Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition Multiple Choice (One point each) 1. _________ standards can be applied to both manufacturing and service firms using the same methodology. SPC provides input to the _________ approach. A. B. C. D. E. Eight alpha / eight alpha Sigma nine / sigma nine One omega / one omega Six epsilon / six epsilon Six-sigma / six-sigma 2. Payback is the best known investment criterion. Payback is the number of ________ it takes to repay the initial investment. A. B. C. D. E. payments quarters years months premiums 3. ____________________ is usually motivated by a need to increase quality, reduce operating expense, and provide more efficiency. A. B. C. D. E. The building of a new plant The replacement of old equipment The need to maintain a competitive advantage Acquiring new technology Increasing the operations budget 4. The goal (of Statistical Process Control) is to ___________________. A. B. C. D. E. eliminate errors improve quality improve effectiveness reduce costs prevent process errors before they occur 5. The ___________ method evaluates supplier performance by using standard cost analysis. A. B. price-cost ratio cost-ratio 1 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition C. D. E. performance process categorical 6. The buying firm must be highly skilled at ____________________________. A. B. C. D. E. specifying product attributes forecasting expected requirements ensuring the right quality at a reasonable price all the above \"A\" and \"C\" only 7. It is no easy task for management to decide to __________________ component parts and services. A. B. C. D. E. make lease buy all of the above \"A\" and \"C\" only 8. Implementing TQM requires the following: Defining the _______. Identifying systems ________. Identifying __________. A. B. C. D. E. vision / inputs / suppliers objectives / processes / clients mission / output / customers vision / weaknesses / stakeholders goals / strengths / shareholders 9. In the ________ bargaining situation, the profits (and/or losses) of the respective bargainers always sum to the same fixed amount. The term _________ stands for the fact that what one bargainer gains, the other losses and the gains (and/or losses) net out to be _______. A. B. C. D. E. net-sum / net-sum / one zero-sum / zero-sum / zero routine-sum / routine-sum / two zero-sum / zero-sum / ten net-sum / net-sum / zero 10. According to the textbook, three additional conditions also must exist in order for 2 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition bargaining to occur. Which of the following is not one of those conditions? A. B. C. D. The provisional offers must determine the outcome of the situation, i.e., one party must lose and the other party must win. Mutual compromise must be possible. If one of the parties must choose between total victory and complete loss, no bargaining occurs. Bargaining situations require intermediate solutions for the parties involved. The possibility must exist for provisional offers to be made by those involved in the situation. The provisional offers must not determine the outcome of the situation until the terms are accepted by all parties. 11. It is important to make sure that all ______________ feel as though their interests were represented and considered in making the decision. A. B. C. D. E. employees stockholders managers stakeholders union members 12. The role of the purchasing function in a manufacturing organization has become increasingly important. The _____________ production control system focuses on reducing both raw materials and work-in-process inventories. A. B. C. D. E. JUST-ON-TARGET MBO just-in-time strategic just-in-line 13. A commonly cited source of financial benefit from outsourcing is the vendor's better ______________. A. B. C. D. E. quality cost structure expertise and knowledge economies of scale quality and technology 14. Two-party bargaining can be divided into two types: _________ and ___________. A. B. C. D. E. standard / routine fail safe / goal oriented distributive / integrative win / lose routine / fail safe 3 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition 15. The acronym \"MTO\" is defined as: A. B. C. D. E. make-to-order maintenance-to-order materials-to-order message-to-operations machined-to-order 16. In general, __________ is stored capacity. A. B. C. D. E. stock inventory assets overtime second and third shifts 17. The ________ is the source of raw materials and component part inventories. A. B. C. D. E. buyer customer manufacturing organization supplier none of the above 18. Shippers and carriers also must observe _____________. They must consider the implications of legal constraints on each movement under the final contractual agreement. A. B. C. D. E. state laws and regulations local laws and regulations contractual provisions corporate policies and procedures antitrust restrictions 19. In many instances, the negotiation process in transportation has become more formalized. The negotiation process should be based on a __________ strategy. A. B. C. D. E. long-term win-win short-term strategic competitive win-lose 20. __________ are used to transport low-valued, nonperishable products such as oil, diesel 4 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition fuel, jet fuel, kerosene, and natural gas. A. B. C. D. E. Trucks Rail cars Pipelines Barges Water carriers 21. The development of a strategic purchasing plan requires all of the following with one exception. Which one is incorrect? A. B. C. D. A complete understanding of corporate strategies and marketing plans An extensive evaluation/study of current suppliers, how performance is measured, and the expectation of suppliers relative to the industry. Study of the degree of local purchasing opportunities. Identification of total costs associated with current purchasing department/function, budgets, staffing, and so forth. 22. Supplier partnerships can be categorized using five factors. Which of the following is not one of the five factors? A. B. C. D. E. degree of risk/reward type of relationship product type infromation asset ownership 23. A third problem companies face in global sourcing is ___________. Many times there are delays and confusion in translations. A. B. C. D. E. negotiating bargaining communication contracting understanding one another 24. A few countries, notably ______________, are often targeted as the ones that are displacing American workers by offering cheap labor. A. B. C. D. E. Japan and China South Korea and China South Korea and Taiwan India and Japan India and China 25. Once a final list is established, ___________ should be arranged. This meeting involves 5 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition representatives from all potential vendors and all relevant hospital departments in order to discuss general perceived requirements of the equipment. A. B. C. D. E. a separate meeting with each supplier a vendor conference a reverse auction a vendor planning session a pre-bid conference 26. Before developing an initial base of qualified suppliers, the purchasing and requesting user departments must develop a list of ____________ that are as detailed as possible. A. B. C. D. E. potential suppliers manufacturers functional specifications attributes benefits 27. The buying firm must consider its total cost of accepting a quantity discount. Specifically, the ___________ associated with carrying larger quantities must be compared to the expected benefit of the discounts. A. B. C. D. E. direct costs indirect costs holding costs transportation costs cash outlay 28. The buying firm, no matter how powerful, should attempt to obtain a ___________ and good consensus. A. B. C. D. E. fair price market price discount price low price standard price 29. With its many benefits, supply chain partnerships retain several inherent risks that can be potentially damaging to participants. First and foremost, heavy reliance on one partner can be disastrous if the partner _____________. A. B. C. D. changes the specifications does not deliver on time fails to produce quality products does not meet expectations 6 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition E. increases the price of his materials 30. The relationship between _______________ is dependent upon the origins of the commitment. A. B. C. D. E. power and commitment involvement and commitment power and politics power and involvement politics and involvement 31. _______ systems are helpful for companies with assembled products that have component requirements dependent on the final product. A. B. C. D. E. MRP IRA PDQ MRA ARA 32. The acronym \"EOQ\" is defined as _______________. A. B. C. D. E. economic order quantity economical order quantity equal opportunity quantity equal order quantity economic organizational quantity 33. In the area of inventory management, the purchasing professional should make explicit decisions regarding which of the following? A. B. C. D. E. What to stock How much to invest How much service to offer All the above \"A\" and \"B\" only 34. __________ professionals are primarily charged with the responsibility for controlling the total cost of ownership (TCO). A. B. C. D. Accounting Purchasing Marketing Buying 7 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition E. Operating 35. _________________ is a stockless inventory method for ordering and stocking MRO and related items. The use of ________________ will aid the firm in reducing ordering and inventory costs. A. B. C. D. E. Purchase Order Systems / Purchase Order Systems Systems procurement / systems procurement Materials contracting / materials contracting Systems contracting / systems contracting Contracting systems / contracting systems 36. __________ may not be the solution for all commodity buying. As an example, if there are too few sellers, ___________ will not yield the best price. A. B. C. D. Traditional auctions / traditional auctions Traditional auctions / reverse auctions Reverse auctions / traditional auctions Reverse auctions / reverse auctions 37. Government contractors, under certain conditions must award subcontracts to ________________ bidders. A. B. C. D. E. the low cost the preferred women and minority the advanced female 38. An FOB shipment, means ___________ at a named place. A. B. C. D. E. freight on board FedEx on board freight on bill free on board free on border 39. When the seller makes an agreement to allow the buyer a specific time limit to make the purchase, _____________ will pass from the offeree to the offeror in return for a firm commitment. A. full commitment 8 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition B. C. D. E. trust services accountability consideration 40. The three types of purchasing authority are ________ authority, ________ authority, and __________ authority. A. B. C. D. E. granted / line / functional implied / staff / emergency line / staff / implied express / implied / emergency functional / staff / emergency 41. If the ______ is adequate, the right contractor is selected, and the ultimate price is reasonable, then a good management effort will secure the project. A poor management effort will undo all three pre-execution achievements. A. B. C. D. E. SOP DWA CCC SPA SOW 42. EF - earliest finish time can be defines as: A. B. C. D. the earliest time at which the activity can start given that its precedent activities must be completed first. equal to the earliest start time for the activity plus the time required to complete the activity. equal to the latest finish time minus the time required to complete the activity. equal to the earliest start time for the activity plus the time required to complete the activity. 43. The ___________ Act suggests that it is illegal to offer a quantity discount for commodities of like grade and quality that are not based on differences in the cost of manufacturer sales, or delivery resulting from the differing methods or quantities in which such commodities are sold or delivered. A. B. C. D. E. Robin-Parmer Robinson-Patrick Robinson-Patman Martin-Parmer Roberts-Pullman 9 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition 44. The general __________ problem is to batch requirements to minimize the sum of ordering and carrying cost each time an order is to be placed. A. B. C. D. E. buying ordering lot-sizing transportation cost analysis 45. Purchasing agents who violate ethical codes could easily ___________ . A. B. C. D. E. be reprimanded be taken to court loose their jobs loose the respect of their peers go to jail True/False Questions (One Point Each) 46. Setting safety stock so as to achieve a pre-specified service level enables fair comparison of the standard lot-sizing procedures. A. B. True False 47. Among the better-known lot-sizing methods for the single item, non-discount, timephased, certain-demand models are: (1) lot for lot, (2) economic order quantity, (3) periodic order quantity, (4) least unit cost, (5) McLaren's order moment, (6) Silver-Meal, and (7) the Wagner-Whitin dynamic programming algorithm. A. B. True False 48. Buyers and sellers located on different continents can meet electronically. E-sourcing will also lead to higher transactional accuracy and cost reductions for the entire supply chain. E-sourcing creates value by : 1. Reducing the total cost of ownership 2. Streamlining the purchasing process and 3. Business innovation A. B. True False 10 Final Exam - Chapters 1-14 Purchasing and supply chain management 3rd edition 49. A system includes inputs, processes, outputs and verification. A. True B. False 50. PSO 9000 is a set of standards that document the implementation of a quality program. In order to be certified, suppliers need to provide documentation to an external examiner that they meet the PSO 9000 requirements. Once a firm is certified, it will be listed in a directory so that all of its potential customers can know which firms have been certified and to what level. A. True B. False ESSAY (Ten Points) 51. Discuss the complexities of global sourcing? Give specific examples. 11