Question 1

Total cost of ownership (TCO)is a simply a mathematical formulation and is best not described as a philosophy.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is not an ownership cost?

Accepted Answer

A)  Financing Costs 
B)  Downtime Costs 
C)  Risk Costs 
D)  Non-Value Added Costs 
E)  Supply Chain Costs 
A)  Financing Costs 
B)  Downtime Costs 
C)  Risk Costs 
D)  Non-Value Added Costs 
E)  Supply Chain Costs A

Question 3

TCO analysis may include the study of all but one of the following issues.Which issue does not belong in the TCO analysis?

Accepted Answer

A)  Manufacturability 
B)  Projected sales 
C)  Infrastructure 
D)  Outsource decision 
E)  Analysis of suppliers beyond tier one 
A)  Manufacturability 
B)  Projected sales 
C)  Infrastructure 
D)  Outsource decision 
E)  Analysis of suppliers beyond tier one B

Question 4

TCO is an analytical tool,but not a philosophy.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not a supply chain cost based on the TCO?

Accepted Answer

A)  Forecasting 
B)  Administration 
C)  Transportation 
D)  Inventory 
E)  Environmental 
A)  Forecasting 
B)  Administration 
C)  Transportation 
D)  Inventory 
E)  Environmental

Question 6

Which of the following is not an acquisition cost?

Accepted Answer

A)  Purchase Price 
B)  Planning Costs 
C)  Taxes 
D)  Risk costs 
E)  Financing Costs 
A)  Purchase Price 
B)  Planning Costs 
C)  Taxes 
D)  Risk costs 
E)  Financing Costs

Question 7

Which of the following is not one of the three major components of total cost of ownership presented in the textbook?

Accepted Answer

A)  Acquisition Costs 
B)  Ownerships Costs 
C)  Post-Ownership Costs 
D)  Opportunity Costs 
A)  Acquisition Costs 
B)  Ownerships Costs 
C)  Post-Ownership Costs 
D)  Opportunity Costs

Question 8

TCO is an analytical tool and a philosophy.

Accepted Answer

A) True 
 B)False

Question 9

Supply managers must shift their focus in procuring materials,services and equipment from total cost to price.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a supply chain cost based on the TCO?

Accepted Answer

A)  Manufacturing 
B)  Warranty 
C)  Customer service 
D)  Supplier selection/relationships 
E)  Global sourcing 
A)  Manufacturing 
B)  Warranty 
C)  Customer service 
D)  Supplier selection/relationships 
E)  Global sourcing

Question 11

Activity-based costing (ABC)is a technique for directly assigning costs consumed by the object.

Accepted Answer

A) True 
 B)False

Question 12

TCO analysis of equipment purchases may help reduce the expenditures for maintenance and parts over the lives of the investments.

Accepted Answer

A) True 
 B)False

Question 13

TCO is not applicable in one's private life to enable better decision-making.

Accepted Answer

A) True 
 B)False

Question 14

A major problem in TCO analysis of manufacturers is accurate allocation of manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 15

TCO analysis of recurring material costs are often overlooked and can yield great savings.

Accepted Answer

A) True 
 B)False

Question 16

TCO analysis of the labor base can reap lower per person costs,greater benefits,and improved morale.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not true of a NPV calculation and analysis?

Accepted Answer

A)  NPV analyzes present values of the initial expenditure along with the likely future revenue and expenditure streams 
B)  NPV is too difficult to include in most TCO analyses 
C)  NPV greater than zero suggests accepting the investment 
D)  NPV less than 0 suggests rejecting the investment 
E)  NPV = 0 is the point of indifference 
A)  NPV analyzes present values of the initial expenditure along with the likely future revenue and expenditure streams 
B)  NPV is too difficult to include in most TCO analyses 
C)  NPV greater than zero suggests accepting the investment 
D)  NPV less than 0 suggests rejecting the investment 
E)  NPV = 0 is the point of indifference

Question 18

TCO analysis should not be used on recurring material costs.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not an ownership cost?

Accepted Answer

A)  Downtime Costs 
B)  Planning Costs 
C)  Risk Costs 
D)  Cycle Time Costs 
E)  Conversion Costs 
A)  Downtime Costs 
B)  Planning Costs 
C)  Risk Costs 
D)  Cycle Time Costs 
E)  Conversion Costs

Question 20

Accurate estimation of total costs requires a cross-functional approach.Supply management is a critical member of such a cross-functional approach.

Accepted Answer

A) True 
 B)False

Exam 13: Total Cost of Ownership

Total cost of ownership (TCO)is a simply a mathematical formulation and is best not described as a philosophy.

Which of the following is not an ownership cost?

TCO analysis may include the study of all but one of the following issues.Which issue does not belong in the TCO analysis?

TCO is an analytical tool,but not a philosophy.

Which of the following is not a supply chain cost based on the TCO?

Which of the following is not an acquisition cost?

Which of the following is not one of the three major components of total cost of ownership presented in the textbook?

TCO is an analytical tool and a philosophy.

Supply managers must shift their focus in procuring materials,services and equipment from total cost to price.

Which of the following is not a supply chain cost based on the TCO?

Activity-based costing (ABC)is a technique for directly assigning costs consumed by the object.

TCO analysis of equipment purchases may help reduce the expenditures for maintenance and parts over the lives of the investments.

TCO is not applicable in one's private life to enable better decision-making.

A major problem in TCO analysis of manufacturers is accurate allocation of manufacturing overhead.

TCO analysis of recurring material costs are often overlooked and can yield great savings.

TCO analysis of the labor base can reap lower per person costs,greater benefits,and improved morale.

Which of the following is not true of a NPV calculation and analysis?

TCO analysis should not be used on recurring material costs.

Which of the following is not an ownership cost?

Accurate estimation of total costs requires a cross-functional approach.Supply management is a critical member of such a cross-functional approach.

The Progression to Professional Supply Management

Organizational Issues

Supply Management: an Organization Spanning Activity

A Portfolio of Relationships

New Product Development

Purchasing Descriptions and Specifications

Managing for Quality

The Procurement of Equipment

Purchasing Services

Outsourcing

Sourcing

Global Supply Management

Price and Cost Analysis

Methods of Compensation

Negotiation

Contract Formation and Legal Issues

Contact and Relationship Management

Ethics and Social Responsibilities

Production and Inventory Control

Demand Management and Logistics

Implementing Value Network Management

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