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SCM 486 > Exam One > Flashcards

Exam One Flashcards

1
Q

What is the total cost of buying, using, and disposing of an item called?

a. Total price calculation
b. Target cost of purchasing
c. Maximum cost of usage
d. Final cost of buying
e. Total cost of ownership

A

e. Total cost of ownership

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2
Q

Your goal as a purchasing professional should always be to get the lowest possible price.

a. True
b. False

A

b. False

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3
Q

What is purchasing’s primary impact on the income statement (upper) portion of the strategic profit model?

a. Sales revenue
b. S&A costs
c. Taxes and interest
d. Cash and receivables
e. COGS

A

e. COGS

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4
Q

Sales personnel have no ability to impact the Strategic Profit Model.

a. True
b. False

A

b. False

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5
Q

Where does every dollar saved in purchasing go straight to?

a. Gross profit
b. Net profit
c. Operating profit
d. The balance sheet
e. Current assets

A

c. Operating profit

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6
Q

Which of the following is true for a typical manufacturer?

a. Purchased inputs are about 80-95% of COGS
b. Purchased inputs are about 60-80% of COGS
c. Purchased inputs are about 30-40% of COGS
d. Purchased inputs are about 20-30% of COGS
e. Purchased inputs are about 10% of COGS

A

b. Purchased inputs are about 60-80% of COGS

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7
Q

Purchased goods and services are typically a firm’s largest cost category.

a. True
b. False

A

a. True

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8
Q

On the strategic profit model, purchasing can only impact operating costs and taxes.

a. True
b. False

A

b. False

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9
Q

During WWII, there was increased emphasis on purchasing’s importance due to which of the following:

a. Weapons systems design
b. Infantry training standards
c. Material shortages
d. The prevalence of sea battles
e. Improved farming yields

A

c. Material shortages

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10
Q

What is ROA if profit margin is 5% and asset turnover is 1.7?

a. 8.5
b. 8.0
c. 7.7
d. 5.0
e. 1.7

A

a. 8.5

(1. 7 x .05) x 100

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11
Q

Why can Services be challenging to buy?

a. They are intangible
b. It’s hard to know what you are actually getting or to evaluate quality
c. They are hard to classify - can be direct or indirect
d. You may lack knowledge in the service being purchased
e. All of the above.

A

e. All of the above.

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12
Q

What is unauthorized buying by non-purchasing personnel called?

a. Outlaw spending
b. Maverick spending
c. Illegal spending
d. Forbidden spending
e. Frozen spending (because it’s put on “hold” until a purchasing manager clears it)

A

b. Maverick spending

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13
Q

Why should purchasing personnel pay better attention to MRO purchases?
a. Better quality safety goggles can increase productivity over 100%
b. The top cause of workplace accidents is poorly-sourced MRO supplies
c. When combined, MRO purchases often represent a large dollar spend
d. MRO items are always bought by the maintenance department, and someone’s got to keep an eye on those guys
e, They shouldn’t - MRO purchases are a waste of time

A

c. When combined, MRO purchases often represent a large dollar spend

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14
Q

What is purchase price variance?

a. The difference in “regular” and “holiday” pricing
b. The difference in the real price and what you think is fair
c. The difference in the price at the store, and what you can buy it for online
d. How fast the price goes up over a six-month period
e. The price difference between the amount that you pay a supplier to buy a product and the budgeted price for the product

A

e. The price difference between the amount that you pay a supplier to buy a product and the budgeted price for the product

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15
Q

The purchasing process consists of four key steps: need communication, supplier selection, transaction management, relationship management
A. True
B. False

A

A. True

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16
Q

Buying a larger quantity than you need to get a price break might cause additional problems, so do this with caution.

a. True
b. False

A

a. True

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17
Q

Which of the following is characteristic of a high importance buying category?

a. You spend a lot of money on this purchased input
b. There are many suppliers who want to sell you this input
c. The input has a large impact on the customer experience
d. a and c above
e. None of the above

A

d. a and c above

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18
Q

What happens in sales & operations planning?

a. The sales force tells operations what to do
b. Operations tells the sales force what to do
c. Diverse functions come together to forecast how much the company will sell, and how much it needs to make
d. Sales and operations make plans without inputs from any other function
e. Government regulators present limits on sales and operations activities

A

c. Diverse functions come together to forecast how much the company will sell, and how much it needs to make

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19
Q

Not all buys are created equal; you should spend more time and effort on some purchases than others.

a. True
b. False

A

a. True

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20
Q

Which documents must agree for the triple-match?

a. PO, requisition, receiving report
b. PO, requisition, bill of materials
c. PO, invoice, bill of materials
d. PO, invoice, and receiving report
e. PO, invoice, requisition

A

d. PO, invoice, and receiving report

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21
Q

Although most spend documentation looks backward to see what has been purchased, you should be proactive and match future spend to _______, _______, and _______ plans.

a. market, spending, and cost
b. technology, saving, and investing
c. product, market, and technology
d. growth, purchasing, and product
e. eating, sleeping, and playing

A

c. product, market, and technology

22
Q

Which of the following is not one of the four steps top-notch sales people use to close a deal and keep customers happy?

a. Determine perceptions
b. Define the buying center
c. Cultivate authoritative presence
d. Evaluate motivations
e. Assess sources of power

A

c. Cultivate authoritative presence

23
Q

Which of the following is not one of the advantages of a centralized sourcing structure?

a. Standardization
b. Duplication
c. Talent development
d. Increased bureaucracy
e. Economies of scale

A

d. Increased bureaucracy

24
Q

To identify the right organizational structure for your firm, which of the following needs to be done?

a. Spend analysis
b. Spend documentation
c. Firm documentation
d. Firm spending
e. None of the above

A

a. Spend analysis

25
Q

What type of sourcing organizational structure is known for distributing control to individual plants or business units?

a. Centralized
b. Localized
c. Decentralized
e. Outlandered
f. External

A

c. Decentralized

26
Q

For more specific feedback and understanding of how internal customers perceive purchasing performance, purchasing professionals should ask about what two dimensions?

a. Purchasing’s services and purchasing’s benefits
b. Purchasing’s people and purchasing’s reliability
c. Purchasing’s problem resolution and purchasing’s feedback
d. Purchasing’s services and purchasing’s people
e. None of the above

A

d. Purchasing’s services and purchasing’s people

27
Q

In managing internal relations, what is your main role as a purchasing professional?

a. Determine the lowest cost to procure necessary company supplies
b. Act as the gatekeeper to ensure only the best materials are bought
c. Initiate the process by finding out what the needed components are
d. Figure out how to work with and influence the members of the buying center
e. All of the above are part of your main role

A

d. Figure out how to work with and influence the members of the buying center

28
Q 
A new production tool is purchased that will fix quality issues as well as increase output. As the company is new to the technology, they expect to benefit from a learning curve. It takes them 200 seconds to produce the first gizmo after the new machine has been installed and they expect to be on a 90% learning curve. How long is it going to take them to produce the 415th gizmo (rounded up to the next full second)?
You Answered
 a. 7 seconds 
 b. 20 seconds 
 c. 80 seconds
 d. 90 seconds 
 e. 70 seconds
A

c. 80 seconds

29
Q

When making decisions, if someone decides something because it will make others like or respect them more, they are most motivated by what type of benefits?

a. Personal benefits
b. Power benefits
c. Product benefits
d. Process benefits
e. Profit benefits

A

a. Personal benefits

30
Q

The process for making spend visible is called?

a. Spend analysis
b. Spend documentation
c. Firm documentation
d. Firm spending
e. None of the above

A

b. Spend documentation

31
Q

_____________ is NOT a commonly used environmental certification in supply management?

a. EMAS
b. ISO 14001
c. FSC Certification
d. ISO 26001

A

d. ISO 26001

32
Q

A supplier telling the buyer that it would like to ship on an FOB basis is which influence tactic?

a. Information exchange
b. Recommendations
c. Requests
d. Ingratiation
e. Threats

A

c. Requests

33
Q

As a buying agent, whose best interest should you have in mind?

a. Your own best interest
b. Your employer’s best interest
c. The supplier’s best interest
d. The sales representative’s best interest
e. Society’s best interest

A

b. Your employer’s best interest

34
Q

When solving disputes in buyer-supplier relationships, which action should be used as a last resort?

a. Mediation
b. Arbitration
c. Going to court
d. Open communication
e. Putting yourself in the shoes of the supplier

A

c. Going to court

35
Q

Which two tactics can be considered as coercive?

a. Threats and promises
b. Information exchange and recommendations
c. Ingratiation and recommendations
d. Requests and ingratiation
e. Threats and requests

A

a. Threats and promises

36
Q

What is the environmental bottom line concerned with?

a. Fair wages
b. Harming the environment as little as possible
c. Profitability
d. Safe working conditions
e. Supporting diverse suppliers

A

b. Harming the environment as little as possible

37
Q

Which of the following is a voluntary program by the U.S. Customs and Border Protection that aims to improve supply chain security?

a. The Uniform Commercial Code
b. The Sarbanes-Oxley Act
c. The Dodd-Frank Act
d. Customs-Trade Partnership Against Terrorism
e. Foreign Corrupt Practices Act

A

d. Customs-Trade Partnership Against Terrorism

38
Q

Which one of the following is not an advantage of contract management software (CMS)?

a. CMS brings visibility to contracts
b. CMS offers templates with which contracts can be easily generated
c. CMS alerts you once contract conditions have not been met
d. CMS can be costly to implement
e. CMS enhances the monitoring of your contracts

A

c. CMS alerts you once contract conditions have not been met

39
Q

Which is not one of the conditions for a valid contract?

a. Offer
b. Consideration
c. Meeting of the minds
d. Purchase price reductions
e. Legal subject matter

A

d. Purchase price reductions

40
Q

What does CMS help users to ensure?

a. Contracts are kept as flexible as possible
b. Contracts are never breached
c. Contractual guidelines are followed
d. Milestones are never missed
e. Purchasing managers can keep their job

A

c. Contractual guidelines are followed

41
Q

Your primary goal as a purchasing agent is to try to ensure an interrupted flow of supply.

a. True
b. False

A

b. False

42
Q

What does Aldi’s sourcing strategy mean for you as a decision maker?

a. Everything you do needs to lower the cost of purchased good-without sacrificing quality.
b. Everything you do has established standards to assure that every product brought for sales is fresh, socially responsible, and safe.
c. You need to scan the market to spot emerging trends and to keep the right product and brands on the shelf.
d. All of the above
e. None of the above

A

a. Everything you do needs to lower the cost of purchased good-without sacrificing quality.

43
Q

An action plan translates theory into practice.

a. True
b. False

A

a. True

44
Q

Beyond total supply, as a purchasing agent, what else do you need to track?

a. Capacities
b. Optimization models
c. Capabilities
d. Cost drivers
e. All of the above
f. Only a & c

A

f. Only a & c

45
Q

Suppliers can only be segmented in one way.

a. True
b. False

A

b. False

46
Q

What does looking at production processes allow you to look for?

a. A donut shop
b. A bicycle manufacturer
c. A job shop
d. highly automated process
e. All of the above
f. c & d only
g. None of the above

A

f. c & d only

47
Q

If a company spends $5 million annually on its goods and services, what percent of the total spend is $400,000?

a. 1%
b. 5%
c. 8%
d. 10%
e. 15%

A

c. 8%

(400,000/5,000,000) x 100

48
Q

The more control you have over price and availability the better you can reduce risk.

a. True
b. False

A

a. True

49
Q

Defining the companies competitive position has guidelines that include which of the following?

a. Value proposition
b. Strategic positioning
c. Role of purchasing
d. Role of category
e. All of the above
f. A, & D only

A

e. All of the above

50
Q

What does an implementation planning document look at?

a. Who
b. What
c. Where
d. When
e. How
f. Why
g. All of the above
e. a, b, & d only
f. None of the above

A

e. a, b, & d only

SCM 486 (1 decks)

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