.  External or third party information.
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

65. Which of the following is not an example of questions that should be asked when evaluating a supplier’s
management capability?
  a.  Has management committed the supplier to TQM and continuous improvement?
  b. Is management customer focused?
  c.  What is the willingness of employees to contribute to improved operations? 
  d. Does management put a priority on supply chain management?
  e.  What is the history of labor/management relations?
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

66. Which of the following is not an example of points that should be considered when evaluating a supplier’s
employee capabilities?
  a.  The degree to which employees are committed to quality and continuous improvement.
  b. The overall skills and abilities of the workforce.
  c.  Employee morale.
  d. Workforce turnover.
  e.  Disclosure of environmental infractions.
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

67. All of the following are examples of commonly used environmental performance recent _____.
  a.  disclosure of any environmental infractions
  b. attainment of ISO 9000 certification 
  c.  formal hazardous and toxic waste reduction programs exist
Cengage Learning Testing, Powered by Cognero Page 81
  d. programs to control or eliminate ozone-depleting substances
  e.  attainment of ISO 14000 certification
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

68. Which of the following is not a risk of selecting a supplier in poor financial condition?
  a.  The supplier is unwilling to share its technical expertise with the purchaser.
  b. The supplier will go out of business.
  c.  The supplier may not have the resources to invest in plant, equipment, or research that is necessary
for longer-term technological or other performance improvements.
  d. The supplier may become too financially dependent on the purchaser.
  e.  Financial weakness is usually an indication of other underlying problems.
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

69. Which of the following key financial ratios is calculated as Current assets/Current liabilities?
  a.  Inventory turnover.
  b. Debt to equity.
  c.  Current ratio.
  d. Total asset turnover.
  e.  Quick ratio.
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

70. Which of the following key financial ratios is calculated as Profit after taxes/Sales?
  a.  Current debt to equity.
  b. Fixed asset turnover.
  c.  Return on assets.
  d. Says sales outstanding.
  e.  Net profit margin.
ANSWER:   e
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 82
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

71. Which of the following key financial ratios is calculated as Sales/Total assets?

  a.  Fixed asset turnover.
  b. Total asset turnover.
  c.  Current ratio.
  d. Return on assets.
  e.  Interest coverage.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

72. Which of the following is not an example of a question that should be asked when evaluating a supplier’s
production scheduling and control systems?
  a.  Does the supplier use a requirements planning system as part of an ERP system to ensure the
availability of required components or meet service requests on a timely basis?
  b. What lead time does the supplier’s production scheduling and control system require?
  c.  What is the supplier’s on-time delivery performance history?
  d. Does the supplier’s scheduling system support a purchaser’s delivery requirements?
  e.  What safeguards are in place to protect the confidentiality of electronic transfers?
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

73. All of the following are examples of questions that should be asked when evaluating a supplier for longer-
term relationship potential except _____.
  a.  Has the supplier indicated a willingness or commitment to a longer-term relationship?
  b. Will the supplier engage in joint problem solving and improvement efforts?
  c.  What is the supplier’s on-time delivery performance? 
  d. Is the supplier willing to come to us first with innovations?
  e.  Is the corporate culture similar between the two parties?
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic

Cengage Learning Testing, Powered by Cognero Page 83

NOTES:   4

74. All of the following are characteristics of an effective supplier survey except _____.
  a.  the survey should include the performance categories considered important to the evaluation and
selection process
  b. the survey process should be as objective as possible
  c.  it is mathematically straightforward
  d. the buyer should attempt to measure every possible variable every time it is used
  e.  the format of the evaluation should provide some flexibility across different types of purchase
requirements
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

75. A/An _____ is a discrepancy, nonconformance, or missing requirement that will have a significant negative
impact on an important area of concern in an audit statement.
  a.  deficiency
  b. performance problem 
  c.  entry qualifier
  d. unacceptable outcome
  e.  Challenge

76. A/An _____ is a minor departure from an intended level of performance, or a nonconformance that is easily
resolved and does not materially affect the required output.
  a.  Discrepancy
  b. Problem
  c.  Defect
  d. unacceptable outcome
  e.  Deficiency

77. _____ involves the identification of the steps, activities, time, and costs involved within a process.
  a.  Data warehousing
  b. Co-location
  c.  Process mapping 
  d. Supply base optimization
  e.  TQM

Cengage Learning Testing, Powered by Cognero Page 84

78. A _____ is responsible for understanding in depth entire families or groups of purchased goods and services.
  a.  third party
  b. general buyer
  c.  preferred supplier
  d. long-term buyer-supplier relationship
  e.  commodity team 

Chap 8
True / False

1. In recent years, the concept of quality has changed radically from meeting customer requirements or
expectations to exceeding them.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

2. Within its supply chains, supply management does not merely buy parts or services from suppliers – it buys
(and sometimes must help manage and improve) current and anticipated supplier capabilities that will result in
quality products and services.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. Buyers should focus only on a supplier’s physical output (the end result), never on the supporting inputs,
systems, and processes that created that output.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
Cengage Learning Testing, Powered by Cognero Page 85
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

4. It is difficult to maintain a trusting and collaborative relationship and receive quality goods and services when
suppliers do not enjoy working with the buying organization.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

5. A buyer cannot realistically expect the highest levels of supplier performance when the supplier must respond
to frequent or short lead time changes.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

6. Reliance on a firm’s suppliers for raw materials, components, subassemblies, and even finished products is
steadily decreasing.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

7. One of the primary causes of nonconforming supplier quality involves inconsistent communication and the
resultant misunderstanding of specifications, expectations, and requirements between supply chain members.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3
Cengage Learning Testing, Powered by Cognero Page 86
8. Most specifications are precise and succinct.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

9. Many suppliers are hesitant to challenge excessive specifications for fear of losing the bid.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

10. Deming’s quality philosophy has often been criticized because it does not prescribe specific firm-level
actions and programs for management to follow.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

11. Deming’s 14 Points constitute an à la carte menu of quality improvement activities, from which a company
can pick and choose only those with which they agree.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

12. The focal point of the Deming philosophy is that the entire organization should be focused on satisfying
customer needs, whether the customer is internal or external.
  a. True

Cengage Learning Testing, Powered by Cognero Page 87

  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

13. Quality is only for manufacturing.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

14. Deming indicates that the only proper way of dealing with defects is to inspect for and remove them from
the process.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

15. The lowest purchase price of an item may be important in the short run for supply management but may
cause increased costs somewhere else in the production system over the long run: excessive scrap and rework,
defective products, greater warranty claims, and so on.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

16. Working with more suppliers allows the supply manager to concentrate on building trusting, collaborative
relationships and supplier loyalty while improving quality in purchased goods and services.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
Cengage Learning Testing, Powered by Cognero Page 88
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

17. The TQM-focused organization must look at increasing process variation and seeking innovation in both
product and process.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

18. There is a minimal gap between real leadership and what we traditionally think of as management or
supervision.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

19. Slogans, signs, and posters are highly effective in changing worker behavior because they assume that most,
if not all, quality problems are due to human behavior.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

20. Designed-in systemic variation is a managerial concern, not a labor issue.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

Cengage Learning Testing, Powered by Cognero Page 89

21. The performance appraisal systems in most organizations create real barriers to pride in workmanship as
they promote competitive behavior and quantity of work over quality.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

22. Even when given the proper climate in which to work, most people do not want to do a good job.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

23. A grassroots TQM effort that emanates from the lower levels of the organization is doomed to failure
without active and visible top management commitment and support.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

24. The objective of supplier certification is to ensure that nonconforming items are not created or do not leave a
supplier’s facility.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

25. Supplier certification applies only to entire companies or products, rather than a specific part, process, or
site.
  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 90
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

26. The extensive use of corrective action requests supports prevention of nonconforming defects.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

27. Perhaps the most dramatic difference between traditional quality control methods and total quality
management thinking involves a shift from a process orientation to a product orientation.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

28. It is far less expensive and more efficient in the long run to avoid generating the defect in the first place than
it is to inspect for it once it is created.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

29. An emphasis on finished product rather than process demands that a supplier provide evidence of its process
capability to the buyer on an ongoing, regular basis.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding

Cengage Learning Testing, Powered by Cognero Page 91

OTHER:   Analytic
NOTES:   4

30. To be considered capable, the outputs from a process must fall outside upper and lower specification limits.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

31. One property of normally distributed data is that 99.7 percent of all possible observations of process output
occur within plus-or-minus standard deviations of the process mean.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

32. A process that is stable and in control (i.e., no special and correctable causes of variation) can be expected to
produce virtually all of its output within its natural tolerance limits.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

33. The Cpk value is always larger than the Cp index.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

34. According to Genichi Taguchi, any deviation from a target value carries with it some level of opportunity
Cengage Learning Testing, Powered by Cognero Page 92
loss due to scrap, rework, and customer dissatisfaction.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

35. Inconsistency is the enemy of total quality.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

36. In many respects, the cost of quality should actually be considered as the cost of “poor quality.”
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

37. Because of the nature of many cost accounting systems, quality costs are rarely aggregated into various
overhead accounts, which would mask their real impact on the finances and operations of a company.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

38. All delivery activities in a process can be considered wasteful.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy

Cengage Learning Testing, Powered by Cognero Page 93

KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

39. Once a firm fully rationalizes and optimizes its supply base, improvement will occur primarily by
developing the capabilities of existing suppliers rather than by switching suppliers on a large scale.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

40. Companies that are unable to commit the necessary resources to assess or certify supplier quality on their
own will never accept ISO 9000:2008 registration as proxy evidence of a supplier’s quality management
capability.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

41. ISO 9000:2008 follows a product-based approach to quality management that stresses planning, acting,
analyzing results, and making improvements.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

42. Suppliers that earn ISO 9000:2008 registration typically demonstrate lower levels of quality than those
suppliers that are not registered.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 94
NOTES:   5

43. ISO 14000:2004 does not build on existing governmental regulations, establish emissions and pollution
levels, or detail any specific testing methods.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

44. The MBNQA is a competition and implies that a winning organization excels not only in quality
management but also in quality achievement.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

45. It can take only a few months for a company to adequately develop a quality management system that is
competitive for the MBNQA.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

46. A supplier quality manual may delineate the maximum process required for the supplier regarding
inspections, use of statistical process control, continuous improvement, testing, sample evaluations,
performance improvement, and the like.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

Cengage Learning Testing, Powered by Cognero Page 95

47. A comprehensive supplier quality manual does not need to describe the supplier selection and evaluation
processes.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

Multiple Choice

48. According to Armand Fiegenbaum, _____ is defined as the total composite of product and service
characteristics of marketing, engineering, manufacturing, and maintenance through which the product or service
in use will meet or exceed the expectations of the customer.
  a.  Productivity
  b. process capability
  c.  zero defects
  d. Quality
  e.  supply base optimization
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

49. _____ represents the ability to meet or exceed current and future customer (i.e., buyer and eventually end
customer) expectations or requirements within critical performance areas on a consistent basis.
  a.  Kaizen
  b. Supplier quality
  c.  Strategic sourcing
  d. Process capability
  e.  Supply base rationalization
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

50. Which of the following is not one of the expectations that suppliers have in a typical supply chain
relationship?
  a.  Minimizing product design changes once production begins.
Cengage Learning Testing, Powered by Cognero Page 96
  b. Providing visibility to future purchase volume requirements.
  c.  Sharing early access and visibility to new-product requirements.
  d. Valuing accurate and timely payment of invoices.
  e.  Having the buyer co-locate its buying, engineering, and quality staffs into a supplier’s facility.
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

51. The average North American manufacturing firm spends _____ percent of its cost of goods sold on
purchased goods and services.
  a.  < 10
  b. 25
  c.  55
  d. 75
  e.  > 90
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

52. The _____ the proportion of the final product that suppliers provide, the _____ the impact they will have on
overall product cost and quality.
  a.  smaller….greater
  b. larger….lesser
  c.  smaller….more significant
  d. larger….greater
  e.  There is no definitive relationship between proportion of final product provided by suppliers and
impact on overall product cost and quality.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

53. All of the following are factors that influence how much attention supply management should commit to
managing supplier quality except _____.
  a.  the physical distance between the supplier and buyer facilities
  b. the ability of a supplier to affect a buyer’s total quality

Cengage Learning Testing, Powered by Cognero Page 97

  c.  the internal resources available to support supplier quality management and improvement
  d. the ability of a buying firm to practice world-class quality
  e.  a buyer’s ability to collect and analyze quality-related data
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

54. Which of the following is not one of the eight key principles of total quality management?
  a.  Define quality in terms of customers and their requirements.
  b. Inspect for quality at the end of the production line.
  c.  Stress objective rather than subjective analysis.
  d. Strive for zero defects.
  e.  Make quality everyone’s responsibility.
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

55. Which of the following is not one of the eight key principles of total quality management?
  a.  Pursue quality at the source.
  b. Emphasize prevention rather than detection of defects.
  c.  Focus on process rather than output.
  d. Establish continuous improvement as a way of life.
  e.  Stress subjective rather than objective analysis. (LO #2)
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

56. Which of the following is not one of the eight key principles of total quality management?
  a.  Strive for zero defects.
  b. Define quality in terms of customers and their requirements.
  c.  Focus on output rather than process.
  d. Make quality everyone’s responsibility.
  e.  Stress objective rather than subjective analysis.
ANSWER:   C
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 98
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

57. Which of the following is one of the dimensions used in developing a clear understanding of the buyer’s
expectations and requirements?
  a.  The ability of the buyer to succinctly identify, define, quantify, or specify its technical and sourcing
requirements.
  b. The seller’s ability to effectively communicate its requirements.
  c.  How compatible the buyer’s and supplier’s respective corporate cultures are.
  d. The ability of the selling company to succinctly identify, clearly define, quantify, or specify its
technical and sourcing requirements.
  e.  None of the above.
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

58. Which of the following is not one of the unique features of Deming’s philosophy?
  a.  Variation is the primary source of quality nonconformance.
  b. Although quality is everyone’s responsibility, senior management has the ultimate responsibility for
quality improvement.
  c.  Intrinsic motivation is more powerful than extrinsic motivation.
  d. Interacting parts of a system must be treated individually, not as a whole.
  e.  Predictions must be grounded in theory that helps to understand cause-and-effect relationships.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

59. Which of the following is not one of Deming’s 14 points?

  a.  Create a vision and demonstrate commitment.
  b. Utilize fear to motive workers.
  c.  Improve constantly and forever.
  d. Optimize the efforts of teams.
  e.  Remove barriers to pride in workmanship.
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 99
NOTES:   4

60. Which of the following is not one of Deming’s 14 points?

  a.  Encourage education and self-improvement.
  b. Take action.
  c.  Institute leadership.
  d. Optimize the efforts of teams.
  e.  Utilize numerical quotas and measurement by objective to motivate management.
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

61. Which of the following is not one of Deming’s 14 points?

  a.  Institute training.
  b. Drive out fear.
  c.  Optimize the efforts of individuals working alone. (LO #4)
  d. Stop making decisions purely on the basis of price.
  e.  Improve constantly and forever.
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

62. _____ means continuous improvement and must be built into every single process in the organization.
  a.  Banzai
  b. Optimization
  c.  Gung ho
  d. Kaizen
  e.  Bonsai
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

63. The concept of _____ consists of rework and disposal efforts that increase cost and decrease productivity.
  a.  the hidden factory
  b. Six Sigma
Cengage Learning Testing, Powered by Cognero Page 100
  c.  continuous improvement
  d. zero defects
  e.  Kaizen
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

64. Which of the following is false concerning Deming’s philosophy on fear in the workplace?
  a.  Employees may be fearful of making a mistake and being reprimanded for it.
  b. Fear-free organizations are very common as only takes a short time to develop and maintain an
organizational culture that promotes risk taking and change.
  c.  Most people have a fear of failure, so they don’t want to try anything new or different.
  d. People are creatures of habit and do not like to make changes in their routines.
  e.  Middle managers may be fearful of letting go of their traditional power based on command and
control.
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

65. Which of the following is false concerning Deming’s philosophy on numerical quotas and measurement by
objective?
  a.  Workers may game the system to make their individual production and output goals.
  b. Many numerical based goals and objectives are often developed arbitrarily.
  c.  Goals are often short term in their focus.
  d. Output standards fully support TQM improvements and other quality initiatives.
  e.  Many numerically-based goals and objectives are beyond the control of the worker.
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

66. _____ occurs whenever value is added to a product or service as it moves through transformation processes
in the supply chain.
  a.  Six Sigma
  b. Process capability
  c.  Kaizen

Cengage Learning Testing, Powered by Cognero Page 101

  d. Supply base rationalization
  e.  Quality at the source
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

67. All of the following are positive results from early supplier design involvement except _____.
  a.  longer lead-times in order to find and fix product defects before they get to the customer
  b. better quality and product design
  c.  establishing reasonable tolerances
  d. suppliers can anticipate and begin preproduction work
  e.  improved product quality and manufacturability
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

68. _____ is the avoidance of nonconformance in products and services by not allowing errors or defects to
occur in the first place.
  a.  Detection
  b. Inspection
  c.  Prevention
  d. The hidden factory
  e.  Optimization
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

69. A _____ program is the formal process of verifying, usually through an intensive cross-functional on-site
audit, that a supplier’s processes and methods actually produce consistent and conforming quality.
  a.  supplier selection and evaluation program
  b. supplier certification
  c.  Six Sigma
  d. process capability
  e.  zero defects
ANSWER:   b
Cengage Learning Testing, Powered by Cognero Page 102
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

70. _____ is the ability of a process to generate outputs that meet engineering specifications and/or customer
requirements and refers to the normal behavior of a process when operating in a state of statistical control.
  a.  Process optimization
  b. Six Sigma
  c.  Supplier certification
  d. Quality at the source
  e.  Process capability
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

71. The _____ process capability index quantifies the relationship between the process’s natural tolerance limits
and the product’s specifications using a two-sided approach, regardless of process centering.
  a.  Cpk
  b. x-bar
  c.  MRP
  d. Cp
  e.  Six Sigma
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

72. The _____ process capability index does not adequately account for situations where the process is not
closely centered on the nominal specification target value.
  a.  Cxy
  b. optimization
  c.  Six Sigma
  d. Cpk
  e.  Cp
ANSWER:   E
DIFFICULTY:  Easy

Cengage Learning Testing, Powered by Cognero Page 103

KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

73. A _____ is designed to provide information about the performance of the process under stable operating
conditions, i.e., when no special causes of variation are present.
  a.  make-buy analysis
  b. process capability study
  c.  price analysis
  d. cost analysis
  e.  Six Sigma project
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

74. According to Philip Crosby, the only true performance standard that defines total quality is _____, which he
defined as conformance to requirements.
  a.  zero defects
  b. Six Sigma
  c.  process capability
  d. Optimization
  e.  Rationalization
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

75. _____ include the direct, out-of-pocket costs of measuring quality, specifically checking for possible
defects.
  a.  Six Sigma costs
  b. Internal failure costs
  c.  Appraisal costs
  d. External failure costs
  e.  Prevention costs
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic

Cengage Learning Testing, Powered by Cognero Page 104

NOTES:   4

76. _____ occur before the product or service is provided to the customer.

  a.  Internal failure costs
  b. Appraisal costs
  c.  External failure costs
  d. Prevention costs
  e.  Total costs
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

77. _____ are incurred following production or after the customer takes possession.
  a.  Inspection costs
  b. Appraisal costs
  c.  Internal failure costs
  d. Prevention costs
  e.  External failure costs
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

78. _____ are those costs incurred when production processes are designed or modified to prevent defects from
occurring in the first place.
  a.  Appraisal costs
  b. Internal failure costs
  c.  External failure costs
  d. Prevention costs
  e.  Six Sigma costs
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

79. All of the following are examples of appraisal costs except _____.

  a.  laboratory testing of prototypes and samples
Cengage Learning Testing, Powered by Cognero Page 105
  b. production inspection activities
  c.  development and maintenance of a quality management system
  d. development and maintenance of a quality management system
  e.  incoming materials inspections
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

80. Which of the following is not an example of an internal failure cost?

  a.  Process troubleshooting.
  b. Equipment calibration.
  c.  Re-inspection following detection of a defect.
  d. Production downtime caused by defects.
  e.  Scrap and process waste.
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

81. All of the following are examples of external failure costs except _____.
  a.  warranty costs
  b. replacement of defective products to customers
  c.  liability lawsuits
  d. quality planning
  e.  loss of customer goodwill
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

82. Which of the following is not an example of a prevention cost?

  a.  Incoming material inspections.
  b. Quality planning.
  c.  Equipment calibration.
  d. Development of a quality manual.
  e.  Maintenance of a quality management system.
ANSWER:   A
Cengage Learning Testing, Powered by Cognero Page 106
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

83. In _____, there is an intense focus on identifying and eliminating common causes of waste that add cost,
time, and effort to the product or service while not adding value to the customer.
  a.  supplier evaluation and selection process
  b. the MBNQA
  c.  SIO 14000:2004
  d. the Honda BP process
  e.  None of the above.
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

84. Which of the following is not one of the seven wastes identified by the Honda BP process?
  a.  Overproduction.
  b. Delivery.
  c.  Waste in the work itself.
  d. Inventory.
  e.  Product advertising and promotion.
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

85. _____ results in waste because a valuable equipment or labor resource is not producing output.
  a.  Idle time
  b. Inventory
  c.  Wasted operator motion
  d. Delivery
  e.  Overproduction
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

Cengage Learning Testing, Powered by Cognero Page 107

86. _____ is the organized and systematic study of every element of cost in a part, material, process, or service
to ensure that it fulfills its design and operational functions at the lowest possible total cost.
  a.  Six Sigma
  b. Process capability
  c.  New product development
  d. CAD/CAM
  e.  VA/VE
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

87. Which of the following is not one of the five elements in the Six Sigma performance improvement model?
  a.  D(efine).
  b. M(easure).
  c.  A(ccess).
  d. I(mprove).
  e.  C(ontrol).

88. To remain current registration, ISO 9001:2008 registration must be accomplished every _____.
  a.  10 years
  b. 5 years
  c.  2 years
  d. 3 years
  e.  There is no expiration date for ISO 9001:2008 registration.
Answer 3years

89. In ISO 9000:2008, (the) _____ consists of a quality manual, related procedures, and work instructions.
  a.  third-party registration
  b. quality management system
  c.  environmental management system
  d. supplier certification
  e.  All of the above.
Answer b

Cengage Learning Testing, Powered by Cognero Page 108

90. Which of the following is not one of the benefits to the buyer of a supplier achieving ISO 9001:2008
registration?
  a.  Few buying firms have sufficient size or resources to independently develop and implement their
own comprehensive supplier certification audits.
  b. The supplier may develop interest from other buyers wanting to do business with it. (LO #5)
  c.  Third party registration may provide insight into a supplier’s quality system conformance that a
buyer may otherwise lack.
  d. The buying firm receives the benefit of a supplier quality certification without actually having to
conduct its own quality certification audits.
  e.  The supplier assumes responsibility for meeting the ISO standards and paying its own registration
fees.
Answer b

91. The _____ series of standards, originally established in 1993, is designed to promote environmental
awareness and protection as well as pollution prevention.
  a.  MBNQA
  b. ISO 9001:2008
  c.  Zero defects
  d. Six Sigma
  e.  ISO 14001:2004
Aswer e

92. _____ is a competition and implies that a winning organization excels not only in quality management but
also in quality achievement.
  a.  ISO 9001:2008
  b. MBNQA
  c.  ISO 14001:2004
  d. Six Sigma
  e.  Zero defects

93. _____ is the most basic and important tenet of the MBNQA criteria.
  a.  Continuous improvement
  b. Six Sigma
  c.  Statistical process control
  d. Process capability
  e.  None of the above.

Cengage Learning Testing, Powered by Cognero Page 109

94. An effective supplier quality manual will contain all of the following except _____.
  a.  documentation control
  b. testing and acceptance procedures
  c.  metrics and measurement protocols
  d. basic responsibilities of both the buyer and the supplier
  e.  approved accounting expenses

CHAP 9
All of the following are points that should be considered before initiating a project except _____.
Select one:

a. establish an effective governance process with a cross-functional team

b. make sure the objectives and outcomes are championed by senior executive management

c. measure subjectively

d. place the program under the leadership of people with skill, credentials, and credibility

1. Supplier performance that is sufficient today should be competitive in the marketplace of tomorrow.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

2. Supplier performance measurement differs somewhat from the process used to initially evaluate and select a
supplier as it is a continuous process as opposed to a unique, one-time event.
Cengage Learning Testing, Powered by Cognero Page 110
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. Central to the design of all supplier measurement systems is the decision about what to measure and how to
weight various performance categories.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

4. Buyers rarely rely on suppliers for cost-reduction assistance.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

5. A buyer should delay reporting a supplier’s poor performance until the next annual performance review.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

6. All supplier measurement systems have some element of subjectivity.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding

Cengage Learning Testing, Powered by Cognero Page 111

OTHER:   Analytic
NOTES:   6

7. The categorical approach to supplier evaluation is commonly used by smaller organizations because it is both
easy and relatively inexpensive to implement.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

8. Weighted-point supplier evaluation systems are very inflexible because the user cannot change the weights
assigned to each performance category or the actual performance categories themselves.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

9. The cost-based system is the most thorough and least subjective of the three supplier performance
measurement systems.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

10. Considering the cost-based supplier evaluation system, the actual cost per nonconformance event may be
difficult to estimate or calculate, as many traditional cost accounting systems are not designed to identify and
capture such data.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3
Cengage Learning Testing, Powered by Cognero Page 112
11. The supplier performance index (SPI) always provides a complete or accurate assessment of supplier
performance.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

12. Supply base rationalization and optimization often involves eliminating those suppliers who are unwilling to
achieve (or are incapable of achieving) supply management performance objectives, either currently or expected
in the near future.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

13. The elimination of both marginal and small-purchase-volume suppliers is usually the last phase of the
rationalization process.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

14. During the early phases of supply base rationalization and optimization, the process usually results in an
absolute reduction in the total number of suppliers.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

15. The remaining suppliers in a rationalized and optimized supply base are seldom capable of performing
Cengage Learning Testing, Powered by Cognero Page 113
additional tasks or providing other products and services that add value to the buyer-supplier relationship.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

16. Many buyers have now concluded that, if they select suppliers carefully and develop close and collaborative
working relationships with fewer suppliers, supply risk can actually decrease.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

17. Maintaining multiple suppliers for each item can actually increase the probability and level of supply base
risk.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

18. The administrative cost of maintaining 5,000 suppliers will be dramatically lower than the cost of
maintaining a core group of 500 highly qualified suppliers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

19. Short-term purchase contracts that award small volumes of business to multiple suppliers decrease
production costs and provide incentive for individual supplier investments in process improvement.
  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 114
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

20. A single source can never deliver cost and quality improvements over the life of a contract even if a buyer
manages that supplier effectively.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

21. A smaller supplier with limited capacity for growth may need to eliminate some existing customers to meet
the increased requirements of a larger customer.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

22. In an absence of competition situation, a supplier may hold the buyer hostage by unduly raising prices
without justification or becoming too complacent, particularly when there are higher switching costs.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

23. Buyers can minimize supply disruption risk from a single suppler by selecting a supplier with multiple
production facilities.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
Cengage Learning Testing, Powered by Cognero Page 115
OTHER:   Analytic
NOTES:   4

24. Buyers cannot move too aggressively when reducing the supply base.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

25. There is only one common approach to supply base rationalization and optimization.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

26. A large supply base means the duplication of a wide range of supply management activities, adding to
acquisition cost without a corresponding increase in value added to the customer.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

27. Supplier rationalization and optimization should be a one-time activity.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

28. Direct involvement in a supplier’s operations by buyer personnel is the most challenging part of any supplier
development process.
Cengage Learning Testing, Powered by Cognero Page 116
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

29. In supplier development, the supplier must be convinced that it is in the supplier’s own best interest to
accept the buyer’s direction and technical assistance.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

30. All organizations need to pursue supplier development.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

31. If a supplier’s product or service is deemed routine to the buyer, it should then be considered for supplier
development.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

32. The buyer and the supplier must agree on how to divide or share the costs and benefits from the supplier
development project.
  a. True
  b. False
ANSWER:   True

Cengage Learning Testing, Powered by Cognero Page 117

DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

33. Suppliers are sometimes not willing to accept outside help in the form of supplier development, either
because they are too proud to accept help or because they do not see the value in improving quality or delivery
performance.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

34. Pursuing supplier development activities directly with suppliers is both quick and easy.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

35. Regarding supply base risk, every sourcing decision will be different and must be carefully evaluated
regarding its own particular situation.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

36. Maintaining small quantities of inventory has been the traditional methods of dealing with supply base risk.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic

Cengage Learning Testing, Powered by Cognero Page 118

NOTES:   6

37. Multiple sourcing can add quality variability to the sourced product because of the use of different materials,
manufacturing techniques, and processes.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

38. Scenario analysis is technically considered forecasting and attempts to explore and prepare for possible
future scenarios that may have a significant negative impact on the costs and operations of an organization.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

39. Scenario planning begins with the creation of viable working strategies and plans that would allow managers
to respond quickly in the event that a specific risk scenario should actually come about.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

40. The prime reason for hedging is to protect the buyer against major swings in the value of a future purchase.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

41. All buyers are encouraged to engage in currency hedging activities, regardless of their level of experience.

Cengage Learning Testing, Powered by Cognero Page 119

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

42. Few international shipments of merchandise require insurance coverage.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

43. Certain risks, such as those arising from war, piracy, and losses attributable to delays in transit, are generally
covered by standard insurance policies.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

44. Sustainability reflects only the importance of strategic environmental practices of an organization’s suppliers
but not the management of social responsibility in the supply base.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

45. Overall reduction in material usage and disposal can be accomplished through engineering design changes
and reuse and recycle programs.
  a. True
  b. False
ANSWER:   True

Cengage Learning Testing, Powered by Cognero Page 120

DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

46. Which of the following is not a typical qualitative service factor in a supplier performance measurement
system?
  a.  Problem resolution ability.
  b. Technical ability.
  c.  Process capability.
  d. Ongoing progress reporting.
  e.  Wavelength.
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

47. Which of the following is not one of the typical uses of supplier measurement data?
  a.  Supporting supply base rationalization and optimization.
  b. Identifying those highly capable suppliers that may qualify for consideration of longer-term
partnerships or designation as preferred suppliers.
  c.  Identifying those suppliers that are not performing at expected levels so that appropriate remedial or
development actions can be taken.
  d. Deciding where to locate supplier facilities.
  e.  Determining a supplier’s future purchase volume based on its past performance.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

48. Which of the following is a disadvantage of a categorical supplier evaluation system?

  a.  Least reliable.
  b. Cost accounting system required.
  c.  Less frequent generation of evaluations.
  d. Most subjective.
  e.  Usually manual.
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering

Cengage Learning Testing, Powered by Cognero Page 121

OTHER:   Analytic
NOTES:   3

49. All of the following are advantages of a categorical supplier evaluation system except _____.
  a.  easy to implement
  b. requires minimal data
  c.  different personnel can contribute
  d. low-cost system
  e.  greatest potential for long-range improvement 
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

50. Which of the following is a disadvantage of a weighted-point supplier evaluation system?

  a.  Tends to focus on unit price.
  b. Most complex, so implementation costs are high.
  c.  Most subjective.
  d. Least reliable.
  e.  Cost accounting system required.
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

51. All of the following are advantages of a weighted-point supplier evaluation system except _____.
  a.  flexible system
  b. supplier ranking allowed
  c.  moderate implementation costs
  d. total cost approach
  e.  quantitative and qualitative factors combined into a single system
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

52. Which of the following is a disadvantage of a cost-based supplier evaluation system?

  a.  Least reliable.
Cengage Learning Testing, Powered by Cognero Page 122
  b. Most complex so implementation costs are high.
  c.  Less frequent generation of evaluations.
  d. Most subjective.
  e.  Tends to focus on unit price.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

53. All of the following are advantages of a cost-based supplier evaluation system except _____.
  a.  total cost approach
  b. specific areas of supplier nonperformance identified
  c.  objective supplier ranking
  d. greatest potential for long-range improvement
  e.  good for firms with limited resources
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

54. The _____ supplier evaluation system seeks to identify and quantify the total cost of doing business with a
given supplier, as the lowest purchase price may not always result in the lowest total cost for an item or service.
  a.  Six Sigma
  b. zero defects
  c.  cost-based
  d. Categorical
  e.  weighted-point
ANSWER:   C
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

55. In supplier measurement, the basic logic of the _____ is built around the calculation of a/an _____.
  a.  categorical system…supplier performance index
  b. cost-based system…process capability index
  c.  weighted-point system…Q adjustment factor
  d. weighted-point system…cost accounting system
  e.  cost-based system…supplier performance index (SPI)
Cengage Learning Testing, Powered by Cognero Page 123
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

56. The supplier performance index (SPI) equals (_____ plus _____) divided by _____.
  a.  Total Purchases….Nonperformance Costs….Total Purchases 
  b. Nonperformance Costs….Total Purchases….Nonperformance Costs
  c.  Total Purchases….Appraisal Costs….External Failure Costs
  d. External Failure Costs….Internal Failure Costs….Total Purchases
  e.  TransportationCosts….Appraisal Costs….Prevention Costs
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

57. Which of the following is not one of the management uses for the data derived from a comprehensive cost-
base supplier evaluation system?
  a.  Such a system provides the necessary information that allows a buyer to justify buying from a
preferred supplier despite a higher unit price.
  b. The system allows a buyer to communicate the cost of specific nonperformance events to the
originating supplier, which then helps identify improvement opportunities.
  c.  Quantifying nonconformance costs can result in a chargeback to the offending supplier for unplanned
costs.
  d. The system allows customized assignment of cost accounting codes depending on how much money
is left in the annual budget.
  e.  A buyer can use this data to identify longer-term sources of supply based on a supplier’s total cost
performance history.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

58. The _____ is a normalization factor for the supplier performance index (SPI) that eliminates high-dollar lot
bias.
  a.  Cp
  b. MRO
  c.  Q adjustment factor
  d. Cpk
Cengage Learning Testing, Powered by Cognero Page 124
  e.  Rfx
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

59. _____ is the process of identifying how many and which suppliers a buyer will maintain.
  a.  Supply base optimization
  b. Supply base rationalization 
  c.  Six Sigma
  d. Zero defects
  e.  Strategic sourcing
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

60.  _____ involves a detailed analysis of the supply base to ensure that only the most capable and highest
performing suppliers are kept in the supply base after it is rationalized.
  a.  Supply base optimization
  b. Outsourcing
  c.  Strategic sourcing
  d. Supply base reduction
  e.  Supply base management
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

61. Which of the following is not one of the advantages of a rationalized and optimized supply base?
  a.  Buying from world-class suppliers.
  b. Use of full-service suppliers.
  c.  Lower supply base administrative costs.
  d. Reduction of supply base risk.
  e.  Absence of competition.
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
Cengage Learning Testing, Powered by Cognero Page 125
OTHER:   Analytic
NOTES:   4

62. Which of the following is not one of the advantages of a rationalized and optimized supply base?
  a.  Longer lead-times.
  b. Use of full-service suppliers.
  c.  Lower total product cost.
  d. Ability to pursue complex supply management strategies.
  e.  Buying from world-class suppliers.
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

63. All of the following are possible risks of maintaining fewer suppliers except _____.
  a.  supplier dependency
  b. supply disruption
  c.  overaggressive supply reduction
  d. maintaining an all-foreign supply base 
  e.  absence of competition
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

64. In _____, a buyer selects or develops suppliers with multiple or redundant capabilities.
  a.  single sourcing
  b. cross-sourcing 
  c.  global sourcing
  d. strategic sourcing
  e.  sole sourcing
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

65. Which of the following is not one of the formal approaches to supply base rationalization?
  a.  Twenty/eighty rule.
Cengage Learning Testing, Powered by Cognero Page 126
  b. “Improve or else” approach.
  c.  Global sourcing.
  d. Triage approach.
  e.  Competency staircase approach.
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

66. The _____ identifies those 20 percent of suppliers receiving the bulk of purchase spend or that minority of
suppliers that cause the most quality problems.
  a.  “improve or else” approach
  b. triage approach
  c.  strategic sourcing approach
  d. competency staircase approach
  e.  twenty/eighty rule
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

67. The _____ provides all suppliers, regardless of their performance history, a chance to remain in the supply
base.
  a.  “improve or else” approach
  b. triage approach
  c.  competency staircase approach
  d. twenty/eighty rule
  e.  Six Sigma approach
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

68. The _____ requires the systematic evaluation of the performance of individual suppliers and ultimate
placement into one of three categories.
  a.  twenty/eighty rule
  b. competency staircase approach
  c.  “improve or else” approach

Cengage Learning Testing, Powered by Cognero Page 127

  d. triage approach
  e.  zero defects approach
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

69. The _____ requires suppliers to successfully navigate a successive series of performance milestones or
hurdles in order to remain in the supply base.
  a.  triage approach
  b. competency staircase approach 
  c.  M*A*S*H approach
  d. “improve or else” approach
  e.  twenty/eighty rule
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

70.  _____ is any activity undertaken by a buyer to improve a supplier’s performance or capabilities to meet the
buyer’s short- and long-term supply needs.
  a.  Supply base rationalization
  b. The twenty/eighty rule
  c.  Supply base optimization
  d. Supplier development 
  e.  Six Sigma
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

71. Which of the following is not a typical supplier development activity?

  a.  Providing incentives to suppliers for improved performance.
  b. Promoting competition among suppliers.
  c.  Raising prices paid for purchased goods and services.
  d. Directly involving buyer personnel with suppliers.
  e.  Conducting training and process improvement initiatives.
ANSWER:   c
Cengage Learning Testing, Powered by Cognero Page 128
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

72. In overcoming the barriers to supplier development, which of the following is not one of the approaches
typically used?
  a.  Direct-involvement activities.
  b. Single sourcing.
  c.  Incentives and rewards.
  d. Warnings and penalties.
  e.  All of the above are typical approaches.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

73. Which of the following is not a buyer-specific barrier to supplier development?

  a.  The buying company’s purchase volume from the supplier does not justify development investment.
  b. No immediate benefit to supplier development is evident to the buying organization.
  c.  Lack of executive support within the buying organization for supplier development.
  d. Importance of purchased item does not justify development efforts.
  e.  Supplier’s management agrees to improvement but fails to implement the proposals.
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

74. Which of the following is not a supplier-specific barrier to supplier development?

  a.  No immediate benefit to supplier development is evident in the buying organization.
  b. Lack of commitment on the part of supplier’s management.
  c.  Supplier’s management agrees to improvements but fails to implement the proposals.
  d. Supplier lacks engineering resources to implement solutions.
  e.  Supplier lacks employee skill base to implement solutions.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

Cengage Learning Testing, Powered by Cognero Page 129

75. All of the following are general categories of supply base risk except _____.
  a.  political risk
  b. market risk
  c.  sourcing risk
  d. financial risk
  e.  employee hiring risk
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

76.  _____ in a supply base consists of such factors as: country stability, regional stability, political and
governmental stability, levels of official corruption, dissimilarities regarding contract law and intellectual
property rights, elections, military actions, civil disturbances, terrorism, trade balance issues, and customs duties
and tariffs.
  a.  Financial risk
  b. Market risk
  c.  Supplier company risk
  d. Political risk
  e.  Sourcing risk
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

77. All of the following are elements of market risk in a supply base except _____.
  a.  the number of buyers competing for the same goods or source of supply
  b. increasingly shorter product life cycles
  c.  regional political risk
  d. threat of emerging, often disruptive, technologies
  e.  protecting and maintaining trade secrets and intellectual properties from misuse or misappropriation
by suppliers, particularly those located overseas
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

Cengage Learning Testing, Powered by Cognero Page 130

78. Which of the following is not one of the elements of financial risk in a supply base?
  a.  Inventory carrying costs.
  b. Currency exchange rates.
  c.  INCOTERMS
  d. Hard vs. soft currencies.
  e.  Legal systems. 
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

79. All of the following are common contingency management tools that can be effectively used at the tactical
level to assist the supply manager in identifying, analyzing, reducing, and monitoring supply base risk except
_____.
  a.  single sourcing
  b. Inventory
  c.  automated visibility and early warning systems
  d. use of third party intermediaries
  e.  scenario analysis
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

80. _____ allows a buying organization to react more quickly when supply chain risk events occur by already
having previously prepared plans and proposed responses in place in advance of the actual risk event.
  a.  Hedging
  b. Use of third party intermediaries
  c.  Multiple sourcing
  d. Scenario analysis
  e.  None of the above.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

81. If a/an _____ currency is utilized, the _____ bears the currency risk and is likely to build in additional
contingency costs to cover its unknown risk.
  a.  supplier’s…supplier
Cengage Learning Testing, Powered by Cognero Page 131
  b. buyer’s…supplier 
  c.  buyer’s…buyer
  d. supplier’s…buyer
  e.  Regardless of the currency chosen, both parties share the currency risk equally.
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

82. _____ can be defined as how supply chain members communicate and collaborate regarding sources of risk,
utilizing risk management tools to mitigate and minimize risk and uncertainty across the supply chain.
  a.  PERT/CPM
  b. Scenario analysis
  c.  Hedging
  d. SCRM 
  e.  None of the above.
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

83. According to ISM, _____ is defined as the ability to meet current needs without hindering the ability to meet
the needs of future generations in terms of economic, environmental, and social challenges.
  a.  Sustainability 
  b. Scenario analysis
  c.  Social responsibility
  d. Supply chain risk management
  e.  Standardization
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

84. According to ISM, _____ is a framework of measurable corporate policies and procedures and resulting
behavior designed to benefit the workplace and, by extension, the individual, the organization, and the
community.
  a.  supply chain risk management
  b. sustainability

Cengage Learning Testing, Powered by Cognero Page 132

  c.  ISO 9000:2008
  d. social responsibility
  e.  supplier development
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

Chap 11

1. The price paid for purchased products and services has no direct impact on the end customer’s perception of value provided
by the organization.

  a. True

  b. False

ANSWER:   False

DIFFICULTY:  Easy

KEYWORDS:   Bloom’s: Understanding

OTHER:   Analytic

NOTES:   1

Cengage Learning Testing, Powered by Cognero Page 133

2. Price analysis focuses simply on a seller’s price with little or no consideration given to the actual cost of production.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. With the increased amount of outsourcing occurring in every global company today, the majority of the cost of goods
sold is driven by suppliers, which are outside the four walls of an organization.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

4. Strategic cost management approaches do not vary according to the stage of the product life cycle.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

5. As a product reaches its end of life, supply management cannot ignore the potential value of environmental initiatives
to remanufacture, recycle, or refurbish products that are becoming obsolete.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

6. The major benefits from cost-reduction efforts occur when supply management is not involved in the
new-product/service development cycle.
  a. True
  b. False
ANSWER:   False
Cengage Learning Testing, Powered by Cognero Page 134
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

7. In general, low-value generics in which a competitive market with many potential suppliers exists should emphasize
total delivered price.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

8. When demand exceeds supply, a buyer’s market exists, and prices generally decrease.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

9. When supply exceeds demand, a buyer’s market exists, and prices generally move downward.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

10. Examples of monopolies in the United States include the steel, automobile, and appliance industries.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

11. Economic conditions seldom determine whether a market is favorable to the seller or to the purchaser.
Cengage Learning Testing, Powered by Cognero Page 135
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

12. Some sellers rely on a detailed analysis of internal cost structures to establish price, whereas others simply price at a
level comparable to the competition.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

13. In many cases, the price charged by a seller may have little or no relationship to actual costs.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

14. A major benefit of multiple sourcing is a lower price that results from the higher volumes offered to a supplier.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

15. Although a quantity discount has a positive effect on the purchase price, a buyer need not be cautious about the net
impact on the total cost of an item.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
Cengage Learning Testing, Powered by Cognero Page 136
OTHER:   Analytic
NOTES:   2

16. The market-share model is also known as the penetration pricing model and is an aggressive pricing approach for
efficient producers because price is a direct function of cost.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

17. The opportunity cost of taking the supplier’s cash discount is almost always higher than the opportunity cost of not
taking the cash discount.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

18. The Consumer Price Index (CPI) tracks material price movements from quarter to quarter, is scaled to a base year
(1988), and tracks the percentage increase in material commodity prices based on a sample of industrial purchasers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

19. Purchasers impact price at the time they set the specifications for the product or service.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

20. A seller’s cost structure affects price because, in the long run, the seller must price at a level that covers all variable
Cengage Learning Testing, Powered by Cognero Page 137
costs of production, contributes to some portion of fixed costs, and contributes to some level of profit.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

21. How well suppliers purchase their goods and services has no direct impact on purchase price levels.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

22. Break-even analysis includes both cost and revenue data for an item to identify the point where revenue equals costs,
and the expected profit or loss at different production volumes.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

23. A should-cost model can lead the procurement manager to better understand elements of overhead, mark-ups on non-
value-added costs, and other components that can undermine price inflation.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

24. At the highest levels of the organization, top management uses break-even analysis as a strategic planning tool.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 138
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

25. Most large firms base purchase decisions and evaluation suppliers on only the cost elements of unit price,
transportation, and tooling.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

26. Building a TCO model is an easy task.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

27. The value of money spent any time in the future does not depend on the organization’s cost of capital.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

28. Target pricing is an innovative approach used in the final stages of the product life cycle to establish a contract price
between a buyer and a seller.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

29. The cost of a new product is no longer an outcome of the product design process; rather, it is an input to the process.
Cengage Learning Testing, Powered by Cognero Page 139
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

30. Under penetration pricing, using final price as a basis, the product is disaggregated into major subsystems, each of
which has its own target cost.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

31. Under traditional pricing approaches, product cost + profit = selling price.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

32. Using a traditional pricing approach, the selling price – profit = allowable product cost.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

33. The difference between the supplier’s price and the target cost becomes the strategic cost-reduction objective.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 140
NOTES:   5

34. In setting target prices and target costs, the new-product development team should bear in mind the cardinal rule of
target costing: the target cost can never be violated.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

35. If total costs are less than target costs, the design must change or costs must be reduced.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

36. Traditional pricing practices have supported cooperative efforts to make design, product, and process improvements
with suppliers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

37. Identification of all costs provides the basis for establishing joint improvement targets.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

38. The main risk in target and cost-based pricing concerns volume variability.
  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 141
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

39. A cost-based approach to determining price is clearly appropriate for all purchased items.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

40. A cost-based approach to supplier pricing is feasible when the seller contributes high added value to an item through
direct or indirect labor and specialized expertise.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

41. _____ = (Quality + Technology + Service + Cycle Time) ÷ Price.

  a. Cost
  b. Efficiency
  c. Value
  d. Total cost
  e. Target cost
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

42. _____ refers to the process of comparing supplier prices against external price benchmarks, without direct knowledge
of the supplier’s costs.
  a. Cost analysis
  b. Make-buy
analysis
  c. Target costing
Cengage Learning Testing, Powered by Cognero Page 142
  d. Price analysis
  e. Total cost analysis
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

43. _____ is the process of analyzing each individual cost element (i.e., material, labor hours and rates, overhead, general
and administrative costs, and profit) that together add up to the final price.
  a. Price analysis
  b. Cost analysis
  c. Cost analysis
  d. Total cost analysis
  e. Make-buy
analysis
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

44. _____ applies the price/cost equation across multiple processes that span two or more organizations across a supply
chain.
  a. Make-buy
analysis
  b. Price analysis
  c. Cost analysis
  d. Target costing
  e. Total cost analysis
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

45. In the framework for strategic cost management, _____ are high-value products or services and can be sourced
through traditional bidding approaches that require price analysis using market forces to do the work and identify what is
a competitive price.
  a. critical products
  b. unique products
  c. custom-made products
  d. Generics
  e. Commodities
Cengage Learning Testing, Powered by Cognero Page 143
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

46. Which of the following is not one of the categories of products in the strategic cost management matrix?
  a. Commodities.
  b. One-time buys.
  c. Critical products.
  d. Unique products.
  e. Generics.
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

47. A _____ is an analytical tool that identifies the primary external forces that are causing prices to either increase or
decrease.
  a. market analysis
  b. total cost analysis
  c. cost analysis
  d. make-buy analysis
  e. target price analysis
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

48. In a/an _____ market structure, there exist identical products with minimal barriers for new suppliers to enter the
market, and price is solely a function of the forces of supply and demand.
  a. monopolistic
  b. oligopolistic
  c. communistic
  d. perfect competition
  e. Price is never solely a function of supply and demand, regardless of market
structure.
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 144
NOTES:   2

49. Which of the following is not one of the questions that should be asked when analyzing a seller’s pricing strategy?
  a. Does the seller have a long-term pricing strategy, or is it short-term in nature?
  b. Is the seller a price leader or a price follower?
  c. How many employees does the seller’s plant employ?
  d. Is the seller attempting to establish entry barriers to other competitors by establishing a low price initially, then
preparing to raise prices later in the future?
  e. Is the seller using a cost-based pricing approach or a market-based pricing approach?
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

50. In the _____, the supplier analyzes the market to find the combination of price per unit and quantity of sales that
maximizes its profit on the assumption that (1) lowering the price per unit will result in more units being sold, and (2)
greater volume will spread the indirect cost over more units.
  a. price volume model
  b. sole sourcing model
  c. market-share model
  d. market skimming model
  e. promotional pricing model
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

51. In the _____, pricing is based on the assumption that long-run profitability depends on the market share obtained by
the supplier.
  a. price volume model
  b. market-share model
  c. open market model
  d. target pricing model
  e. market skimming model
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

52. In the _____, the seller is willing to take a lower price because of the potential mass market appeal of the product,
Cengage Learning Testing, Powered by Cognero Page 145
resulting in substantially higher sales volumes.
  a. revenue pricing model
  b. promotional pricing model
  c. revenue pricing model
  d. cash discount model
  e. market-share model
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

53. In the _____, prices are set to achieve a high profit on each unit by selling to supply managers who are willing to pay a
higher price because of a lack of supply management sophistication or who are willing to pay for products or services of
perceived higher value.
  a.  market skimming model
  b.  revenue pricing model
  c.  promotional pricing
model
  d.  price volume model
  e.  competition pricing model
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

54. The emphasis of the _____ is on obtaining sufficient current revenue to pay for operating cost rather than on profit.
  a. price volume model
  b. promotional pricing model
  c. revenue pricing model
  d. market skimming model
  e. competition pricing model
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

55. In the _____, suppliers are typically concerned about capacity utilization, covering fixed cost, and retaining skilled
labor during market slowdowns, when they are willing to reduce their prices until market conditions change.
  a. revenue pricing model
  b. market skimming model

Cengage Learning Testing, Powered by Cognero Page 146

  c. penetration pricing model
  d. market-share model
  e. competition pricing model
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

56. The _____ presents pricing for individual products and services that is set to enhance the sales of the overall product
line rather than to ensure the profitability of each product.
  a. price volume model
  b. competition pricing model
  c. market skimming model
  d. promotional pricing model
  e. revenue pricing model
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

57. The _____ strategy is based on determining the highest price that can be offered to the supply manager that will still
be lower than the price offered by competitors.
  a. penetration pricing model
  b. market-share model
  c. cash discount
  d. revenue pricing model
  e. competition pricing model
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

58. In the _____, the supplier simply takes its estimate of costs and adds a markup percentage to obtain the desired profit.
  a. margin pricing model
  b. cost markup pricing model
  c. total cost analysis model
  d. penetration pricing model
  e. revenue pricing model
ANSWER:   B
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 147
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

59. In the _____, the supplier establishes a price that will provide a profit margin that is a predetermined percentage of the
quoted price, i.e., not a percentage of cost.
  a. rate-of-return pricing
model
  b. margin pricing model
  c. market-share model
  d. competition pricing model
  e. target costing model
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

60. In the _____, the desired profit is added to the estimated costs.
  a. penetration pricing model
  b. revenue pricing model
  c. margin pricing model
  d. rate-of-return pricing
model
  e. TCO model
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

61. In _____, a purchaser may have to use internal engineering estimates about what it costs to produce an item, rely on
historical experience and judgment to estimate costs, or review public financial documents to identify key cost data about
the seller.
  a. reverse price
analysis
  b. TCO analysis
  c. penetration pricing
  d. using the PPI
  e. competition pricing
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 148
NOTES:   2

62. All of the following are opportunities for supplier cost reductions except _____.
  a. process capability
  b. plant utilization
  c. learning-curve effect
  d. ability to vote out the supplier’s labor union
  e. management capability
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

63. _____ indicates whether a seller can lower its cost as a result of the repetitive production of an item.
  a. Process capability analysis
  b. Market analysis
  c. Price analysis
  d. Break-even analysis
  e. Learning-curve analysis
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

64. _____ includes both cost and revenue data for an item to identify the point where revenue equals cost, and the
expected profit or loss at different production volumes.
  a. Make-buy analysis
  b. TCO
  c. Break-even analysis
  d. Market-share
pricing
  e. None of the above.
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

65. Which of the following is not one of the common assumptions typically used in break-even analysis?
  a. Fixed costs are never considered.
  b. Fixed costs remain constant over the period and volumes
Cengage Learning Testing, Powered by Cognero Page 149
 considered.
  c. Variable costs fluctuate in a linear fashion.
  d. Revenues vary directly with volume.
  e. Break-even analysis considers total costs rather than average costs.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

66. The _____ is an approach to estimating the different components that make up the supplier’s per unit price per unit of
product or service, i.e., what the product or service should cost in a theoretical world.
  a. market skimming model
  b. make-buy analysis
  c. competition pricing model
  d. rate-of-return model
  e. Should-cost model
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

67. In should-cost modeling, the _____ provides a high level view of the supply chain, and then the supplier’s primary
cost elements are broken down into material, labor, overhead, transportation freight, inventory cost, maintenance costs,
and others.
  a. PPI
  b. value stream map
  c. target price
  d. product
specification
  e. None of the above.
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

68. In should-cost modeling, _____ are any components not under the direct control of the buying or supplying company
but those that have a significant influence on the outcome being modeled.
  a. direct costs
  b. assumption variables
  c. overhead costs

Cengage Learning Testing, Powered by Cognero Page 150

  d. transportation modes
  e. decision variables
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

69. In should-cost modeling, _____ include those components the company has direct control or influence over.
  a. direct costs
  b. assumption variables
  c. variable costs
  d. decision variables
  e. commodity prices
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

70. In should-cost modeling, _____ refers to the integrity and transparency of the cost model created.
  a. direct cost
  b. value stream maps
  c. make-or-buy analysis
  d. fixed cost
  e. auditability
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

71. _____ is defined as the present value of all costs associated with a product, service, or capital equipment that are
incurred over its expected life.
  a. Cash flow analysis
  b. Total cost of ownership
  c. Make-buy analysis
  d. Revenue pricing
  e. Competition pricing
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 151
NOTES:   4

72. All of the following are examples of broad total cost of ownership categories except _____.
  a. purchase price
  b. acquisition costs
  c. sales, general, and administrative overhead costs
  d. usage costs
  e. end-of-life costs
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

73. In TCO, _____ is the amount paid to the supplier for the product, service, or capital equipment.
  a. acquisition cost
  b. usage cost
  c. end-of-life cost
  d. purchase price
  e. opportunity cost
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

74. In TCO, _____ includes all costs associated with bringing the product, service, or capital equipment to the customer’s
location.
  a. purchase price
  b. opportunity costs
  c. acquisition costs
  d. usage costs
  e. end of life costs
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

75. In TCO for a product, _____ include(s) all costs associated with converting the purchased part/material into the
finished product and supporting it through its usable life.
  a. purchase price
  b. acquisition costs
Cengage Learning Testing, Powered by Cognero Page 152
  c. end of life costs
  d. opportunity costs
  e. usage costs
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

76. In TCO for a service, _____ include all costs associated with the performance of the service that are not included in
the purchase price.
  a. invoice costs
  b. usage costs
  c. acquisition costs
  d. end of life costsend of life costs
  e. interest costs
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

77. In TCO for capital equipment, _____ are all costs associated with operating the equipment during its life.
  a. usage costs
  b. end of life costs
  c. opportunity costs
  d. acquisition costs
  e. training costs
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

78. _____ include(s) all costs incurred when a product, service, or capital equipment reaches the end of its useful life, net
of amounts received from the sale of remaining product or the equipment (salvage value).
  a. Net present value costs
  b. Usage costs
  c. Purchase price
  d. End-of-life costs
  e. Opportunity costs
ANSWER:   d
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 153
 KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

79. A/An _____ is defined as the cost of the next best alternative.

  a. operating cost
  b. purchase price
  c. net present value
  d. usage cost
  e. opportunity cost
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

80. Which of the following is not one of the important factors to consider when building a TCO model?
  a. Focus on the small and easily measurable costs first.
  b. Building a TCO can be a costly and time-intensive activity.
  c. Work in a team.
  d. Make sure to obtain senior management buy-in before embarking on a full-fledged TCO.
  e. When considering global sourcing, consider all of the relevant labor, quality, logistics, and import costs
associated with the total supply chain.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

_____ refers to the extent to which, by choosing a certain course of action, management can meet a previously
established goal or standard.
a. Efficiency

b. Operational benchmarking

c. Support-activity benchmarking

d. Effectiveness

_____ refers to the relationship between planned and actual sacrifices made to realize a previously agreed-upon goal.
Efficiency

b. Strategic benchmarking
Cengage Learning Testing, Powered by Cognero Page 154
c. Operational benchmarking

d. Effectiveness

Which of the following is not one of the common problems in measuring performance?

Select one:

a. Too much detail.

b. Too much and wrong data.

c. Drive the wrong performance.

d. Measures that are short-term focused.

81. With _____, a product’s allowable cost is strictly a function of what a market segment is willing to pay less the profit
goals for the product.
  a. penetration pricing
  b. target pricing
  c. market-share pricing
  d. should-cost modeling
  e. revenue pricing
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

82. Which of the following statements regarding cost-savings sharing is false?

  a. Cost-sharing approaches require joint identification of the full cost to produce an item.
  b. Profit is a function of the productive investment committed to the purchased item and a supplier’s asset return
requirements.
  c. The cost-based approach provides a supplier with incentives to pursue continuous performance improvement
to realize shared cost savings and invest in productive assets.
  d. Profit is a direct function of cost.
  e. In the traditional market-based pricing approach, one party (usually the purchaser) seeks to capture all cost
savings resulting from a supplier’s improvement effort.
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

Cengage Learning Testing, Powered by Cognero Page 155

83. Which of the following is not an item or product that is an appropriate candidate for a cost-based pricing approach?
  a. An item in which the seller contributes high added value through direct or indirect labor and specialized
expertise.
  b. A complex item customized to specific requirements.
  c. A product requiring a conversion from raw material through value-added designs.
  d. A product requiring supplier-provided design and engineering support.
  e. Commodity-like items.
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

Chap 12

28. A/An _____ is a series of tasks that requires the completion of specific objectives within a certain time frame; has
defined start and stop dates; consumes resources, particularly time, personnel, and budget; and operates with limited
resources.
  a. Process
  b. work order
  c. purchase order
  d. Project
  e. team charter
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

29. All of the following are points that should be considered before initiating a project except _____.
  a. make sure the objectives and outcomes are championed by senior executive
management
  b. measure subjectively
  c. place the program under the leadership of people with skill, credentials, and credibility
  d. establish an effective governance process with a cross-functional team
  e. break down the project into phased deliverables
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1
Cengage Learning Testing, Powered by Cognero Page 156
30. Which of the following is not one of the six phases of a project?
  a. Precompletion.
  b. Project definition.
  c. Preliminary studies.
  d. Performance.
  e. Post-completion.
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

31. All of the following are characteristics of the post-completion phase of a project except _____.
  a. confirm that the final project meets the expectations of management or customers
  b. reassign project personnel to other positions or other projects
  c. restore any used equipment and facilities to their original status
  d. conduct a post-implementation meeting to discuss the strengths and weaknesses of the
project
  e. identify broad budget, personnel, and resource requirements for future projects 
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

32. A _____ visually displays the tasks and times associated with a project and consists of a horizontal bar chart with
activities listed vertically and times or dates displayed horizontally.
  a. PERT tool
  b. Gantt chart
  c. CPM tool
  d. TCO chart
  e. networking tool
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

33. Users apply _____ to projects where there is a single known time for each activity with no variance, while _____
applies to projects where time estimates are variable or uncertain.
  a. Make-buy analysis….CPM
  b. PERT….CPM
Cengage Learning Testing, Powered by Cognero Page 157
  c. Post-completion analysis….PERT
  d. CPM…PERT
  e. PERT….TCO
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

34. Which of the following is not one of the network rules for PERT/CPM?
  a. Networks start and finish at multiple events.
  b. Identify each unique activity within a project by a capital letter that corresponds only to that activity.
  c. Branch direction indicates the general progression in time from left to right.
  d. When a number of activities end at one event, no activity starting at that event may begin before all activities
ending at that event are complete.
  e. Two or more activities cannot share graphically the same beginning and ending events.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

35. In a PERT network, which of the following is not one of the times shown on the chart?
  a. Early start.
  b. Late start.
  c. On time start.
  d. Early finish.
  e. Late finish.
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

36. In a PERT network, a/an _____ is the earliest point in time an activity can begin.
  a. late start
  b. on time
start
  c. early finish
  d. early start
  e. late finish
ANSWER:   d
DIFFICULTY:  Easy
Cengage Learning Testing, Powered by Cognero Page 158
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

37. In a PERT network, a/an _____ is the latest point in time an activity can begin without delaying the entire project.
  a. late start
  b. late finish
  c. early start
  d. early finish
  e. on time finish
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

38. In a PERT network, a/an _____ is the earliest time a project can finish given the expected activity time.
  a. late finish
  b. on time start
  c. on time finish
  d. early start
  e. early finish
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

39. In a PERT network, a/an _____ is the latest time an activity can finish without delaying the entire project.
  a. late start
  b. late finish
  c. on time finish
  d. early start
  e. late start
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

40. The _____ (in time) through a PERT network is the _____.

  a. longest path….critical path 

Cengage Learning Testing, Powered by Cognero Page 159

  b. shortest path….critical path
  c. longest path….slack
  d. shortest path….slack
  e. None of the above.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

41. In a PERT network, the difference between the _____ and the _____ is slack.
  a. early start….late finish
  b. late start….early finish
  c. early start….early finish
  d. late start….early start 
  e. None of the above.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

42. In a PERT network, the difference between the _____ and the _____ is slack.
  a. late finish….early
finish
  b. late start….late finish
  c. early finish….late start
  d. early start….early finish
  e. None of the above.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

43. [A] _____ establishes the rate of improvement because of learning as producers realize direct-labor cost improvements
as production volumes increase.
  a. leverage
  b. learning curve 
  c. knowledge curve
  d. product life cycle
  e. short-term contract
ANSWER:   b
Cengage Learning Testing, Powered by Cognero Page 160
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

44. When referring to learning improvement, the _____ represents a reduction in the cumulative average number of labor
hours as production doubles from a previous level.
  a. critical path
  b. slack path
  c. expected activity time
  d. learning rate
  e. early finish
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

45. Historically, the term _____ applies to the reduced direct-labor requirement per unit of output because of the effects of
learning, while the term _____ refers to the longer-term factors of production that systematically reduce production costs.
  a. learning curve….experience curve 
  b. learning curve….infinity curve
  c. experience curve….Boeing curve
  d. experience curve….learning curve
  e. None of the above.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

46. Which of the following is false regarding when to use the learning curve?
  a. Learning-curve analysis is appropriate when a supplier uses a new production process.
  b. Learning-curve analysis is appropriate when a supplier produces any item for the first time.
  c. The learning curve is appropriate when a supplier produces a technically complex item for the first time.
  d. All processes and items can benefit from or exhibit improvement from learning.
  e. The human factors present at the beginning of production must remain fairly constant over time to apply the
learning curve.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2
Cengage Learning Testing, Powered by Cognero Page 161
47. _____ techniques are primarily applied to existing products and services, while _____ is the application of value
principles during product or service design.

  a. Value analysis….total cost of ownership

  b. Value engineering….price analysis
  c. Value analysis….value engineering 
  d. Price analysis….cost analysis
  e. Value engineering….value analysis
ANSWER:   C
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

48. _____ is a way to achieve continuous performance improvement in an item, product, or service, but it is not a
technique for cheapening a product or service by lowering quality or other performance attributes below what customers
expect.
  a. Make-buy
analysis
  b. Total cost analysis
  c. Price analysis
  d. Cost analysis
  e. Value analysis 
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

49. Which of the following is not a question that value analysis teams should ask to determine if opportunities exist for
item, product, or service improvement?
  a. Are there additional uses for this product?
  b. Can we use a different color of paint? 
  c. Is there a better production method to produce the item or product?
  d. If we are making an item now, can we buy it for less (or vice versa)?
  e. Are packaging cost reductions possible?
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

50. _____ is a technique used to examine the incremental changes in cost between quantities within a supplier’s price
Cengage Learning Testing, Powered by Cognero Page 162
quotation.
  a. TCO
  b. Price analysis
  c. Market-share pricing
  d. Competition pricing
  e. Quantity discount analysis 
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

51. _____ is a tool that reduces processes to their component parts or activities and helps identify and then eliminate non-
value-added activities (waste) or delays within a process.
  a. Process mapping
  b. TCO
  c. PERT/CPM
  d. QDA
  e. Productivity analysis
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

52. A _____ is one in which the set of steps or activities that make up the activity occur one after the other.
  a. continuous process
  b. sequential process 
  c. concurrent process
  d. standardized process
  e. None of the above.
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

53. A/An _____ consists of activities or steps that can be performed at the same time during the main flow of work.

  a. intermittent process
  b. continuous process
  c. standardized process
  d. concurrent process 
Cengage Learning Testing, Powered by Cognero Page 163
  e. None of the above.
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

54. Which of the following is not one of the critical steps to process mapping?
  a. Search for better ways and methods to perform the tasks comprising a process.
  b. Replace sequential activities with concurrent activities whenever possible.
  c. Identify those activities that contribute to waste or add minimal value to the process and target those for
elimination.
  d. Identify the time associated with each part of a process and identify how much of that time is waste.
  e. Utilize all sequential activities whenever possible as concurrent activities are wasteful.
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

55. _____ is a process of visually presenting the flow of materials and information to identify wasted time and actions in a
manufacturing or service process.
  a. Make-buy analysis
  b. QDA
  c. Value stream mapping
  d. TCO
  e. None of the above.
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

56. According to Ohno and Toyota, _____ is a category of waste that produces items for which there are no orders.
  a. excess inventory
  b. overproduction 
  c. unnecessary movement
  d. waiting time
  e. defect
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 164
NOTES:   4

57. According to Ohno and Toyota, _____ is a category of waste that occurs when employees are standing about and
inventory is at a standstill.
  a. waiting time 
  b. defect
  c. overproduction
  d. unnecessary movement
  e. over-processing
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

58. According to Ohno and Toyota, _____ is a category of waste that moves material unnecessarily or long distances.
  a. unnecessary movement
  b. over-processing
  c. defect
  d. unnecessary transport 
  e. overproduction
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

59. According to Ohno and Toyota, _____ is a category of waste that uses more steps to produce a product than necessary.
  a. excess inventory
  b. defect
  c. unnecessary movement
  d. unnecessary transport
  e. over-processing 
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

60. According to Ohno and Toyota, _____ is a category of waste that retains unnecessary inventory between process
steps.
  a. excess inventory
  b. overproduction
Cengage Learning Testing, Powered by Cognero Page 165
  c. over-processing
  d. waiting time
  e. None of the above.
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

61. According to Ohno and Toyota, _____ is a category of waste that includes any wasted motion by man or machine.
  a. overproduction
  b. unnecessary transport
  c. unnecessary movement
  d. defect
  e. None of the above.
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

62. According to Ohno and Toyota, _____ is a category of waste that makes the wrong product.
  a. overproduction
  b. waiting time
  c. defect 
  d. unnecessary movement
  e. over-processing
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

63. _____ actions and resources are those that create value for the customer.
  a. Extras
  b. Non-value-adding
  c. Necessary non-value-
adding
  d. Value-adding 
  e. None of the above.
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
Cengage Learning Testing, Powered by Cognero Page 166
OTHER:   Analytic
NOTES:   4

64. _____ actions and resources are everything done in the process, which contribute no value to the customer, but which
they are forced to pay for when they buy the product or service.
  a. Value-adding
  b. Excess inventory
  c. Necessary non-value-
adding
  d. Waiting time
  e. Non-value-adding 
ANSWER:   e
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

65. _____ actions and resources are those actions in a process that must be done to make the product but create no value
for the customer.
  a. Non-value-adding
  b. Necessary non-value-adding 
  c. Value-adding
  d. Inventory surplus
  e. None of the above.
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

66. In value stream mapping, the flow diagram that depicts the process and shows the times and resources used at each
step and the time delay between each step is called a/an _____.
  a. anticipated state map
  b. future state map
  c. ideal state map
  d. current state map 
  e. None of the above.
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

Cengage Learning Testing, Powered by Cognero Page 167

67. In value stream mapping, the flow diagram that depicts process improvements to optimize the value and minimize the
non-value-added streams is called a/an _____.
  a. current state map
  b. future/ideal state
map 
  c. variation map
  d. anticipated state map
  e. None of the above.
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

CHAP 13
1. Everyone negotiates something every day.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

2. Negotiation is a simple skill that applies to only a few purchasing and supply managers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. Negotiation is noncritical means to convey the buyer’s specific sourcing requirements and specifications to its supply
base.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 168
NOTES:   1

4. An important part of negotiation is realizing that the process involves relationships between people, not just
organizations.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

5. An integral part of negotiation involves each party trying to persuade the other party to do something that is in its best
interests.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

6. A negotiator should ensure that his or her BATNA is revealed to the other party, because the final settlement is unlikely
to vary much from that point.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

7. All negotiation settlements must ultimately be judged in light of the other viable alternatives that existed at the time of
the agreement.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

8. Sharing the underlying interests behind a position may cause a negotiator’s power to shift toward the other party,
Cengage Learning Testing, Powered by Cognero Page 169
ultimately resulting in a less than desired outcome.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

9. To reach a negotiated agreement using principled negotiation, a negotiator should always focus on the other party’s
stated position, not his or her underlying interests.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

10. When a negotiator is planning an upcoming negotiation, it is imperative to prioritize all of the potential issues to be
negotiated into needs and wants, thereby knowing what must be achieved and what can be exchanged for something else
of value.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

11. It is easy to develop common ground in the negotiation without knowing what the other party is seeking.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

12. A negotiator can automatically assume that the other party thinks the same way he or she does.
  a. True
  b. False
ANSWER:   False
Cengage Learning Testing, Powered by Cognero Page 170
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

13. The purchasing cycle begins with identifying (or anticipating) a specific need or requirement for a part component,
raw material, subassembly, service, piece of equipment, or finished good to be sourced to conduct or support
organizational operations.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

14. All purchase requirements will require buyers and sellers to conduct a thorough, detailed, and time-consuming
negotiation.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

15. Negotiation is more appropriate when other issues besides price are important or when competitive bidding will not
satisfy the buyer’s requirements on various issues.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

16. All buyer-supplier negotiations are relatively straightforward, only requiring rudimentary preparation and planning.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 171
NOTES:   1

17. Deciding the physical location of where to negotiate is an unimportant part of any planning process.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

18. Excessive formality in negotiation can effectively constrain the parties and restrict the free exchange of ideas and
solutions.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

19. Packaging issues together risks undermining an entire negotiation if the parties reach impasse on a single issue within
the linked proposal.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

20. Effective negotiators are unwilling to make counterproposals.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

21. Good negotiators know that reaching agreement is the end of the negotiation process.
  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 172
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

22. Many negotiators fail to prepare adequately before entering into a formal negotiation oftentimes because of a very
short timeframe in which to make a deal.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

23. Before actual negotiations begin, the parties need to believe realistically that they can reach an agreement.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

24. Experienced negotiators do not need to understand their counterparts through research and experience.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

25. Analyzing the other party requires a thorough assessment of the relative strengths and weaknesses of the parties, as
well as the particulars for each individual issue to be negotiated.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2
Cengage Learning Testing, Powered by Cognero Page 173
26. The issues that are most critical to a supplier are likely to be those most critical to a buyer.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

27. The bargaining zone represents the heart of the negotiation process, as any proposal or counterproposal offered outside
of this range is likely to be rejected by the other party because it is not what he or she is willing to settle for.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

28. A procurement negotiation seldom affects other stakeholders throughout the organization who have an interest in or
will be affected by the negotiation outcomes.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

29. An experienced negotiator does not need to practice or rehearse a complex negotiation before commencing the formal
negotiation.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

30. The effective use of information in a negotiation does not necessarily mean open and complete sharing.
  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 174
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

31. There is minimal likelihood that retaliation or escalation will occur if the power structure shifts unfavorably in the
future.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

32. Referent power is most successful in negotiation when the referents are aware that a counterpart identifies with or has
an attraction to them.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

33. For the effective negotiator, it is acceptable to give away any concession without getting something of equal or greater
value in return.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

34. It is unimportant for the negotiator to have adequately prepared and established a thoughtful BATNA for each issue
until after the negotiation has begun.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
Cengage Learning Testing, Powered by Cognero Page 175
OTHER:   Analytic
NOTES:   5

35. The manner in which a negotiator approaches concession making is an important part of every successful negotiation
strategy.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

36. A willingness to offer large concessions is always in the best interests of a buyer.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

37. The caveat to the best and final offer tactic is that the person making the best and final offer must be prepared to
actually end the negotiation if the other party does not accept the offer.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

38. People seldom show the tendency to fill in the gaps when a discussion encounters silence.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

39. A tactic used during one negotiation may not be successful or applicable to another negotiation, even with the same
counterpart.
Cengage Learning Testing, Powered by Cognero Page 176
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

40. In win-win negotiation, if one party gains, it is only at the expense of the other party.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

41. A win-lose negotiation approach works best for items or services that are important to the buyer’s products or business
or when the item involves high-dollar items or services where cost control is critical.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

42. When preparing for a negotiation with a supplier located in another country, companies must invest in substantial
extra time and effort in planning for the negotiation to accommodate new language translations, travel, modes of
transportation, and other foreign business requirements.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

43. During an international negotiation, an interpreter might verbally communicate yet not fully convey the significance
of unspoken actions, signals, and customs that may be invisible to the foreign or nonnative negotiator.
  a. True
  b. False
ANSWER:   True
Cengage Learning Testing, Powered by Cognero Page 177
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

44. There is minimal danger in stereotyping or oversimplifying the cultural characteristics of different countries or
regions.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

45. Use of electronic media such as e-mail, texting, and instant messaging, has no measurable impact on the dynamics and
effectiveness of a negotiation.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

46. In e-negotiation, status differences are readily apparent, and social norms and behaviors are easier to discern.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

47. Parties may behave differently when negotiating electronically than they do in person.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

Cengage Learning Testing, Powered by Cognero Page 178

48. According to Karrass, research indicates that e-mail-based negotiations typically take less time to complete than those
conducted face-to-face.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

49. E-negotiators generally ask more questions and tend to make fewer assumptions during the negotiation.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

50. Negotiators who interact face-to-face are more likely to reach agreement and avoid impasse than their e-negotiation
counterparts.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

51. Which of the following is not one of the popular definitions of negotiation as presented in the text?
  a. A negotiation is an interactive communication process that may take place whenever we want something from
someone else or another person wants something from us.
  b. Negotiation is the process of communicating back and forth for the purpose of reaching a joint agreement
about differing needs or ideas.
  c. Negotiating is the end game of the sales process.
  d. Negotiation is to be used only to get the absolutely lowest price from a supplier.
  e. Negotiation is a process of formal communication, either face-to-face or via electronic means, where two or
more people, groups, or organizations come together to seek mutual agreement about an issue or issues.
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

Cengage Learning Testing, Powered by Cognero Page 179

52. A/An _____ is also known as the negotiator’s bottom line or reservation point, that is, that point in the negotiation
where it is most advantageous for the negotiator to walk away from the table and implement his or her next-best option.
  a. BATNA
  b. position
  c. interest
  d. need
  e. want
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

53. A negotiator’s _____ can be defined as his or her opening offer, which represents the optimistic (or ideal) value of the
issue being negotiated.
  a. interest
  b. need
  c. BATNA
  d. position
  e. want
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

54. The negotiator’s _____ is the unspoken motivation or reason that underlies any given negotiation position.
  a. want
  b. need
  c. interest
  d. BATNA
  e. bargaining zone
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

55. A/An _____ is considered to be a negotiated outcome that the negotiator must have in order to reach a successful
outcome to the negotiation.
  a. want
  b. need
  c. BATNA
Cengage Learning Testing, Powered by Cognero Page 180
  d. position
  e. interest
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

56. A/An _____ refers to those negotiated outcomes that a negotiator would like to have as opposed to those outcomes
that must be achieved.
  a. need
  b. BATNA
  c. Position
  d. Interest
  e. Want
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

57. Step 1 of Triangle Talk is _____.

  a. know exactly what they want
  b. propose action in a way they can accept
  c. know exactly what you want
  d. apply tactics to win the negotiation
  e. None of the above.
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

58. Step 2 of Triangle Talk is _____.

  a. apply strategy to win the negotiation
  b. know exactly what they want 
  c. know exactly what you want
  d. propose action in a way they can accept
  e. use power to get exactly what you want
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 181
NOTES:   1

59. Step 3 of Triangle Talk is _____.

  a. apply tactics to win the negotiation
  b. know exactly what you want
  c. use power to get what you want
  d. propose action in a way they can accept 
  e. know exactly what they want
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

60. Which of the following is not a reason for negotiating with suppliers?

  a. The total contract value or volume is large.
  b. The purchase is for widely available, commodity-like goods.
  c. The purchase involves utilization of capital-intensive plant and
equipment.
  d. The purchase involves a special or collaborative relationship.
  e. The supplier will perform important or significant value-added activities.
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

61. _____ are the action plans designed to help achieve a desired result.
  a. Arguments
  b. Questions
  c. Strategies
  d. Objectives
  e. Tactics 
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

62. A/An _____ is an aspiration or vision to work toward in the future.

  a. need
  b. objective 
  c. plan
Cengage Learning Testing, Powered by Cognero Page 182
  d. BATNA
  e. position
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

63. Which of the following is not one of the reasons that negotiators frequently fall short of their goals or reach an
impasse?
  a. They neglect the other party’s problems.
  b. They focus too much on price.
  c. They focus too much on common ground.
  d. They neglect their BATNAs.
  e. They focus on interests rather than on positions.
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

64. A/An _____ is a method or scheme devised for making or doing something to achieve a desired end.
  a. want
  b. objective
  c. BATNA
  d. plan 
  e. Position
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

65. In negotiation, a/an _____ is a reality or truth that the parties can state and successfully verify.
  a. fact
  b. issue
  c. position
  d. interest
  e. BATNA
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 183
NOTES:   2

66. A/An _____ is an item or topic to be resolved during the negotiation.

  a. BATNA
  b. issue
  c. interest
  d. position
  e. fact
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

67. The area of overlapping positions among issues, when there is one, between the negotiators is termed the _____.
  a. concurrent zone
  b. agreement possibility
  c. positive position
  d. Objective
  e. bargaining zone 
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

68. Negotiation _____ refers to the overall approach used to reach a mutually beneficial agreement with a supplier that
holds different points of view from the buyer.
  a. Tactics
  b. positioning
  c. strategy 
  d. Conflict
  e. None of the above.
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

69. _____ is/are the ability to influence another person or organization to do something.

  a. Positions
  b. Planning
  c. Strategy
Cengage Learning Testing, Powered by Cognero Page 184
  d. Power 
  e. None of the above.
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

70. _____ is ready access to relevant and useful information and relies on trying to influence the other party through the
cogent presentation of facts, data, information, and persuasive arguments.
  a. Information power
  b. Reward power
  c. Coercive power
  d. Legitimate power
  e. Referent power
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

71. _____ means that one party is able to offer something of perceived value to the other party.
  a. Referent power
  b. Informational power
  c. Expert power
  d. Coercive power
  e. Reward power
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

72. _____ includes the ability to punish the other party – financially, physically, emotionally, or mentally.
  a. Reward power
  b. Coercive power 
  c. Legitimate power
  d. Expert power
  e. Referent power
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 185
NOTES:   3

73. The basis of _____ is the official job position or title that an individual holds, rather than the characteristics of the
individual him/herself.
  a. informational power
  b. referent power
  c. legitimate power
  d. coercive power
  e. expert power
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

74. A negotiator with _____ is recognized as having accumulated and mastered a high level of knowledge about a
particular subject, often coupled with verifiable credentials and stature to document that mastery.
  a. referent power
  b. legitimate power
  c. coercive power
  d. reward power
  e. expert power 
ANSWER:   E
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

75. The source of _____ comes from interpersonal appeal based on socially acceptable individual qualities and attributes,
such as one’s personality or attractiveness.
  a. informational power
  b. expert power
  c. coercive power
  d. referent power 
  e. physical power
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

76. A _____ is a movement away from a negotiating position that offers something of value to the other party in order to
ultimately gain something else of value.
Cengage Learning Testing, Powered by Cognero Page 186
  a. reward
  b. concession
  c. coercive maneuver
  d. tactic
  e. strategy
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

77. _____ is a negotiation tactic that involves one party, often the seller, offering an unusually low price to receive a
buyer’s business.
  a. Low ball 
  b. High ball
  c. Boulwarism
  d. Caucus
  e. Trial balloon
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

78.  _____ is a negotiation tactic that involves taking a time out.

  a. Silence
  b. Venue
  c. Caucus 
  d. Take-it-or-leave-it
  e. Low ball
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

79. _____ is a negotiation tactic that is a test of acceptability.

  a. Take-it-or-leave-it
  b. Best and final offer
  c. Price increase
  d. Trial balloon 
  e. Honesty and openness
ANSWER:   d
Cengage Learning Testing, Powered by Cognero Page 187
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

80. _____ is a negotiation tactic that involves taking an abnormally high initial position on an issue.
  a. Low ball
  b. High ball 
  c. Best and final offer
  d. Curve ball
  e. Knuckleball
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

81.  _____ is a negotiation tactic that often signals the end of a negotiation on a given issue.
  a. Venue
  b. Silence
  c. Planned concessions
  d. Trial balloon
  e. Best and final offer
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

82. _____ is a negotiation tactic that involves not immediately responding when the other party makes an offer in the hope
that an awkward silence will encourage further offers or concessions from the other party.
  a. Trial balloon
  b. Silence
  c. High ball
  d. Questions
  e. Planned concessions
ANSWER:   B
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

83. _____ is a negotiation tactic that signals that it is now the other party’s turn to reciprocate and make a concession on
Cengage Learning Testing, Powered by Cognero Page 188
an important issue.
  a. Venue
  b. Low ball
  c. Honesty and openness
  d. Best and final offer
  e. Planned concessions 
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

84. _____ is a negotiation tactic in which the negotiator insists on negotiating in a location that is more favorable to
him/her.
  a. Consistency
  b. Caucus
  c. Venue
  d. Low ball
  e. High ball
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

85. According to Cialdini, _____ is a principle which states that people feel an obligation to give something back of equal
or greater value to someone else after we have received something of perceived value from them.
  a. social proof
  b. authority
  c. consistency
  d. reciprocation
  e. Scarcity
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

86. According to Cialdini, _____ is a principle that says we prefer to be consistent in our beliefs and actions.
  a. scarcity
  b. liking
  c. social proof
  d. reciprocation
Cengage Learning Testing, Powered by Cognero Page 189
  e. consistency
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

87. According to Cialdini, _____ is a principle which states that we look to the behavior of others to determine what is
desirable, appropriate, and correct.
  a. social proof
  b. Liking
  c. Consistency
  d. Scarcity
  e. Authority
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

88. According to Cialdini, _____ is a principle which states that we work well and are more agreeable with people we like
or who are like us.
  a. Leverage
  b. liking 
  c. Authority
  d. 
Reciprocatio
n
  e. Consistency
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

89. According to Cialdini, _____ is a principle which states that we are more likely to accept the positions, arguments, and
direction from recognized authority figures.
  a. Liking
  b. Consistency
  c. Scarcity
  d. social proof
  e. Authority
ANSWER:   E

Cengage Learning Testing, Powered by Cognero Page 190

DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

90. _____ means that two or more parties are competing over a fixed sum value with the winner taking all or the larger
share.
  a. Lose-lose negotiation
  b. Win-lose negotiation
  c. Winner-take-all negotiation
  d. Integrative bargaining
  e. None of the above.
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

91. _____ seeks to expand the value or resources of outcomes available to all parties through cooperative negotiation.
  a. Win-win negotiation 
  b. Distributive bargaining
  c. Competitive bargaining
  d. Lose-lose negotiation
  e. Open-table bargaining
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

92. In _____, the parties work closely together to identify new and creative ways to expand available resources or
generate new value obtained through a negotiated agreement.
  a. Logroll
  b. use non-specific
compensation
  c. cut the costs for compliance
  d. expand the pie 
  e. find a bridge solution
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5
Cengage Learning Testing, Powered by Cognero Page 191
93. In _____, the parties identify more than one issue where disagreement exists and then agree to trade off these issues so
that each party has one of its top-priority issues satisfied.
  a. use non-specific
compensation
  b. cut the costs for compliance
  c. expand the pie
  d. find a bridge solution
  e. Logroll
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

94. In _____, one party achieves his or her objective on an issue, whereas the other receives something else of value as a
reward for going along.
  a. use nonspecific compensation
  b. Logroll
  c. expand the pie
  d. find a bridge solution
  e. cut the costs for compliance
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

95. In _____, one party (usually the buyer) gets a lower price as the parties work jointly to reduce the seller’s costs or the
joint transaction costs of doing business together.
  a. Logroll
  b. expand the pie
  c. cut the costs for compliance 
  d. find a bridge solution
  e. use non-specific
compensation
ANSWER:   C
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

96. _____ involves inventing new options that satisfy each party’s needs.

Cengage Learning Testing, Powered by Cognero Page 192

  a. Expand the pie
  b. Find a bridge solution
  c. Logroll
  d. Cut the costs for compliance
  e. Use non-specific compensation
ANSWER:   B
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

97. _____ occurs as a result of negotiators being immersed in a place in which their established norms have been
confronted and may no longer be applicable.
  a. Win-win negotiation
  b. Competitive bargaining
  c. Reciprocation
  d. Consistency
  e. Culture shock 
ANSWER:   E
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

98. All of the following are effective e-negotiating practices except _____.

  a. use a blended negotiation, starting with an initial face-to-face meeting or a telephone call to build essential
rapport with the other party
  b. establish common ground and interests to build mutual trust
  c. use “emoticons” to counter the lack of nonverbal awareness
  d. forward e-mail negotiations to the other party’s immediate superior for verification 
  e. proofread the entire message, including addressees, before sending the e-mail out
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   7

1. According to Shook, lean is a philosophy that seeks to shorten the time between when the customer order and the
shipment to the customer by eliminating waste.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
Cengage Learning Testing, Powered by Cognero Page 193
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

2. In a pull system, an upstream work center or operation will create output regardless whether a downstream center
directly requests that output.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. Anything less than perfect quality leads to waste.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

4. WIP is incomplete – it has not yet been transformed to a saleable finished good.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

5. If WIP builds up at a workstation, a scheduler should not have to reroute the flow of material to another work center.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

6. A higher-than-anticipated finished-goods inventory level may mean that a increase in customer demand is occurring.
  a. True
Cengage Learning Testing, Powered by Cognero Page 194
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

7. When firms produce goods in anticipation of future customer orders, they are operating in a just-in-time environment.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

8. The most basic and the easiest inventory-related cost to quantify and track is unit cost.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

9. Ordering costs are a composite of the costs associated with the release of a material order.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

10. Carrying costs do not vary with the level of inventory, which makes these costs fixed.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

Cengage Learning Testing, Powered by Cognero Page 195

11. It is often difficult to quantify the total costs associated with ordering and carrying physical inventory.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

12. Most cost accounting systems are capable of identifying and assigning the true costs related to maintaining physical
inventory.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

13. From the financial accounting perspective, inventory has historically been considered a current asset.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

14. Even in an era of just-in-time production, almost all firms hold some level of preproduction inventory.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

15. Production inventory consumes a minor portion of inventory investment.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
Cengage Learning Testing, Powered by Cognero Page 196
OTHER:   Analytic
NOTES:   4

16. The true cost of MRO inventory often goes unnoticed because firms fail to track these items with the same intensity as
production inventory.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

17. Supply chains are insensitive to changes in markets, including changes in the availability of material supply as well as
price changes.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

18. Suppliers seldom offer quantity discounts to encourage larger orders from purchasers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

19. Unnecessary inventory usually results from one thing: uncertainty.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

20. It is harder to increase a material release by 10 percent or carry safety stock to cover supplier quality problems than to
correct the root cause of a problem.
Cengage Learning Testing, Powered by Cognero Page 197
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

21. Suppliers that cannot meet delivery schedules create delivery uncertainty.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

22. Purchasers should not accept any of the blame for delivery uncertainty.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

23. A major step toward eliminating delivery uncertainty is a commitment to stable release schedules with realistic (but
not overly generous) supplier lead times.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

24. The ability to plan material requirements accurately increases as order-cycle time lengthens.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 198
NOTES:   4

25. Specifying customized parts when standardized parts are available adversely affects material inventory because
customized parts are usually more expensive.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

26. Most inventory waste results from underlying problems that blue collar workers have failed to correct.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

27. The underlying emphases of lean– to eliminate all forms of uncertainty and waste – are relevant to all
organizations, regardless of the specific planning and control tools that are used.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

28. Continuous improvement involves small, daily improvements that ensure that the process in moving forward.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

29. According to JIT, inspection is a waste of both time and personnel caused by defects.
  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 199
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

30. Lean is an easy approach to implement.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

31. Decisions in lean must be based on the opinions or preferences of influential individuals, as well as on facts and data.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   5

32. A logical place to begin when managing inventory investment is to make sure there is agreement between physical
and electronic inventory.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

33. Record integrity exists when the physical inventory on hand exceeds the electronic record on hand, regardless of the
quantity of inventory.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6
Cengage Learning Testing, Powered by Cognero Page 200
34. The advantage of consignment to the buyer is the ability to defer ownership and avoid committing working capital and
incurring carrying charges.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

35. Very few organizations use distributors to provide at least some portion of their inventory requirements, particularly
maintenance, repair, and operating supplies.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

36. Shortening the material pipeline in terms of time between suppliers and a buyer can reduce the average amount of
inventory in a system.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

37. Using a RFID system, if supplier quality and lead times are reliable, planners can time the arrival of components just
before production of the final part number.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

38. _____ means that inventory moves through the supply chain continuously with minimal queueing or non-value-adding
activity being performed.

Cengage Learning Testing, Powered by Cognero Page 201

  a.  Pull
  b. WIP
  c.  MRO
  d. Flow
  e.  Push
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

39. _____ means that customer orders start the work process, which ripples down through the supply chain.
  a.  Make-to-stock
  b. Push
  c.  MRP
  d. DRP
  e.  Pull
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

40. _____ means that supply chains must have perfect quality.

  a.  DRP
  b. Flow
  c.  Pull
  d. Push
  e.  Striving for excellence
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

41. All of the following are categories of inventory except _____.

  a.  lean inventory
  b. raw material and semifinished item inventory
  c.  work-in-process inventory
  d. MRO supplies inventory
  e.  pipeline/in-transit inventory
Cengage Learning Testing, Powered by Cognero Page 202
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

42. _____ inventory includes the items purchased from suppliers or produced internally to directly support production
requirements.
  a.  Work-in-process
  b. Finished-goods
  c.  MRO suppliers
  d. Pipeline/in-transit
  e.  Raw material and semifinished items
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

43. Which of the following is an example of WIP inventory?

  a.  Waiting to be moved to another process.
  b. Currently being worked on at a work center.
  c.  Lining up at a processing center due to a capacity bottleneck or machine breakdown.
  d. All of the above.
  e.  None of the above.
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

44. _____ inventory includes completed items or products that are available for shipment or future customer orders.
  a. WIP
  b. Finished-goods
  c.  MRO
  d. Pipeline/in-transit
  e.  Raw materials and semifinished items
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1
Cengage Learning Testing, Powered by Cognero Page 203
45. When firms produce goods in anticipation of future customer orders, they are operating in a/an _____
environment.
  a. assemble-to-order
  b. make-to-order
  c. make-to-stock
  d. just-in-time
  e.  None of the above.
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

46. When firms produce goods in response to a customer order, they are operating in a/an _____ environment.
  a.  make-to-order
  b. make-to-stock
  c.  make-to-forecast
  d. WIP
  e. None of the above.
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

47. _____ inventory includes the items used to support production and operations and are not physically part of
a finished product.
  a. Raw materials
  b. WIP
  c. Semifinished items
  d. MRO
  e. Pipeline/in-transit
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

48. _____ represents the funds committed to operating a business, including the purchase and holding of inventory.
  a. Pipeline inventory
  b. WIP
Cengage Learning Testing, Powered by Cognero Page 204
  c.  MRP
  d. Working capital
  e.  None of the above.
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

49. Which of the following is a component of carrying cost?

  a.  Cost of capital.
  b. Cost of storage.
  c. Cost of obsolescence, deterioration, and
loss.
  d. All of the above.
  e.  None of the above.
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

50. _____ are calculated as Average Inventory in Units x Unit Price x Carrying Cost per Year.
  a.  Quality costs
  b. Ordering costs
  c. Inventory carrying costs
  d. MRO costs
  e.  Cycle counting costs
ANSWER:   C
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

51. All of the following are considered to be the right reasons for investing in inventory except _____.
  a.  avoid disruptions in operational performance
  b. Unreliable supplier delivery
  c.  support customer service requirements
  d. hedge against marketplace uncertainty
  e.  take advantage of order quantity discounts
ANSWER:   b

Cengage Learning Testing, Powered by Cognero Page 205

DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

52. Which of the following is not one of the wrong reasons for investing in inventory?
  a.  Poor quality and material yield.
  b. Extended order-cycle times from global sourcing.
  c.  Hedge against marketplace uncertainty.
  d. Specifying custom items for standard applications.
  e. Inefficient manufacturing processes.
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   4

53. Which of the following is not one of the key principles of the lean concept?
  a. Maximize the use of people.
  b. Simplify first, and only then apply new technology.
  c. Focus on gradual, but continuous, improvement.
  d. Minimize waste (including poor quality).
  e.  All of the above.
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

54. All of the following are important barriers to lean supply except _____.
  a.  large warehouses
  b. dispersed supply base
  c. historic buyer-supplier
relationships
  d. number of suppliers
  e. supplier quality performance
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

Cengage Learning Testing, Powered by Cognero Page 206

55. _____ involves frequent deliveries of smaller quantities directly to the point of use at the purchaser.
  a.  Lean supply
  b. Lean transportation
  c.  Lean warehousing
  d. Lean ordering
  e. None of the above.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   5

56. A repeatable lean transportation schedule, also called a _____, moves goods from supplier to purchaser and
then from purchaser back to supplier with return material.
  a.  MRO system
  b. pull system
  c.  push system
  d. closed-loop system
  e.  None of the above.
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

57. A _____ system is a production control approach that uses containers, cards, or visual cues to control the
production and movement of goods through the supply chain.
  a.  MRP
  b. DRP
  c. lean supply
  d. JIT kanban
  e.  lean transportation
ANSWER:   D
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

58. All of the following are common signaling methods used in a kanban system except _____.
  a. single-card system
  b. color coding of containers

Cengage Learning Testing, Powered by Cognero Page 207

  c.  designated storage spaces
  d. computerized bar coding systems
  e.  verbal notification
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

59. _____ of inventory refers to the amount of inventory that a firm owns at any given time.
  a.  Volume
  b. Velocity
  c.  Value
  d. Vigor
  e.  None of the above.
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

60. _____ of inventory refers to how quickly raw material and work-in-process inventory transform into
finished goods that the customer accepts.
  a.  Volume
  b. Velocity
  c.  Value
  d. Vigor
  e. None of the above.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

61. _____ of inventory pertains to the unit cost of the inventory.

  a. Volume
  b. Velocity
  c.  Value
  d. Virtue
  e.  None of the above.
ANSWER:   C

Cengage Learning Testing, Powered by Cognero Page 208

DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

62. Record integrity is the result of various activities and procedures designed to ensure that the amount of
_____ is equal to the computerized record of _____.
  a.  MRP….kanban
  b. DRP….MRP
  c.  ROH….POH
  d. POH….ROH
  e.  None of the above.
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

63. The downside of poor forecasting includes all of the following except _____.
  a. higher inventory volumes
  b. poor customer service as inventory is misallocated across locations and
products
  c.  higher inventory carrying charges
  d. excessive safety stock levels
  e.  decreased customer service costs
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6

64. Which of the following is not one of the benefits of simplified designs?

  a. Fewer suppliers.
  b. Increased number of manual transactions.
  c. Reduced transactions to support the inventory.
  d. Fewer part numbers.
  e. Lower inventory management costs.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   6
Cengage Learning Testing, Powered by Cognero Page 209
65. Which of the following is not one of the policies used to improve design simplification and reduce
complexity?
  a.  Increase the number of suppliers.
  b. Establish premium pricing for customization.
  c. Establish geographic-specific options and standards.
  d. Do not eliminate frequently requested options.
  e.  Utilize business modeling and TCO tools to support complexity reduction decisions.
ANSWER:   A
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

66. According to the APICS Dictionary, _____ is defined as the process of a supplier placing goods at a
customer location without receiving payment until after the buyer uses the goods.
  a.  Kanban
  b. Just-in-time
  c.  Consignment
  d. MRO
  e.  None of the above.
ANSWER:   c
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

67. All of the following action support reduced order-cycle time with suppliers except _____.
  a.  expanded global sourcing
  b. expanded electronic capability
  c.  supplier development support
  d. order-cycle time measurement
  e. focus on second- and third-tier
suppliers
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   6

68. The _____ is one that is delivered on time, accurately, and in perfect condition.
  a. kanban order
Cengage Learning Testing, Powered by Cognero Page 210
  b. MRO order
  c. consignment order
  d. perfect order
  e. MRP order
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

69. In _____, demand for an item is not directly dependent upon the demand for any other item that is produced.
  a.  dependent demand
  b. independent demand
  c. codependent demand
  d. Six Sigma
  e.  just-in-time
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

70. A/An _____ system takes a period-by-period set of master production schedule requirements (anticipated or
booked customer orders) and produces a time-phased set of material, component, and subassembly
requirements timed to support an expected build schedule.
  a. kanban
  b. DRP
  c. just-in-time
  d. perfect order
  e.  MRP
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

71. A _____ details the components or subassemblies and the quantity required to produce a final part number or end
item.
  a.  kanban
  b. perfect order
  c. bill of material
file
Cengage Learning Testing, Powered by Cognero Page 211
  d. DRP system
  e.  RFID system
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

72. Which of the following is not one of the functions of a distribution resource planning system?
  a.  Forecasting finished-goods inventory requirements.
  b. Establishing correct inventory levels at each stocking location.
  c. Determining the timing and replenishment of finished-goods inventories.
  d. Producing a time-phased set of material, component, and subassembly requirements timed to support an
expected build schedule.
  e. Transportation planning and vehicle load scheduling.
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   7

73. _____ inventory is in transit to a customer or is located throughout distribution channels.

  a.  Pipeline/in-transi
  b. MRO
  c.  WIP
  d. Raw materials and semifinished items
  e.  Just-in-time
ANSWER:   A
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

True / False

1. Although this sounds difficult, it is often easy to develop measures that direct behavior or activity exactly as intended.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy

Cengage Learning Testing, Powered by Cognero Page 212

KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

2. Few measures include a standard or target against which to evaluate performance results or outcomes.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

3. It is difficult to develop performance improvement plans without understanding the areas in which performance falls
short.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

4. Measurement fails to motivate and direct behavior toward desired end results.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

5. Measuring and evaluating performance historically has had certain problems and limitations.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

6. Having too little data is the most common problem an organization has with its measurement system.
  a. True
Cengage Learning Testing, Powered by Cognero Page 213
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

7. A serious problem in measurement is that the data that managers pay attention to are often the wrong data.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

8. Few measures drive behavior that is not what is intended or needed.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

9. The problem with measuring behavior is that there is no guarantee the behavior will lead to desired results.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   1

10. The most common price performance measures include actual purchase price versus planned purchase price
comparisons, actual purchase price(s) compared to a market index, comparisons of actual-to-actual purchase prices for
individual and aggregated items between operating plants or divisions within an organization, and target prices achieved.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
Cengage Learning Testing, Powered by Cognero Page 214
NOTES:   2

11. Purchase price versus market index measures are least appropriate for market-based products where pricing is
primarily a function of supply and demand.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

12. Actual prices for similar items should not be compared between plants, divisions, or business units due to differing
market conditions.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

13. Although firms are increasingly focusing on cost versus price, price performance measures are no long popular.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

14. Cost avoidance figures almost always require manual calculation and are sometimes subject to exaggeration.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

15. Customer defects per supplier is a measure of the number of defects from individual suppliers to indicate comparative
quality performance among competing suppliers.
  a. True
Cengage Learning Testing, Powered by Cognero Page 215
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

16. The PPM measure indicates the incidence of failures of components, assemblies, and systems or services when
actually incorporated into the final product or service and supplied to external customers.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

17. It is uncommon to have measures that track different aspects of a firm’s inventory investment.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

18. On-time delivery or responsiveness measures indicate the degree to which suppliers are able to meet customer
schedule requirements.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

19. Transportation costs can be measured only in total dollars and never as a percentage of cost of goods sold or sales
revenue.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
Cengage Learning Testing, Powered by Cognero Page 216
OTHER:   Analytic
NOTES:   2

20. Salaries traditionally take the largest share of the purchasing administrative budget.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

21. The most common method of establishing a budget uses the current administrative budget as a starting point.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

22. With the current budget plus adjustment approach, the administrative budget for purchasing is a percentage of another
measure that reflects purchasing’s workload.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

23. Supply managers should emphasize purchasing efficiency over purchasing effectiveness as a strict measure of
performance.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

24. Purchasing requires measures that reflect its ability to support overall corporate and functional goals, which means a
reduced emphasis on pure efficiency measures and greater emphasis on effectiveness measures.
Cengage Learning Testing, Powered by Cognero Page 217
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

25. Each location of an organization must use the same performance objectives or performance criteria.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

26. The measurement system should rely on quantitative data instead of qualitative feelings and assessments.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

27. Well-defined measures use data that are available and accurate.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

28. A common misconception is that a performance evaluation system should not measure every activity.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic

Cengage Learning Testing, Powered by Cognero Page 218

NOTES:   2

29. Joint participation means that the personnel responsible for each measure participate in developing the measure or
establishing the measure’s performance objective.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

30. Performance measurement systems receiving their data from automated or computerized systems are generally more
susceptible to data manipulation.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

31. A performance objective must reflect the realities of the firm’s competitive environment.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

32. Purchasing and supply chain managers often use the historical approach with effectiveness-related measures.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

33. Historical data provide substantial insight about the performance capabilities of competitors or other leading firms.
  a. True
  b. False
Cengage Learning Testing, Powered by Cognero Page 219
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

34. A sound measurement and evaluation system provides sporadic reporting of performance results.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

35. Some individuals resist the benchmarking process because of a reluctance to recognize the value of a competitor’s
way of doing business – the “not invented here” syndrome.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

36. The original premise of the balanced scorecard was that a total reliance on financial measures was leading
organizations to make poor decisions.
  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

37. Measurement is virtually free.

  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4
Cengage Learning Testing, Powered by Cognero Page 220
38. All aspects of performance lend themselves to quantitative measurement.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

39. There is no one best way to measure performance.

  a. True
  b. False
ANSWER:   True
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

40. A single, overall productivity measure representing purchasing and supply chain performance is feasible.
  a. True
  b. False
ANSWER:   False
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   4

Multiple Choice

41. _____ refers to the extent to which, by choosing a certain course of action, management can meet a previously
established goal or standard.
  a. Operational benchmarking
  b. Efficiency
  c. Support-activity benchmarking
  d. Effectiveness 
  e. None of the above.
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

Cengage Learning Testing, Powered by Cognero Page 221

42. _____ refers to the relationship between planned and actual sacrifices made to realize a previously agreed-upon goal.
  a. Strategic benchmarking
  b. Effectiveness
  c. Efficiency
  d. Operational
benchmarking
  e. None of the above.
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

43. Which of the following is one of the reasons for measuring performance?

  a. Support better decision making.
  b. Support better communication.
  c. Provide performance feedback.
  d. Motivate and direct behavior.
  e. All of the above.
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

44. Which of the following is not one of the common problems in measuring performance?
  a. Too much detail.
  b. Too much and wrong data.
  c. Measures that are short-term focused.
  d. Drive the wrong performance.
  e. Measures of behavior versus
accomplishments.
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   1

45. A _____ is the increase or decrease in cost resulting from a change in purchasing strategy or practice brought about by
an individual or a group.
  a. cost change
  b. cost avoidance
  c. target cost
Cengage Learning Testing, Powered by Cognero Page 222
  d. target price
  e. purchase price variance
ANSWER:   a
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

46. _____ is the process of determining what the external customer is willing to pay for a product or service and then
assigning specific cost targets to the components, assemblies, and systems that make up the product or service.
  a. Specific costing
  b. Target pricing 
  c. Total cost analysis
  d. Cost avoidance
  e. None of the above.
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

47. _____ represents the difference between a price paid and a potentially higher price (which might have occurred if
purchasing had not obtained the lower price through a specific effort or action).
  a. Target cost
  b. Cost reduction
  c. Target price
  d. Cost avoidance
  e. None of the above.
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

48. A/An _____ demonstrates the impact of purchasing and supply strategies and actions on revenues of the firm.
  a. income measure
  b. target cost
  c. revenue measure
  d. target price
  e. cost avoidance measure
ANSWER:   c
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
Cengage Learning Testing, Powered by Cognero Page 223
OTHER:   Analytic
NOTES:   2

49. The _____ measure expresses a maximum number (in absolute or percentage terms) of level of defects allowable for
any particular product, assembly, or service.
  a. Effectiveness
  b. Efficiency
  c. TQM
  d. Cost avoidance
  e. PPM
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

50. A/An _____ is the amount of time (in weeks or months) from concept to first shipment or provision of a product or
service to the external customer.
  a. on-time delivery measure
  b. time-to-market target
  c. responsiveness measure
  d. first insight measure
  e. cost avoidance measure
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

51. A/An _____ would typically link to a contractual agreement whereby, for new technologies, the buying firm may get
insight, some period of time before new technology developments are shared with other organizations.
  a. TQM measure
  b. first insight measure
  c. cycle time reduction
  d. responsiveness measure
  e. None of the above.
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

52. _____ focus on achieving standardization of components, systems, and services and application of currently used
Cengage Learning Testing, Powered by Cognero Page 224
purchased items or the use of industry-standard versus unique items.
  a. First insight measures
  b. Standardization measures
  c. Responsiveness measures
  d. Cycle time reduction measures
  e. Flexibility measures.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

53. _____ measures include tracking actual transportation costs against some preestablished objective, demurrage and
detention costs, and premium transportation.
  a. Transportation cost avoidance
  b. PPM
  c. Field failure rate
  d. Target prices achieved
  e. Transportation cost reduction
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

54. All of the following are examples of customer order measures except _____.
  a. percentage of on-time delivery
  b. total time from customer order to customer delivery
  c. returned orders
  d. warranty claims
  e. inventory turns
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

55. A/An _____ is one that personnel cannot inappropriately influence the results of.
  a. efficient measure
  b. qualitative measure
  c. quantitative measure
  d. non-manipulable measure
  e. None of the above.
Cengage Learning Testing, Powered by Cognero Page 225
ANSWER:   D
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   2

56. All of the following are examples of e-transaction measures except _____.

  a. days/weeks/months of supply of inventory 
  b. absolute number of suppliers
  c. percentage of suppliers
  d. percentage of advanced shipping notices
  e. electronic funds transfer
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   2

57. _____ is the continuous measuring of products, services, processes, activities, and practices against a firm’s best
competitors or those companies recognized as industry or functional leaders.
  a. Benchmarking 
  b. TCO
  c. TQM
  d. Effectiveness
  e. Efficiency
ANSWER:   a
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

58. _____ involves a comparison of one firm’s market strategies against those of another.
  a. Functional benchmarking
  b. Strategic benchmarking
  c. Operational benchmarking
  d. Support-activity benchmarking
  e. None of the above.
ANSWER:   b
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

Cengage Learning Testing, Powered by Cognero Page 226

59. _____ is a process that the purchasing function follows when it performs benchmarking comparisons.
  a. Strategic benchmarking
  b. Support-activity benchmarking
  c. Process capability
  d. Operational benchmarking 
  e. Outsourcing
ANSWER:   d
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

60. Which of the following is not one of the benefits of benchmarking?

  a. Helps identify the best business or functional practices to include in a firm’s business
plans.
  b. Determines internal customer needs and wants. 
  c. Breaks down a reluctance to change.
  d. Serves as a source of market intelligence.
  e. Uncovers a previously unrecognized technological breakthrough.
ANSWER:   b
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Understanding
OTHER:   Analytic
NOTES:   3

61. All of the following are phases in the benchmarking process except _____.
  a. planning
  b. analysis
  c. integration
  d. maturity
  e. total cost analysis 
ANSWER:   e
DIFFICULTY:  Easy
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

62. According to Kaplan and Norton, a balanced scorecard includes all of the following key performance measurement
areas except the _____.
  a. customer satisfaction perspective
  b. operational excellence
perspective
  c. innovation perspective
Cengage Learning Testing, Powered by Cognero Page 227
  d. human resource perspective
  e. financial perspective
ANSWER:   d
DIFFICULTY:  Moderate
KEYWORDS:   Bloom’s: Remembering
OTHER:   Analytic
NOTES:   3

Lớp soạn
Chapter 1
QN=001-SCM Supply management is planning and acquiring the
current and future needs of an organization via…..
a. Strategic Orientation, Cross-functional Groups, Process-
driven Approach and Supply base Management.

b. Strategic sourcing, Cross-functional Groups, Process-driven

Approach and Supply Base management.

c. Strategic Orientation, Cross-national Groups,Process-driven

Approach and Supply Base Management.

d. Strategic Orientation, Cross-functional Groups, Process-

driven Approach and Supplier Management
ANS: A

PTS: P.9, 4e

Mix Choice: Yes

QN=002-SCM201 These are one Four Enablers of Purchasing and Supply

Chain Management,except…
a. Human Resources

Cengage Learning Testing, Powered by Cognero Page 228

b. Information Technology

c. Measurement

d. Strategic Approach

ANS: D

PTS: P.18 , 4e

Mix Choice: Yes

QN=003-SCM201 What was purchasing’s central focus during World War

I?
a. Obtaining as much goods as possible

b. Procurement of raw material versus buying finished/ semi-

finished goods

c. Purchasing weapons and military equipment.

d. Adjusting demand and supply trends

ANS: B

PTS: P.23 , CH1, 4e

Mix Choice: Yes

QN=004-SCM201 In Capable Human Resources,….. has become an

integral part of purchasing and supply chain
management
a. Human factors

b. Supplier quality management

Cengage Learning Testing, Powered by Cognero Page 229

c. Cost-management

d. Financial capability

ANS: C

PTS: P.19 , CH 1, 4e

Mix Choice: Yes

QN=005-SCM201 Demand planning identifies all the claims on output

except…
a. Forecasts of anticipated demand

b. Inventory adjustments

c. Orders taken but not filled

d. Logistics network capable of satisfying demand

requirements
ANS: D

PTS: P.16 , CH 1, 4e

Mix Choice: Yes

Chapter 2

QN=001_SCM201_M Which of the following is NOT the element of the Purchasing

Process

a. Identify user requirements

b. Evaluate supplier needs effectively and efficiently

c. Identify suppliers to meet user needs

d. Develop agreements with suppliers

e.  

Cengage Learning Testing, Powered by Cognero Page 230

 f.  

ANS: B

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

QN=002_SCM201_M Which of the following is NOT the element of the Purchasing

Process

a. Develop ordering mechanism 

b. Ensure payment occurs promptly

c. Ascertain user needs were effectively met

d. Keep the quality stable, no need to improve more 

e.  

f.  

ANS: D

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

QN=003_SCM201_M Which of the following is NOT the objective of Purchasing

Organisation:

a. Supply assurance

b. Manage sourcing process efficiently and effectively

c. Develop disconnected supply strategies that support

business goals and objectives

Cengage Learning Testing, Powered by Cognero Page 231

d. Develop aligned goals with internal stakeholders

e.  

f.  

ANS: C

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

QN=004_SCM201_M To supporting the uninterrupted flow of high-quality goods

and services that internal customers require, Purchasing
have to do the following, except:

a. Buy products  and services at the right price

b. Buy products  and services from the right source

c. Buy products  and services at the right specification that

meets suppliers’ needs

d. Buy products  and services in the right quantity

e.  

f.  

ANS: C

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

QN=005_SCM201_M To supporting the uninterrupted flow of high-quality goods

and services that internal customers require, Purchasing
have to do the following, except:

Cengage Learning Testing, Powered by Cognero Page 232

a. Arrange for delivery at the right time

b. Buy products  and services from the right source

c. Buy products  and services at the right specification that

meets users’ needs

d. Require delivery to the right external customer

e.  

f.  

ANS: D

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

QN=006_SCM201_M Purchasing must manage its internal operations efficiently

and effectively, by performing the following, except:

a. Determining staffing levels

b. Developing and adhering to administrative budgets

c. Providing professional training and growth opportunities for

employees

d. Introducing systems that just keep spending visibility, efficient

invoicing and payment, and user satisfaction in a stable

e.  

f.  

ANS: D

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

Cengage Learning Testing, Powered by Cognero Page 233

QN=007_SCM201_M To develop Supply Base Management, Purchasing have to
do the following, except:

a. Select suppliers that can meet your short-term needs

b. Identify new suppliers that have the potential for excellent

performance and develops closer relationships with these
suppliers

c. Improve existing suppliers

d. Develop new suppliers that are not competitive with current

suppliers

e.  

f.  

ANS: A

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

QN=008_SCM201_M To develop aligned Goals with Internal Functional

Stakeholders, Purchasing must do the following, except:

a. Consider internal customers as Stokeholders 

b. Establish strong cross-boundary communication

c. Develop cross-functional coordination and collaboration

d. Develop positive, problem-solving relationships

e.  

f.  

ANS: A

Cengage Learning Testing, Powered by Cognero Page 234

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

QN=009_SCM201_M To develop Integrated Strategies that Support Goals and

Objectives, Purchasing have to do the following, except:

a. Segregate completely functional supply goals with

organizational goals

b. Become mutually-supportive, not counter-productive

c. Leverage supply management’s substantial impact on the

firm’s bottom line

d. Utilize supply management as a strategic core competency

e.  

f.  

ANS: A

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

QN=010_SCM201_M Effective supply market intelligence involves the following,

except:

a. Monitoring supply markets and trends and interpreting the

impact of these trends on company strategies

b. Identifying the critical materials and services required to

support company strategies in sub performance areas, during
the process of improving old products

c. Developing supply options and contingency plans that

support company plans

Cengage Learning Testing, Powered by Cognero Page 235

d. Supporting the organization’s need for a diverse and globally
competitive supply base

e.  

f.  

ANS: B

PTS:  

CHAPTER: 2

MIX CHOICES: Yes

Chapter 4
001_SCM201 In relationship inputs, information is about

A. Markets

B. Plans and requirements

C. Market share

D. A&B

ANS D

CHAPTER 4

MIX CHOICES Multiple choices

002_SCM201 What is the benefit of CFTs?

A. Reduced time to complete tasks

B. Joint ownership of decisions

C. Enhanced communication among functions or organizations

D. All of this

Cengage Learning Testing, Powered by Cognero Page 236

ANS D

CHAPTER 4

MIX CHOICES Multiple choices

003_SCM201 Which is not a types of Recognition and Rewards?

A. Praise by words

B. Non-monetary rewards

C. Monetary bonuses and other one-time cash awards

D. Executive recognition

ANS A

CHAPTER 4

MIX CHOICES Multiple choices

004_SCM201 What is the benefit of supplier involvement on CFTs?

A. Are rated more effective

B. Higher quality of information exchange

C. Put forth the greater effort

D. All of this

ANS D

Cengage Learning Testing, Powered by Cognero Page 237

CHAPTER 4

MIX CHOICES Multiple choices

005_SCM201 Which is not an assessment criteria for Supplier Suggestion Programs?

A. Go/No-go decision

B. Feasibility

C. Cost savings

D. Resources required

ANS C

CHAPTER 4

MIX CHOICES Multiple choices

006_SCM201 What forecasting systems combine the intelligence of multiple supply

chain partners?

A. FORE

B. SUPPLY

C. CPFR

D. MULTISUP

ANS C

CHAPTER 4

Cengage Learning Testing, Powered by Cognero Page 238

MIX CHOICES Multiple choices

007_SCM201 Which of the following is NOT a step in the forecasting process?

A. Determine the use of the forecast.

B. Select the forecasting model.

C. Determine the time horizon of the forecast.

D. Eliminate any assumptions.

ANS D

CHAPTER 4

MIX CHOICES Multiple choices

008_SCM201 The two general approaches to forecasting are:

A. qualitative and quantitative.

B. historical and associative.

C. judgmental and qualitative.

D. mathematical and statistical.

ANS A

CHAPTER 4

MIX CHOICES Multiple choices

Cengage Learning Testing, Powered by Cognero Page 239

009_SCM201 _____ involves professionally managing suppliers and developing close
working relationships with different internal groups.

A. Program management

B. Credible commitment

C. Supply integration

D. Relationship management

ANS C

CHAPTER 4

MIX CHOICES Multiple choices

010_SCM201 _____ is defined as the process by which two or more parties adopt a
high level of purposeful cooperation to maintain a trading relationship
over time to achieve specific goals.

A. Collaboration

B. SRM

C. KPI

D. Supply integration

ANS C

CHAPTER 4

MIX CHOICES Multiple choices

Cengage Learning Testing, Powered by Cognero Page 240

Chapter 6
QN=001_SCM201_M The _____ is a solicitation document that is used by organizations to
obtain general information about services, products, or suppliers and
is used generally before a specific requisition of an item is issued.

a. RFI

b. PO

c. RFP

d. RFQ

e.  

f.  

ANS: A 

PTS: P.209 The RFI is a solicitation document that is used by

organizations to obtain general information about services, products,
or suppliers and is used generally before a specific requisition of an
item is issued.

CHAPTER: 6

MIX CHOICES: Yes

 
QN=002_SCM201_ A/An _____ is a formal request for the suppliers to prepare bids, based
E on the terms and conditions set by the buyer.

a. RFQ

b. e-RA

c. purchase order

d. supplier analysis

e.  

f.  

ANS: A

PTS: P.216 A RFQ is a formal request for the suppliers to prepare bids,
based on the terms and conditions set by the buyer.

CHAPTER: 6
Cengage Learning Testing, Powered by Cognero Page 241
 MIX CHOICES: Yes
 
 
 
QN=003_SCM201_H A _____ has unique requirements or niche suppliers, yet are
significant to the business.

a. bottleneck commodity

b. matrix commodity

c. leverage commodity

d. critical commodity

e.  

f.  

ANS: A 

PTS: P.213 A bottleneck commodity is the final combination often found in

developing sourcing strategy is for bottleneck commodities, which
have unique requirements or niche suppliers yet are significant to the
business.

CHAPTER: 6

MIX CHOICES: Yes

 
 
QN=004_SCM201_H A ________ is an annual review of a firm’s entire set of purchases.  

a. spend analysis

b. SWOT analysis

c. value analysis

d. Pareto analysis  

e.  

f.  

ANS: A 
Cengage Learning Testing, Powered by Cognero Page 242
 PTS: P.196 A spend analysis is an annual review of a firm’s entire set of
purchases.

CHAPTER: 6

MIX CHOICES: Yes

 
 
 
QN=005_SCM201_H In supplier evaluation, a _____ includes those systems that release,
schedule, and control the flow of work in an organization.

a. planning and control system

b. traffic management system

c. Logistic system

d. None of the above.

e.  

f.  

ANS: A 

PTS: P.214 In supplier evaluation, a planning and control system includes

those systems that release, schedule, and control the flow of work in
an organization.

CHAPTER: 6

MIX CHOICES: Yes

 

QN=006_SCM201_M _____ is the process of identifying cost considerations beyond unit

price, transport, and tooling

a. The total cost of ownership

b. Price analysis

c. Make-buy analysis

d. Portfolio analysis

e.  

Cengage Learning Testing, Powered by Cognero Page 243

f.  

ANS: A

PTS: P.221 - Total cost of ownership (TCO) is the process of identifying

cost considerations beyond unit price, transport, and tooling

CHAPTER: 6

MIX CHOICES: Yes

QN=007_SCM201_M ____ is the process of determining the appropriate number and mix of
suppliers to maintain.

a. Make-buy analysis

b. Supply base optimization

c. Competitive bidding

d. Price analysis

e.  

f.  

ANS: B

PTS: P.218 - Supply base optimization is the process of determining the

appropriate number and mix of suppliers to maintain.

CHAPTER: 6

MIX CHOICES: Yes

QN=008_SCM201_ Companies that are successful in deploying supply chain strategies do

E so because the strategy development process is___

a. Clastic 

b. Decentralizing 

c. Disintegrative

d. Integrative.

e.  
Cengage Learning Testing, Powered by Cognero Page 244
f.  

ANS: D

PTS: P.192 Companies that are successful in deploying supply chain

strategies do so because the strategy development process is
integrative

CHAPTER: 6

MIX CHOICES: Yes

QN=009_SCM201_ A/An _____ has demonstrated its performance capabilities through

E previous purchase contracts and, therefore, receives preference during
the supplier selection process

a. Preferred supplier.

b. Commodity supplier

c. Sole source supplier

d. Marginal supplier

e.  

f.  

ANS: A

PTS: P.216  A preferred supplier has demonstrated its performance

capabilities through previous purchase contracts and, therefore,
receives preference during the supplier selection process

CHAPTER: 6

MIX CHOICES: Yes

QN=010_SCM201_M Which of the following is not one of Porter’s five forces?

a. Switching costs

b. Market internal competition

c. Supplier bargaining power

d. Threat of new entrants

e.  

Cengage Learning Testing, Powered by Cognero Page 245

 f.  

ANS: A

PTS: P.207 Porter’s five forces

CHAPTER: 6

MIX CHOICES: Yes

Chapter 7
QN=01 Which is the first step in Supplier Evaluation and Selection Process? 

a. Identify key sourcing requirements.

b. Identify potential supply sources.

c. Recognize the need for supplier selection

d. Determine method of supplier evaluation and selection

e.

f.

ANS: C 

PTS:

CHAPTER: 7

MIX Yes
CHOICES:

Source: p.237
The Supplier Evaluation and Selection Process/chapter 7

QN=02 The final step of the evaluation and selection process is 

a. To select the supplier(s) and reach a contract agreement

b. Evaluating supplier provided information, conducting supplier visits, and

using preferred supplier lists.

c. To evaluate the remaining suppliers, which may appear to be equally

Cengage Learning Testing, Powered by Cognero Page 246

 qualified

d. To search for information or the effort put forth toward the search is a
function of several variables

e.

f.

ANS: A

PTS:

CHAPTER: 7

MIX Yes
CHOICES:

Source: p.247
The Supplier Evaluation and Selection Process/chapter 7

QN=03 What are the primary criteria most evaluations rate suppliers?

a. Cost or price, quality, and sales

b. Cost or price, quantity, and delivery history.

c. Cost or price, quality, and delivery

d. Cost or price, quantity, and delivery

e.

f.

ANS: C

PTS:

CHAPTER: 7

MIX CHOICES: Yes

Source: p.248
Key Supplier Evaluation Criteria/three primary criteria/chapter 7

Cengage Learning Testing, Powered by Cognero Page 247

 QN=04 The Supplier Evaluation and Selection Survey Development includes

a. 5 steps

b. 7 steps

c. 8 steps 

d. 3 steps

e.

f.

ANS: B

PTS:

CHAPTER: 7

MIX
CHOICES:
Source: p.256
Developing a Supplier Evaluation and Selection Survey/ Identify Supplier Evaluation Categories(Exhibit
7.5)/chapter 7

QN=05 What is the first step in the Supplier Evaluation and Selection Survey
Development?

a. Identify and weigh subcategories.

b. Review and improve supplier performance continuously.

c. Evaluate supplier directly.

d. Identify supplier evaluation categories.

e.

f.

ANS: D

PTS:

CHAPTER: 7

MIX
CHOICES:

Cengage Learning Testing, Powered by Cognero Page 248

QN=06 What is the last step in the Supplier Evaluation and Selection Survey
Development?

a. Identify and weigh subcategories.

b. Review and improve supplier performance continuously.

c. Evaluate supplier directly.

d. Identify supplier evaluation categories.

e.

f.

ANS: B

PTS:

CHAPTER: 7

MIX
CHOICES:

QN=07 Which following definition is true about Countertrade?

a. A broad term that refers to all trade where buyer and seller have at least a
partial exchange of goods for goods

b. A relative size advantage

c. is generally more complex than domestic buying. 

d. is attempting to increase their business with traditionally disadvantaged

suppliers, including suppliers with female, minority, or handicapped owners

e.

f.

ANS: A

PTS:

CHAPTER: 7 

MIX
CHOICES:

Cengage Learning Testing, Powered by Cognero Page 249

source :Supplier selection/ countertrade requirement p 262
QN=08 How many critical issues belong to supplier selection

a. 3

b. 5

c. 7

d. 4

e.

f.

ANS: B

PTS:

CHAPTER: 7

MIX
CHOICES:
Source: supplier selection (P-261/262)

QN=09 Supply managers have many tools and approaches available to help them
shorten the selection cycle time. Although dozens of activities can help shorten
selection time, the following does not present a set of powerful ways to reduce
selection time.  

a. Map the Current Supplier Evaluation and Selection Process  

b. Integrate with Internal Customers  

c. Third-Party Support  

d. Countertrade Requirements  

e.

f.

ANS: D

PTS:

CHAPTER: 7

Cengage Learning Testing, Powered by Cognero Page 250

 MIX
CHOICES:
Source: p.263 
Tools and Approaches/ Reducing Supplier Evaluation and Selection Cycle Time/ Chapter 7

QN=10 In Electronic Tools to improve the evaluation and selection process, ...is a tool
to use during first-time visits with suppliers to make a quick “yes or no” decision
about the possibility of using the supplier. The tool requires the user to rank
various criteria among suppliers.  

a. Special Edition  

b. E-Learning Scorecard 

c. RFP Version 2.0  

d. SPEX evaluation kits  

e.

f.

ANS: B

PTS:

CHAPTER: 7

MIX
CHOICES:
Source: p.264
Tools and Approaches/ Reducing Supplier Evaluation and Selection Cycle Time/ Chapter 7

Chapter 8
QN=001 What is Supplier Quality?

a. Ability to meet or exceed current and future customer expectations

or requirements within critical performance areas on a consistent
basis.

b. A statistical measurement of a process’s ability to produce parts

within specified limits on a consistent basis.

c. The process of shrinking the supply base by reducing the number of

active suppliers.

Cengage Learning Testing, Powered by Cognero Page 251

d. An institutional procurement process that continuously improves
and re-evaluates the purchasing activities of a company.

e.

f.

ANS: A

PTS:

CHAPTER: 08

MIX CHOICES: Yes

Definition of Supplier Quality (slide 04)

QN=002 _____ is defined as the total composite of product and service

characteristics of marketing, engineering, manufacturing, and
maintenance through which the product or service in use will meet or
exceed the expectations of the customer.

a. Process capability

b. Quality

c. Supply base optimization

d. Productivity

e.

f.

ANS: B

PTS:

Cengage Learning Testing, Powered by Cognero Page 252

CHAPTER: 08

MIX CHOICES: Yes

Overview of Supplier Quality, page 272 ebook

QN=003 Which of the following is not one of the eight key principles of total
quality management?

a. Define quality in terms of customers and their requirements.

b. Stress objective rather than subjective analysis.

c. Strive for zero defects.

d. Inspect for quality at the end of the production line.

e.

f.

ANS: D

PTS:

CHAPTER: 08

MIX CHOICES: Yes

Eight Key Principles of Total Quality Management, page 278 ebook

QN=004 _____ means continuous improvement and must be built into every
single process in the organization.

a. Development

b. Involvement

Cengage Learning Testing, Powered by Cognero Page 253

c. Kaizen

d. Optimization

e.

f.

ANS: C

PTS:

CHAPTER: 08

MIX CHOICES: Yes

Point 5 - 14 points of Deming’s philosophy, page 280 ebook

QN=005 The DMAIC Model includes:

a. Define, Meaning, Analyze, Issue, Control

b. Define, Measure, Analyze, Improve, Control

c. Define, Measure, Analyze, Issue, Control

d. Definition, Meaning, Analyze, Issue, Control

e.

f.

ANS: B

PTS:

CHAPTER: 0

Cengage Learning Testing, Powered by Cognero Page 254

MIX CHOICES: Yes

The DMAIC Model - Slide 42

QN=006 Which of the following is NOT Deming's 14 points?

a. Creating a Vision and Demonstrate

b. Supplier Quality

c. Drive Out Fear

d. Encourage Education and Self-Improvement

e.

f.

ANS: B

PTS:

CHAPTER: 0

MIX CHOICES: Yes

14 points of Deming’s philosophy, page 281 ebook

QN=007 _____ is the process of determining the right mix and number of
suppliers to maintain for a given purchase category or commodity.

a. Supply base rationalization or optimization

b. Cost of Quality

c. Striving for Zero Defects

Cengage Learning Testing, Powered by Cognero Page 255

d. Supplier Quality

e.

f.

ANS: A

PTS:

CHAPTER: 08

MIX CHOICES: Yes

Striving for Zero defects, page 288 e-book

QN=008 ____ is the avoidance of nonconformance in products and services

by not following errors or defects to occur in the first place.

a. Optimization

b. Quality

c. Prevention

d. Measure

e.

f.

ANS: C

PTS:

CHAPTER: 0

MIX CHOICES: Yes

Cengage Learning Testing, Powered by Cognero Page 256
Cost of Quality, page 289 ebook

QN=009 Who argued that the only performance standard that defines total
quality is zero defects?

a. Joseph Juran

b. Philip Crosby

c. Adam Smith

d. Abraham Maslow

e.

f.

ANS: B

PTS:

CHAPTER: 08

MIX CHOICES: Yes

Striving for Zero defects, page 288 ebook

QN=010 Why are The ISO 14000 standards designed?

a. Environmental protection and pollution prevention.

b. Management process

c. Product quality assessment

Cengage Learning Testing, Powered by Cognero Page 257

d. Minimizing process errors

e.

f.

ANS: A

PTS:

CHAPTER: 08

MIX CHOICES: Yes

ISO 14000 standard, page 296 ebook

Chapter 9
QN=006-SCM201 What is the primary objective of supplier development
and improvement at Honda?
a. To serve customers with complex needs by providing
special treatment

b. To create and maintain a dedicated supply base that

support Honda’s U.S. requirement
c. To maintain and qualifying the supply base

d. To provide the highest quality products to their

customers
ANS: B

PTS: P.307 , CH 9, 4th e

Mix Choice: Yes

QN=007-SCM201 Supplier management involves…

a. The continuous measurement, evaluation, and analysis
of supplier performance

Cengage Learning Testing, Powered by Cognero Page 258

b. The continuous measurement, qualification , and
analysis of supplier performance
c. The continuous development, evaluation, and analysis
of supplier performance
d. The continuous measurement, evaluation , and analysis
of customer feedback.
ANS: A

PTS: P.308 , CH 9, 4th e

Mix Choice: Yes

QN=009-SCM201 Most of the objective, quantitative variables lie within

the following three categories,except:
a. Delivery performance

b. Quality performance

c. Cost reduction

d. Supplier performance

ANS: D

PTS: P.309 , CH 9, 4th e

Mix Choice: Yes

QN=010-SCM201 Most of the objective, quantitative variables lie within

the following three categories,except:
a. Delivery performance

b. Quality performance

c. Cost reduction

d. Supplier performance

ANS: D

Cengage Learning Testing, Powered by Cognero Page 259

PTS: P.309 , CH 9, 4th e

Mix Choice: Yes

QN=011-SCM201 Most of the objective, quantitative variables lie within

the following three categories,except:
a. Delivery performance

b. Quality performance

c. Cost reduction

d. Supplier performance

ANS: D

PTS: P.309 , CH 9, 4th e

Mix Choice: Yes

QN=012-SCM201 In Qualitative Service Factors, the description of

Problem resolution ability factor is…
a. Supplier’s willingness to help find ways to reduce
purchase cost

b. Supplier’s manufacturing ability compared with other

industry suppliers
c. Supplier’s attentiveness to problem resolution

d. Subjective rating concerning how well a buying firm

and a supplier work together
ANS: C

PTS: P.310 , CH 9, 4th e

Mix Choice: Yes

QN=013-SCM201 The advantages of Categorical include all of the

following except

Cengage Learning Testing, Powered by Cognero Page 260

a. Easy to implement

b. Requires minimal data

c. Most subjective

d. Low-cost system

ANS: C

PTS: P.311 , CH 9, 4th e

Mix Choice: Yes

QN=014-SCM201 The disadvantages of Weighted-point are

a. Tends to focus on unit price and Requires some
computer support

b. Cost accounting system required and Computer

resources required
c. Least reliable and Usually manual

d. Easy to implement and Requires minimal data

ANS: A

PTS: P.311 , CH 9, 4th e

Mix Choice: Yes

QN=015-SCM201 The first step of a process map for supplier development

is…
a. Identify Critical Commodities for Development

b. Form Cross-Functional Development Team

Cengage Learning Testing, Powered by Cognero Page 261

c. Meet with Supplier’s Top Management Team

d. Define Key Metrics and Cost-Sharing Mechanism

ANS: A

PTS: P.325 , CH 9, 4th e

Mix Choice: Yes

QN=016-SCM201 What are the three classifications of Barriers to supplier

development?
a. Buyer-specific barriers, buyer-supplier interface
barriers and supplier-specific barriers

b. Direct-involvement activities, incentives and rewards,

warning and penalties
c. Buyer-specific barriers, buyer-supplier interface
barriers ,warning and penalties
d. Direct-involvement activities, buyer-supplier interface
barriers, warning and penalties
ANS: A

PTS: P.328 , CH 9, 4th e

Mix Choice: Yes

QN=017-SCM201 The most popular practice of better companies

employed with their suppliers by the study of ManTech
team is…
a. Supplier rating, certification, and awards

b. Supplier symposia and suggestion programs

c. Supplier continuous improvement programs

d. Supplier training

ANS: D

PTS: P.329, CH 9, 4th e

Cengage Learning Testing, Powered by Cognero Page 262

Mix Choice: Yes

QN=018-SCM201 What should be the solution when organizational

cultures are poorly aligned
a. Adapt a new approach to local conditions

b. Designed-in motivation

c. Implement after commitment

d. Direct support

ANS: A

PTS: P.332 , CH 9, 4th e

Mix Choice: Yes

QN=019-SCM201 Pursuing supplier development activities directly with

suppliers is neither quick nor easy, it requires…
a. Vision, commitment, open communication and
equitable sharing of costs and benefits

b. Vision, commitment, open communication and

maintaining supplier relationship
c. Support, commitment, open communication and
equitable sharing of costs and benefits
d. Vision, quality, open communication and equitable
sharing of costs and benefits
ANS: A

PTS: P.335, CH 9, 4th e

Mix Choice: Yes

QN=020-SCM201 Over the last 10 years, the package delivery has

become….
a. Highly competitive

Cengage Learning Testing, Powered by Cognero Page 263

 b. Relatively competitive

c. No longer competitive

d. Highly saturated

ANS: A

PTS: P.336, CH 9, 4th e

Mix Choice: Yes

Chapter 11

QN=011_SCM201_M Purchasing and supply chain specialists must understand the

principles of…

a. purchase price paid

b. price and cost analysis.

c. total cost analysis

d. cost analysis

e.  

f.  

ANS: B

PTS:  

CHAPTER: 11

MIX CHOICES: Yes

 

Cengage Learning Testing, Powered by Cognero Page 264

 QN=012_SCM201_M The ability to practice … techniques, such as those outlined
in this chapter, can make the difference between creating
value and creating waste.

a. purchase price paid

b. price and cost analysis

c. total cost analysis

d. cost analysis

e.  

f.  

ANS: B

PTS:  

CHAPTER: 11

MIX CHOICES: Yes

 

QN=013_SCM201_M An awareness of cost fundamentals, cost analysis

techniques, and innovative approaches to product costing is
simply another area for …

a. the purchasing and supply chain professional to master

b. the importance of establishing the impact on customer needs

c. best-in-class companies recognize

d. the supplier benefits from longer-term contracts

e.  

f.  

ANS: A

Cengage Learning Testing, Powered by Cognero Page 265

 PTS:  

CHAPTER: 11

MIX CHOICES: Yes

 

QN=014_SCM201_M How many ways are there to build a Total Cost of Ownership
Model?

a. 3

b. 4

c. 5

d. 6

e.  

f.  

ANS: D

PTS:  

CHAPTER: 11

MIX CHOICES: Yes

 

QN=015_SCM201_M Typically these costs can be broken into four broad

categories:

a. Purchase price, Acquisition costs, Usage costs, End-of-life

costs

b. Purchase price, Acquisition costs, Usage costs, TCO

categories

c. Purchase price, Acquisition costs, Usage costs, Total cost

analysis

Cengage Learning Testing, Powered by Cognero Page 266

 d. Purchase price, Acquisition costs, Usage costs, Cost analysis

e.  

f.  

ANS: A

PTS:  

CHAPTER: 11

MIX CHOICES: Yes

 

QN=016_SCM201_M The impact of cost reduction on profits is much larger than

the impact of increased

a. Innovation

b. Production

c. Sales

d. Information

e.  

f.  

ANS: C

PTS:  

CHAPTER: 11

MIX CHOICES: Yes

QN=017_SCM201_M Value=(quality + technology + service + cycle time) / Price

Cengage Learning Testing, Powered by Cognero Page 267

a. The value equation

b. Total cost analysis

c. Profit

d. Cost-Based Pricing Models

e.  

f.  

ANS: a

PTS:  

CHAPTER: 11

MIX CHOICES: Yes

QN=018_SCM201_M Price Analysis is...

a. Process of comparing supplier prices to external price

benchmarks, focuses on seller price with no consideration of
the cost of production

b. Analyzing everything that goes into making the product (labor

hours, material, rates) that add up to the final price

c.

Analyzing shipping costs, tariffs, quality, etc.

d.

all the above

e.  

f.  

ANS: a

PTS:  

CHAPTER: 11

Cengage Learning Testing, Powered by Cognero Page 268

MIX CHOICES: Yes

QN=019_SCM201_M Six steps in strategic cost management?

a. Value Engineering,On Site Supplier Development, Cross

Enterprise Cost Improvement, Joint Brainstorming, Supplier
Suggestion Programs, Design and Development

b. Value Engineering,On Site Supplier Development, Cross

Enterprise Cost Improvement, Ongoing Production, Supplier
Suggestion Programs, Design and Development

c.

Value Engineering,Supply Chain Compression, Cross

Enterprise Cost Improvement, Ongoing Production, Supplier
Suggestion Programs, Design and Development

d. Value Engineering,On Site Supplier Development, Cross

Enterprise Cost Improvement, Joint Brainstorming, Supplier
Suggestion Programs, Supply Chain Compression

e.  

f.  

ANS: d

PTS:  

CHAPTER: 11

MIX CHOICES: Yes

QN=020_SCM201_M “Supplier takes an estimate of costs and adds a markup

percentage” is?

a. Cost Markup Pricing Model

b. Rate of Return Pricing Model

Cengage Learning Testing, Powered by Cognero Page 269

c.

Cost-Based Pricing Models

d. Market Driven Pricing Models

e.  

f.  

ANS: a

PTS:  

CHAPTER: 11

MIX CHOICES: Yes

Chapter 12
001_SCM201_E A/an ______ _____ is a series of tasks that requires the completion of
specific objectives within a certain time frame; has defined start and stop
dates; consumes resources, particularly time, personnel, and budget; and
operates with limited resources.

A. Project

B. Process

C. Procedure

D. Purchase order

ANS A

CHAPTER 12

MIX CHOICES Multiple choices

002_SCM201_M What are six phases of a Project?

Cengage Learning Testing, Powered by Cognero Page 270
A. Concept; Definition; Planning; Preliminary studies; Performance; Post
completion

B. Concept; Project definition; Establishing; Preliminary studies;

Performance; Post completion

C. Concept; Definition; Establishing; Preliminary studies; Performance;

Post completion

D. Concept; Project definition; Planning; Preliminary studies; Performance;

Post completion

ANS D

CHAPTER 12

MIX CHOICES Multiple choices

003_SCM201_M Which of the following is correct about Gantt chart?

A. Responsible for developing a sourcing strategy, which will involve

selecting a supplier follow-on systems development

B. Visually displays tasks and times associated with a project

C. Establish the rate of improvement due to learning as producers real- ize

direct-labor cost improvements as production volumes increase

D. Involves examining all elements of a component, assembly, end product,

or service to make sure it fulfills its intended function at the lowest total
cost

ANS B

CHAPTER 12

Cengage Learning Testing, Powered by Cognero Page 271

MIX CHOICES Multiple choices

004_SCM201_E A _____ establishes the rate of improvement because of learning as

producers realize direct-labor cost improvements as production volumes
increase.

A. Leverage

B. Knowledge curve

C. Learning curve

D. Product life cycle

ANS C

CHAPTER 12

MIX CHOICES Multiple choices

005_SCM201 In a PERT network, the difference between the _____ and the _____ is
slack.

A. Early start; late finish

B. Late start; early start

C. Early start; early finish

D. Late start; early finish

ANS B

CHAPTER 12

Cengage Learning Testing, Powered by Cognero Page 272

MIX CHOICES Multiple choices

006_SCM201 What is the formula of Value Analysis?

A. Value = Function * Cost

B. Value = Cost/Function

C. Value = Function - Cost

D. Value = Function/Cost

ANS D

CHAPTER 12

MIX CHOICES Multiple choices

007_SCM201 The value analysis process includes

A. Gather information -> Analyze -> Summarize and follow up

B. Analyze -> Speculate -> Recommend and execute -> Summarize and
follow up

C. Gather information -> Speculate -> Analyze -> Recommend and execute
-> Summarized and follow up

D. Gather information -> Analyze -> Speculate -> Recommend and execute
-> Summarized and follow up

ANS C

CHAPTER 12

Cengage Learning Testing, Powered by Cognero Page 273

MIX CHOICES Multiple choices

008_SCM201 … helps identify and then eliminate non-value-added activities (waste) or

delays.

A. Process Mapping

B. Typical Supply Chain Processes

C. Value Stream Mapping

D. Non-value-adding

ANS A

CHAPTER 12

MIX CHOICES Multiple choices

009_SCM201 Which one is not included in Statistical Tools Used in VSM?

A. Scatter plots

B. Finance tables

C. Pareto charts

D. Cause-and-effect diagrams

ANS B

CHAPTER 12

MIX CHOICES Multiple choices

Cengage Learning Testing, Powered by Cognero Page 274

010_SCM201 Typical Supply Chain Processes does not include

A. Outbound logistics and physical distribution

B. Inventory control and management

C. Generates buy-in from affected groups

D. New-product design and development

ANS C

CHAPTER 12

MIX CHOICES Multiple choices

Chapter 13
QN=001_SCM201_M Which of the following is a type of negotiation in which two or more
parties are expanding the value or resources available to all parties
through cooperative negotiation?

a. Win-lose negotiation

b. Zero-sum negotiation

c. Fixed-sum game

d. Integrative bargaining

ANS: D

PTS: P.517/Win-win negotiation <- look at me

CHAPTER: 13

MIX CHOICES: Yes

Cengage Learning Testing, Powered by Cognero Page 275
QN=002_SCM201_H What of the following requires the parties to require more than one
issue in conflict and then agree to trade-off among these issues so one
party achieves a highly preferred outcome on the first issue and the
other person achieves a highly preferred outcome on the second issue?

a. Find a bridge solution

b. Use nonspecific compensation

c. Logroll

d. Cut the costs for compliance

ANS: C

PTS: P.518/Logroll

CHAPTER: 13

MIX CHOICES: Yes

QN=003_SCM201_H Which country firms are dependable and loyal suppliers, they will
treat their customers like valuable family members?

a. Japan

b. Vietnam

c. Russia

d. France

ANS: A

PTS: P.524/Japan 

CHAPTER: 13

MIX CHOICES: Yes

Cengage Learning Testing, Powered by Cognero Page 276

QN=004_SCM201_ What is negotiation?
E

a. A process of formal communication, either face-to-face or via

electronic means, where two or more people, groups, or organizations
come together to seek mutual agreement about an issue or issues

b. The most advantageous for the negotiator to walk away from the table
and implement his or her next best option

c. The approach used to reach a mutually beneficial agreement than

others

d. A process involves management of time, information, and power

between individuals and organizations who are independent

ANS: A

PTS: Exhibit 13.1, Page 498, Negotiation Definitions

CHAPTER: 13

MIX CHOICES: Yes

QN=005_SCM201_ That point where it is advantageous to walk away from the negotiation
E is ____________

a. BATNA

b. Position

c. Interest

d. Concession

ANS: A

PTS:   Exhibit 13.1, Page 498, Negotiation Definitions

CHAPTER: 13

Cengage Learning Testing, Powered by Cognero Page 277

MIX CHOICES: Yes

QN=006_SCM201_M Which of the following is not correct about interest in negotiation?

a. Unspoken motivation or reason that underlies any given position

b. Unlikely to be expressly stated or acknowledged

c. May not be directly germane to the stated position

d. Always focus on the other party’s underlying interests, its stated

positions

ANS: D

PTS: Chapter 13, Slide 8 and 9

CHAPTER: 13

MIX CHOICES: Yes

QN=007_SCM201_E Which of the following is the first phase in the negotiation process?

a. Identify or anticipate sourcing requirement

b. Determine if negotiation or bidding is required

c. Plan for the negotiation

d. Conduct the negotiation

ANS: A

PTS: Chapter 13, Slide 16

CHAPTER: 13

Cengage Learning Testing, Powered by Cognero Page 278

MIX CHOICES: Yes

QN=008_SCM201_ Researchers have identified six general types of power exercised by

E individuals or organizations: informational,_____,  coercive,
legitimate, expert, and referent
.Which one is missing?

a. reward

b. award

c. bounty

d. honor

ANS: A

PTS: Chapter 13, Sources of Negotiation Power

CHAPTER: 13

MIX CHOICES: Yes

QN=009_SCM201_E _____ is the ability to influence another person or organization

a. power

b. coercive

c. legitimate

d. expert

ANS: A

PTS: Chapter 13, Power in Negotiation

CHAPTER: 13
Cengage Learning Testing, Powered by Cognero Page 279
MIX CHOICES: Yes

QN=0010_SCM201_E Strategic negotiation issues involve the broader questions

regarding_______ and how to negotiate.

a. Who, what, where, when

b. Who, what, where, why

c. Who, what, where, which

d. What, where, why, which

ANS: A

PTS: Chapter 13, Develop the Negotiation Strategy and Accompanying

Tactics

CHAPTER: 13

MIX CHOICES: Yes

Chapter 16
QN=03 The most common environmental performance criteria used when evaluating
a supplier’s performance include the following excepts:

a. ISO 14000 certification

b. Control of ozone-depleting substances

c. Disclosure of environmental infractions

d. Labor productivity index

e.

f.

ANS: D

PTS:

CHAPTER: 7

Cengage Learning Testing, Powered by Cognero Page 280

 MIX
CHOICES:
Source: p.251 & 252
Key Supplier Evaluation Criteria/Environmental Regulation Compliance/chapter 7

CHAPTER 16:

QN=12 Physical inventory plays an important role in all supply chains. Which of
following section is not considered the proper reasons for carrying inventory ?

a. Extended order-cycle times from global sourcing

b. Avoid disruptions in operational performance

c. Hedge against marketplace uncertainty

d. Support operational requirements

e.

f.

ANS: A

PTS:

CHAPTER: 16

MIX
CHOICES:
Source: p.593
The Right Reasons for Investing in Inventory/chapter 16

QN=13 Poor quality affects material yields when a portion of the shipment is a ……….
grade or quality than what was specified, therefore providing …….. output than
expected.

a. Lower; more

b. Higher; more

c. Lower; less 

d. Higher; less

e.

f.

ANS: C
Cengage Learning Testing, Powered by Cognero Page 281
 PTS:

CHAPTER: 16

MIX
CHOICES:
Source
Poor quality affects material yields when a portion of the shipment is a lower grade or quality than what was
specified, therefore providing less output than expected/p596
  
QN=14 Forecasting systems should have a goal of …………..the 
difference between a forecasted requirement and an actual requirement to
avoid having to carry higher inventory levels as protection.

a. minimizing 

b. maxing 

c. comparing 

d. realizing

e.

f.

ANS: A

PTS:

CHAPTER: 16

MIX
CHOICES:

QN=15 Which following step doesn’t belong to JIT Purchasing Barriers?

a. Dispersed supply base

b. Historic buyer-seller relationships

c. Supplier quality performance

d. Reduce the number of carriers

e.

Cengage Learning Testing, Powered by Cognero Page 282

 f.

ANS: D

PTS:

CHAPTER: 16 ( creating the lean supply chain)

MIX CHOICES:
Source: Creating the lean supply chain/ Just in time transportation0JIT Purchasing ( Just in time purchasing
barriers) P605/604

QN=16 Which following is true about kanban system?

a. is the first major element of a lean supply chain

b. is a never-ending effort to eliminate waste, which is defined as “any activity

that does not add value to the good or service in the eyes of the consumer

c. is a production control approach that uses containers, cards, or visual cues to

control the production and movement of goods through the supply chain

d. is a philosophy of manufacturing based on planned elimination of all waste

and on continuous improvement of productivity

e.

f.

ANS: C

PTS:

CHAPTER: 16

MIX
CHOICES:
Source:  Creating the lean supply chain/Just-in-Time Kanban Systems P606

QN=17 In Lean supply chain management,  actions support reduced order-cycle

time with suppliers  

a. Expanded electronic capability

b. Supplier development support  

c. Order-cycle time measurement  

d. Delivering the Perfect Customer Order  

Cengage Learning Testing, Powered by Cognero Page 283

 e.

f.

ANS: D

PTS:

CHAPTER: 16

MIX
CHOICES:
Source: p613
Approaches for Managing Inventory Investment/chapter 16

QN=18 … systems attempt to make the most effective use of finished-goods

inventories. These systems, which are concerned with inventory that has left
the work-in-process status and is working its way through a channel of
distribution toward the customer.

a. Supply Chain Inventory Planners  

b. Distribution resource planning (DRP)  

c. Automated Inventory Tracking Systems  

d. Material Requirements Planning System  

e.

f.

ANS: B

PTS:

CHAPTER: 16

MIX
CHOICES:
Source: p614
Approaches for Managing Inventory Investment/chapter 16

QN=19 Which is not one of the five primary categories of inventory?

a. FInished goods inventory

b. Unfinished item inventory

Cengage Learning Testing, Powered by Cognero Page 284
 c. Maintenance, repair, and operating (MRO) supplies inventory

d. Pipeline/in-transit inventory

e.

f.

ANS: B

PTS:

CHAPTER: 16

MIX CHOICES: Yes

Source: p587
Understanding Supply Chain Inventory/chapter 16

QN=20 How many percent of work-in-process (WIP) inventory is in line waiting for
further work or processing in most facilities

a. 24%

b. 4%

c. 15%

d. 36%

e.

f.

ANS: D

PTS:

CHAPTER: 16

MIX Yes
CHOICES:

Source: p587
Understanding Supply Chain Inventory/chapter 16

Chapter 19
Cengage Learning Testing, Powered by Cognero Page 285
QN=001 What is the formula of Purchase price variance?

a. Actual price − Planned price

b. Actual price/Planned price

c. Actual price + Planned price

d. (Actual price − Planned price) × Purchase quantity

e.

f.

ANS: A

PTS:

CHAPTER: 19

MIX CHOICES: Yes

Price performance measures, page 713 ebook

QN=002 What is the formula of Total purchase price variance?

a. Actual price − Planned price

b. Actual price/Planned price

c. Actual price + Planned price

d. (Actual price − Planned price) × Purchase quantity

e.

Cengage Learning Testing, Powered by Cognero Page 286

f.

ANS: D

PTS:

CHAPTER: 19

MIX CHOICES: Yes

Price performance measures, page 713 ebook

QN=003 Which is the true order of The Benchmarking process?

a. Planning, Analysis, Integration, Action, Maturity

b. Analysis, Planning, Integration, Action, Maturity

c. Integration, Action, Analysis, Planning, Maturity

d. Planning, Integration, Analysis, Action, Maturity

e.

f.

ANS: A

PTS:

CHAPTER: 19

MIX CHOICES: Yes

The Benchmarking process, page 731 ebook

QN=004 What should we do in the Planning phase of the Benchmarking

Cengage Learning Testing, Powered by Cognero Page 287

 process?

a. Determine which products, processes, or functions to benchmark

b. Determine how and why benchmark target is better

c. Communicate benchmark findings to key personnel

d. Include personnel responsible for carrying out plans during

formulation of action plans

e.

f.

ANS: A

PTS:

CHAPTER: 19

MIX CHOICES: Yes

Benchmarking Implementation Phases, page 732 ebook

QN=005 What should we do in the Analysis phase of the Benchmarking

process?

a. Determine which products, processes, or functions to benchmark

b. Determine how and why benchmark target is better

c. Communicate benchmark findings to key personnel

d. Include personnel responsible for carrying out plans during

formulation of action plans

e.

Cengage Learning Testing, Powered by Cognero Page 288

f.

ANS: B

PTS:

CHAPTER: 19

MIX CHOICES: Yes

Benchmarking Implementation Phases, page 732 ebook

QN=006 What should we do in the Action phase of the Benchmarking

process?

a. Determine which products, processes, or functions to benchmark

b. Determine how and why benchmark target is better

c. Communicate benchmark findings to key personnel

d. Include personnel responsible for carrying out plans during

formulation of action plans

e.

f.

ANS: D

PTS:

CHAPTER: 19

MIX CHOICES: Yes

Benchmarking Implementation Phases, page 732 ebook

Cengage Learning Testing, Powered by Cognero Page 289

QN=007 All of the following revenue measures demonstrate the impact of
strategies on the firm’s revenues, except

a. Number of patents that have led to royalties

b. Number of invention disclosure forms filed

c. Number of patents granted

d. Number of discounted samples from suppliers

e.

f.

ANS: D

PTS:

CHAPTER: 19

MIX CHOICES: Yes

Revenue measures ẽample, page 716

QN=008 Most purchasing and supply chain measures fall into one of the
following categories, except

a. Price performance

b. Quality

c. Physical environment and safety

d. Demography

e.

Cengage Learning Testing, Powered by Cognero Page 290

f.

ANS:

PTS: D

CHAPTER: 19

MIX CHOICES: Yes

Purchasing and Supply Chain Performance Measurement Categories, page 711 ebook

QN=009 Which is not the problem with purchasing and supply chain
measurement and evaluation?

a. Lack of detail

b. Too much data

c. Measures that are long-term focused

d. Drive the wrong performance

e.

f.

ANS: C

PTS:

CHAPTER: 19

MIX CHOICES: Yes

Problems with Purchasing and Supply Chain Measurement and Evaluation, page 709 ebook

Cengage Learning Testing, Powered by Cognero Page 291

QN=010 Which of the following statements is true about cost avoidance?

a. A difference between the price paid and a potentially higher price

which might have occurred without specific effort or action

b. Almost always require automatic calculation

c. Can be subject to minimization

d. A cost avoidance is the increase or decrease in cost resulting from a

change in purchasing strategy or practice

e.

f.

ANS: A

PTS:

CHAPTER: 19

MIX CHOICES: Yes

Cost-Effectiveness Measures, page 715 ebook

Cengage Learning Testing, Powered by Cognero Page 292

Cengage Learning Testing, Powered by Cognero Page 293