Purchasing A Flashcards
1
Q
In submitting a request for bids, a buyer’s specs should be written in a way that
A
Allows more than one supplier to be competitive
2
Q
To hold ownership of a graphic design, the buyer should include the _________ clause in the purchase agreement.
A
Work for hire
3
Q
A supplier requests a price increase of 3% on a long-term materials purchasing agreement. In order to negotiate the request, the buyer should be keeping an accessible record of
A
- The date(s) of the supplier’s last price increase(s) on the materials
- How much prices have changed over time for the materials
4
Q
Express warranties does not include
A
Unstated promise that the product is fit for ordinary purposes
(note: the key is on the word “unstated”)
5
Q
The department that usually checks the received products against the PO specs and reports discrepancies is
A
Quality control
6
Q
For most organizations a ________ supply of commonly-used business forms is considered optimal
A
Six-month
7
Q
The FOB point specified in a purchase order determines
A
Who normally pays for transportation of purchased goods
8
Q
The object of a(n) __________bill of lading is to enable a shipper to collect for his shipment before it reaches destination
A
Order
9
Q
When a purchasing agent arranges an order for long-term material needs, he should be sure to require a(n)
A
Sample shipment
10
Q
Of the categories of purchases used at a mid to large sized organization, the least common is
A
Items for resale
11
Q
A purchasing agent should typically expect to have the least amount of authority in the purchase of
A
Consulting services
12
Q
A buyer arranges a purchase agreement stating that the order will be shipped C & F destination. This means that the.
A
Buyer pays for the FOB costs
13
Q
The last-in first-out accounting method
A
- Values inventory at current prices
- tends to postpone outlays for income taxes
14
Q
for routine supplies that are widely available, the most important purchasing cost factor, other than price is probably
A
Required delivery date
15
Q
What is the term frequently used in connection with bills of lading which are endorsed over to another party by the owner of the bill giving the party named the title to the property covered by the bill of lading?
A
Assignment
16
Q
The company choose a machine for making envelopes. A week after it is put into operation, a bolt in the machine is sheared off and the broken end is flung several feet, injuring your worker inthe eye. In order to arrange an agreement in which the supplier would assume liability for this injury, a buyer would probably have to delete the existing exclusion concerning
A
Consequential damages
17
Q
What is an advantage typically associated with the use of procurement cards among an organizations employees?
A
Saving some paperwork and time
18
Q
_________ is the term of quality concern that usually involves prepackaged, off-the-shelf items
A
Concealed discrepancy
19
Q
The theory of first bid, final bid is that
A
- a supplier will keep the price as low as possible
- a supplier will make the terms as favorable as possible
- the buyer will save time
20
Q
An implied warranty of merchantability is the implicit promise that a product will be
A
Fit for the ordinary purposes for which it is used
21
Q
Input into material requirements planning (MRP) system does not include
A
Holding costs of materials
22
Q
For __________, the best purchasing approach is usually to keep as little as possible on hand
A
Revenue producing items
23
Q
In international trade, a seller often agrees to deliver the product to a specified port for ocean shipping. Afterwards, the buyer pays for the cost of loading, marine insurance, and further transportation costs. This type of agreement is described as.
A
Free along side
24
Q
An economic order quantity (EOQ) formula would be an appropriate inventory method for
A
Office supplies
25
Relative to financing a purchase, leasing typically has the advantage of
1. greater flexibility
2. fewer financial restrictions
26
A _________ bill of lading is a nonnegotiable document and provides that a shipment needs to be delivered direct to the party whose name is shown as consign
Straight
27
A seller offers a buyer a discount that is stipulated “2% 1– 60X” on the purchase order. This means the buyer will receive the 2% discount if the invoice is paid within _______ days of the delivery date.
70
28
A business that transports goods by motor vehicle to a customer and agrees to accept certain terms and conditions is known specifically
contract carrier
29
A traveler card in a purchasing office is a
Requisition form
30
In evaluating the quality of a vendor, the most important factor is
How the vendor reacts to problems
31
Buyers at an organization are normally considered to be ________ purchasing agents
General
32
In order to function more smoothly with other departments in an organization, such as receiving, purchasing should network its computer system. Usually, it would be appropriate for receiving to have access to information about each of the following, except.
Price information
33
In larger organizations, the _________ is usually established outside of the purchasing operation
maximum price
34
The least expect expensive of shipment method
Rail carload
35
What is the term for the document used on foreign trade that requires payment by the sellers bank for the shipment when the document is presented and accompanied by any agreed-upon proof of shipment?
Sight draft
36
The most appropriate office software for a bid analysis is the
Spreadsheet
37
for a buyer, the first step in quality assurance
Communicating the importance of meeting the given standards
38
Items that are used internally in a business or organization are often abbreviated __________ on purchasing documents
MRO
39
The economic order quantity (EOQ) of an item depends on multiple factors, except
quantity price breaks
40
which of the following is most clearly a breach of the implied warranty of Fitness for a particular purpose
The paint that a buyer recently purchased, one month after being properly applied by a contractor, is peeling from the walls
41
A supplier tries to change the terms of an agreement at the last minute by adjusting the price award. The buyers right to ________ allows him to purchase goods from another source and obtain any difference in price from the original supplier.
Cover
42
in predicting prices, a buyer should least rely on which of the following list: trends, budgets, vendor communication, experience.
Trends
43
The main advantage of an operating lease is that it
Does not have to be entered on the balance sheet as liability
44
The economic order quantity formula takes each of the following into account except: price, obsolescence, the holding cost of inventory, the cost of placing an order
Obsolescence
45
Which of the following is not included usually in a purchasing agent’s activity report: impending strikes, major price increases of reductions, currently lead times for certain items, unresolved claims for damaged material
Currently times for certain items
46
The bill of lading is
Written receipt given by a carrier for goods accepted for transportation
47
Which is the federal agency that compiles the producer price index (PPI)?
Bureau of Labor Statistics
48
A request for quotation (RFQ) should
1. Give the names of all competitors
2. Avoid language, such as “evaluate the feasibility” or “reserves the right to”
3. Identify the estimated annual amount of purchases of the expense category
4. Always be in writing
49
Sellers may disclaim the implied warranty of merchantability by using the
1. Word “merchantability” in the disclaimer and writing the disclaimer itself conspicuous.
2. Phrase “as is.”
3. Phrase “with all faults.”
50
For a buyer, the most accurate way to think of price would be to view it
One component of cost, but not necessarily the most important
51
“Dating” is a method of
Granting extended credit terms used by sellers to induce buyers to receive goods in advance of the required delivery date, thus permitting the seller to ship goods earlier than the buyer would ordinarily wish to receive them
52
A buyer has a relationship with the supplier that is on an order by order basis, with no special provisions about pricing increases in the contract. The supplier announces pricing increase. The buyer knows that the cost of switching to another supplier will probably equal, if not exceeded, the cost of the pricing increase. The buyer
Threaten to open the contract up for competitive bidding
53
in analyzing a group of bids, a buyer should think of his/her primary responsibility as
Converting pricing information into cost information
54
in negotiation with a supplier, a buyer for Agency X makes the statement that Agency X is already receiving a product offered by your supplier for a lower price than another supplier. The supplier challenges the buyer’s statement in court, and the buyer is unable to prove that his statement was correct. The buyer is in violation of __________ law
Antitrust
55
Hardcopies of bills of material usually include
1. The quantity needed
2. A brief description of the item needed
56
A buyer wants to ensure that quality assurance is an issue that is important to a supplier. Before the buyer even enter into an agreement with a supplier, the best way to do this would be to
Request a description of the supplier’s own quality assurance, policies, and protocols
57
A buyer issues a purchase order for certain office supplies at a certain price that she believes was agreed-upon by the supplier. The supplier does not agree with the price that is listed on the purchase order. Under contract law, the supplier has a period of ________ days from the receipt of the written purchase order to voice
10
58
The just-in-time ordering method is best suited to organizations that
Use standard products on a continual basis for an extended period of time
59
Consideration is a term in contract law that refers to the
Giving us something, usually money, in exchange for goods or services
60
Which one of the following is NOT a factor for a buyer when considering the suitability of a potential source?
A. Accessibility of the supplier. B. Financial position of the supplier. C. Cash discounts offered by the supplier. D. Reliability of the supplier
C
61
Which one of the following is NOT pertinent to consider whether a bidder is responsible.
A. Financial resources. B. technical resources. C. Reputation among other buyers. D. Reputation among suppliers
D
62
When a sealed bid may be changed by a potential supplier?
Anytime before the closing date
63
A purchase order that has been acknowledged and accepted by the vendor may be cancelled by the city if the
Vendor accepts the cancellation
64
Suppose that a buyer has been asked to outfit a small room in agency’s building as a library. He asks X, who manufactures library equipment and has an architect in its staff, to develop a plan and suggest equipment for the room. X submits blueprints, equipment lists, and an installed price of $50K. The agency is delighted with the proposed plan and approves it. It would then be most appropriate for the buyer to
Pay X for the plans only, and then ask X, Y, and Z to bid on these plans.
65
A buyer may make a purchase without negotiation
The commodity costs relatively little in dollars and cents
66
which of the following would not constitute proper use of a buyers association with a salesman?
A. Develop interest in all the salesman’s products among city agencies. B. Accelerate delivery of the salesman’s firm’s product to meet a deadline. C. Acquaint the buyer with the method by which the salesman’s firm manufactures its product. D. Acquaint the buyer with other products produced by the salesman‘s firm.
A
67
Which of the following is the most important reason for stock in a commodity in a central storehouse?
A. A local supplier can deliver about as quickly as the central storehouse. B. City agencies have not standardized the commodity. C. The commodity is used by the city agencies all during the year. D. Some city agencies lack space for storing the commodity.
C
68
What bond is not generally used in city purchasing?
surety
69
FOB destination signifies that it is
Seller’s obligation and expense to deliver the goods to the buyer
70
Escalator clause is ordinarily found in a _________ contract
Price at the time of delivery
71
in purchasing, lead time is generally considered to be the period of time from the date of
Requisition to date of delivery
72
The purchase of goods “as is” includes an
Assurance of the quantity available
73
The most advisable course of action for a buyer to obtain an item costing under $100 in the shortest time possible would be
Consult the classified telephone directory to find a local vendor and purchase the item directly
74
Before recommending that a low bidder be awarded a contract for a certain commodity, a buyer should
check the low bidder’s price against price indices to make sure that it is reasonable
75
When purchases are made by brand name, it usually follows that
Buyer depends upon the integrity and reliability of the company that produces the commodity
76
Assume that the buyer asks for informal written quotations for a certain quantity of a commodity from four suppliers. He receives almost identical bids. He suspects collusion. In this situation, it would be most advisable for the buyer to
Reject all bids, revise specifications, and advertise for new bids
77
what action is ordinarily considered acceptable purchasing practice? A. Asking for quotations from six suppliers and then deciding not to order any of the commodity. B. Taking a cash discount of 2% offered under 2/10 net 30, thirty days after receipt of the invoice and the material. C. Requesting a quotation for 2000 pounds of paper and then ordering 125 pounds at the 2000 pound price. D. Asking a supplier for a sample of an item to fill an agency’s need for only one of the items.
A
78
The term caveat emptor means
Let the buyer beware
79
Which is not conducive to good communication between city, purchasing personnel and suppliers? A. Friendly manner B. Firm but courteous manner. C. Personal approach. D. Curt and brisk manner
D
80
how many units is a gross?
144 units
81
what is the formula to calculate increased price percentage?
New price less old price divided by old price
82
FOB Seller means
The buyer pays for transportation costs and equals FOB ORIGIN.
83
FOB destination means
Delivered
84
What is NOT an advantage of centralized purchasing?
Purchases are made more directly and promptly
85
What ARE advantages of a centralized purchasing?
1. Preferential discounts can be secured for quantity contract
2. Higher yields are obtained from disposal of excess surplus, scrap, salvage
3. Savings from elimination of duplicated personnel
86
Of the following, which is the LEAST relevant record to purchasing
A. commodity purchase record; B. purchase requisition; C. request for quotation; D. stores requisition
D
87
Before seeking price reduction through quantity alone, which is the LEAST relevant factor: A. obsolescence; B. handling & distribution; C. price analysis; D. possible deterioration
C
88
Which of the following is the LEAST important to consider when selecting the right vendor? A. Maintenance costs of a higher bidder are significantly lower than that of the lowest bidder B. The vendor has a tax hearing pending C. The vendor has frequent strikes in his plant D. The vendor is often late in making deliveries
A
89
A publication with no value to buyers and purchasing agents is
Dun’s Review
90
__________ is NOT a credit reporting agency
Harcourt-Brace
91
Which is the item that is NOT of value in assisting the buyer to determine whether a price bid is fair and reasonable is
A. commodity journals B. price experience C. price indices D. Sweet’s catalogs
D
92
___________ is NOT a specification and code-making organization
American Management Organization
93
When a buyer wittingly solicits a favored price, discriminatory to other competing customers, he may be in violation of
Clayton Act, as amended
94
Which is the LEAST necessary for a contract to be valid and binding? A. Competent parties B. Consideration C. Legality of the subject matter D. Written acceptance
D
95
A standard package discount refers to the discount allowed
if the purchaser agreed to buy the vendor’s regular package
96
Escalation is a provision
allowing for an increase in a contract price based on pre-determined contingencies
97
Liquidated damages is BEST defined as: A. a sum agreed between the buyer and seller to be paid by the party who breaches the contract B. a varying amount which is to be paid by the seller to the buyer if the commodity is seized or destroyed by governmental authority
A
98
True or false: brass is an alloy of copper and zinc
True
99
True or false: bronze is an alloy of copper and tin
True
100
True or false: SS pipe type 304 weighs about the same as steel pipe given the same thickness and length
False. If it is mild steel it will not weigh the same
101
True or false: Mild steel is also known as low carbon steel
True
102
Type I in glass refers to
resistance of high temperatures and chemicals
103
Paper is calendared to
make it smooth
104
Prime contractor refers to
firm with which the city has entered into a direct contract for supplies and materials
105
In a conditional sale the ___________ is retained by the ____________
the title only is retained by the seller
106
What is NOT a method of specification?
Custom
107
Buyer’s option is best defined as
price, term, and conditions are usually agreed upon in advance
108
What is the formula for EOQ (Economic Order Quantity)?
Square root of 2DS/H, where D is demand, S is ordering cost, and H is holding cost
109
Reclaimed property which can be repaired or reused is most likely to be classified as
Salvage
110
The standard specifications has least significance for
Encouraging substitute bids
111
Bond paper is
Usually sulphite or rag content and used for correspondence
112
Duplicator paper is
Paper with shiny hard surface which does not absorb alcohol well
113
1000 sheets of Sub 20 paper, size 17x22 weighs nearly ________pounds
40
114
in requisitions for lead pencils for general office use, the pencil numbers you should generally expect to appear most frequently are the numbers
2 and 3
115
Of the following, the hardest lead is: 2B, 2H, 3B, 9H
9H
116
What do the letters in pencils represent? H, B, HB and F
H - hard
B - soft, black
HB or F - hard black, balanced
117
One pound is equal to ________grams
454
118
How many sheets are there in a ream of paper?
500
119
Any food for or drug found by the comptroller to be unwholesome or otherwise unfit for human consumption or use shall not be removed by the vendor until it has been examined by
Dept of Health
120
A system of progress charting in the procurement of heavy major capital budget equipment would normally be LEAST useful in relation to procuring delivery on target date of which of the following? fire pumpers, mimeograph machines, garbage collection trucks, police cars
mimeograph machines
121
Standardization has the advantage of lowering the number of purchase orders and the quantity and variety of items to be stored. The achievement of standardization is most generally the objective of
design analysis
122
A manufacturer would be best advised to bypass the wholesaler or mill supply house when
his product requires specialized selling and service
123
Generally, a claim with a carrier for concealed damages can be filed not later than _______
15 days
124
Generally, the time limit for filing a loss or damage claim with a carrier is
9 months
125
Downpayment or progressive payments are usually required for
Specially designed machinery and equipment
126
A buyer who leaves equipment with a skilled worker for repair should be aware that the latter has a right to retain possession of the property until he is paid for the labor or materials he has bestowed on it. The right is called
lien
127
Analysis of bids for equipment buying does not include analysis of
leasing methods
128
Printing from raised surface is done by which printing process?
Debossing
129
What is the LEAST appropriate topic in a governmental purchasing manual
Buying for employees
130
The use of an automated inventory control system generally results in
the availability of more accurate perpetual inventory data
131
Of the following classes of supplies, the one which you would expect to have the highest safety stock level is: foods, office machines, pharmaceuticals and drugs, spare parts
spare parts
132
What are the components of the procurement cycle
1. Procurement planning
2. Procurement method determination
3. Vendor selection
4. Contract formation and award
5. Contract administration & management
133
What are the methods of specification?
1. Performance
2. Design
3. Technical
4. Functional
5. Brand/Trade Name
