Checkup 4

Question 1

_______________________ may achieve lower costs for the firm.

Answer 1

Centralized purchasing

Question 2

Because the purchasing units are smaller, a firm has __________ control over purchases when purchasing is decentralized.

Answer 2

less

Question 3

Inventory accumulations are likely to take place when prices are expected to ____________.

Answer 3

rise

Question 4

The primary advantage of decentralized purchasing is ___________________.

Answer 4

flexibility

Question 5

___________________ are more likely when purchasing is centralized rather than decentralized.

Answer 5

Quantity discounts

Question 6

Reciprocity limits ___________ in choosing suppliers.

Answer 6

flexibility

Question 7

The purchasing department should (always, or not always) obtain the highest quality materials and equipment available.

Answer 7

not always

Question 8

__________________ usually requires more personnel than centralized purchasing.

Answer 8

Decentralized purchasing

Question 9

______________________________ may occur when purchasing is decentralized.

Answer 9

Unnecessary order duplications

Question 10

When an order is placed, a purchase requisition is sent to the _________________________ by the requesting unit.

Answer 10

purchasing department

Question 11

Two factors that may cause differences in prices among suppliers are _______________________ and __________________________.

Answer 11

quantity discounts; quality differences

Question 12

The timeliness and dependability of ______________________ is important to a purchaser.

Answer 12

delivery

Question 13

Two decisions related to purchasing decisions that manufacturing firms must make are the _________________________ decision and the ___________________________ decision.

Answer 13

make-or-buy; lease-or-purchase

Question 14

Lease payments are usually made at the ____________________ of the lease year.

Answer 14

beginning

Question 15

The primary advantage of ____________ purchasing is the amount of __________ exercised by upper management.

Answer 15

centralized; control

Question 16

A primary advantage of leasing is that the initial ___________________ is unnecessary.

Answer 16

investment

Question 17

Centralized purchasing is particularly effective when operations are _____________________ throughout its various divisions.

Answer 17

standard

Question 18

In some cases, the operating unit is required to submit a requisition only if a ____________________ is exceeded.

Answer 18

dollar limit

Question 19

Cumulative discounts are given when _____________ purchases for a specific period exceed a certain amount.

Answer 19

total

Question 20

List 4 specifications that may be provided on a purchase requisition.

Answer 20

quantity; size; capacity; desired delivery date