Deck 13: Supplier Management

Question 1

3)COPQ is ______.

A)cost of proper quality
B)cost of poor quality
C)cost of process quality
D)cost of premium quality

Answer 1

B

Question 2

8)The supplier management process consists of ______ tasks.

A)five
B)eight
C)seven
D)nine

Answer 2

C

Question 3

12)Which of the following is NOT one of the purposes of a spend analysis?

A)to determine what products the firm is spending the most money on
B)to determine if the company is getting what has been promised for the money spent
C)to determine which suppliers the company is spending on
D)to determine what the competitors' strengths and weaknesses are

Answer 3

D

Question 4

11)This type of risk occurs due to cost escalations because actual services required by the client varied from the estimates or the costs were not calculated in the first place.

A)cost risks
B)failure to deliver the needed services on time
C)failure to realize the expected cost savings
D)security risks

Question 5

19)Consolidating purchases to achieve volume discounts is a sourcing strategy of ______.

A)bottleneck purchases
B)noncritical purchases
C)leveraged purchases
D)strategic purchases

Question 6

9)Which of the following is NOT a task in the supplier management process?

A)supplier information management
B)supplier human resource management
C)supplier phase-out
D)strategic sourcing

Question 7

16)MRO (maintenance,repair,operations)items are examples of ______.

A)noncritical purchases
B)strategic purchases
C)bottleneck purchases
D)leveraged purchases

Question 8

17)Office supplies are an example of ______.

A)leveraged purchases
B)noncritical purchases
C)strategic purchases
D)bottleneck purchases

Question 9

4)Any problems with quality can lead to ______.

A)increased throughput
B)factory shutdowns
C)increased revenue
D)customer satisfaction

Question 10

5)COGS is ______.

A)condition of goods sold
B)cost of goods supplied
C)condition of good supplies
D)cost of goods sold

Question 11

2)Which of the following is NOT one of the main goals of supplier management?

A)to ensure the supplier meets quality standards
B)to promote ethical behavior
C)to maximize the total costs
D)to develop innovative products/processes

Question 12

1)The services and information a company acquires from its vendors is ______.

A)tangible
B)intangible
C)finished goods
D)raw Materials

Question 13

15)The strategic sourcing process consists of ______ steps.

A)six
B)seven
C)five
D)eight

Question 14

6)Total cost of ownership ______.

A)is the purchase price of the supplies
B)includes the overall costs (both direct and indirect)of purchasing,inspecting,handling,transporting,and disposing
C)is the selling price of the supplies
D)is the pocket price of the supplies

Question 15

7)Which of the following is NOT an example of post-transaction costs?

A)cost of returns and product recalls
B)cost of poor quality
C)damage to a company's reputation
D)cost of evaluating suppliers

Question 16

20)Noncritical purchases focus on ______.

A)volume assurance and reliable sourcing
B)exploiting full purchasing power
C)emphasizing long-term supplier relationships
D)functional efficiency

Question 17

14)The main purpose of evaluating the supplier market is ______.

A)to choose purchases with greater cost effectiveness
B)to maximize supply-related risks
C)to choose purchases based on requirements
D)to minimize future purchases

Question 18

10)Which of the following is false about strategic sourcing?

A)It is a systematic process.
B)It focuses on the long term.
C)It aligns the firm's purchasing strategies with its overall strategy.
D)It deals with day-to-day procurement of goods and services.

Question 19

13)Which of the following is NOT one of the factors to contribute to a successful spend analysis?

A)company-wide spending visibility
B)enterprise-wide data classification schemes
C)capability to audit,detect,and correct inaccurate data
D)unavailability of accurate,timely,and detailed expenditure data

Question 20

18)Which of the following is an example of a strategic purchase?

A)heating oil
B)office supplies
C)high-value electronic components
D)repair items

Question 21

34)A decision methodology that uses hierarchy of criteria for evaluation of alternative decisions is the ______.

A)analytic hierarchy process (AHP)
B)optimization method
C)factor rating method
D)sourcing algorithm

Question 22

38)In which type of auction does the buyer list an initial price,in which only a lower bid can be submitted by the suppliers and the current lowest bid is visible to all suppliers as the auction progresses?

A)English auction
B)Dutch auction
C)sealed-bid first-price auction
D)second-price auction

Question 23

39)In which type of auction does the buyer list an initial lower price and then gradually raise the price until one of the suppliers agrees to that price?

A)English auction
B)Dutch auction
C)sealed-bid first-price auction
D)second-price auction

Question 24

21)Which of the following is characterized by high supply risks and the potential for impacting a firm's profitability?

A)bottleneck purchases
B)strategic purchases
C)noncritical purchases
D)leveraged purchases

Question 25

32)Which bidding approach is used when the buyer-supplier relationship is transactional,items are standardized,and price is the predominant selection criterion?

A)online reverse auctions
B)competitive bidding
C)negotiations
D)English auctions

Question 26

28)Which of the following is NOT a criterion for selecting suppliers?

A)financial stability
B)technical capabilities
C)service support
D)employee headcount

Question 27

26)Which of the following is true for transactional relationships?

A)They are related to buy-and-sell exchanges of goods and services.
B)They provide a significant degree of mutual benefit for supplier and buyer.
C)They require a sharing of knowledge and expertise,expenses and risks.
D)They involve the highest level of collaborative relationships between buyer and supplier.

Question 28

37)Which of the following statements is true for online reverse auctions?

A)Buyers compete with each other and bid on products.
B)Businesses use the e-procurement solution for selecting buyers.
C)Buyers submit online competitive bids based on their business requirements.
D)Buyers allow suppliers to submit online bids for products/services as specified by the buyer.

Question 29

33)Which of the following is an approach to help the buyer to choose the best alternative under a set of constraints?

A)factor rating method
B)analytic hierarchy process (AHP)
C)optimization methods
D)sourcing algorithm

Question 30

29)RFP (used in the process of selecting suppliers)stands for ______.

A)request for purchase
B)request for proposal
C)request for production
D)request for price

Question 31

36)The e-procurement solution introduced by General Electric for selecting suppliers is called ______.

A)negotiation
B)competitive bidding
C)online reverse auction
D)Dutch auction

Question 32

40)A win-win situation for the buyer and supplier,in which the buyer chooses the supplier with the lowest bid and the supplier is awarded the contract for a price higher than their quotation,is the ______.

A)English auction
B)Dutch auction
C)sealed-bid first-price auction
D)second-price auction

Question 33

35)A method that assigns relative weights to the selection criteria and selects supplier with the maximum total score is the ______.

A)optimization method
B)factor rating method
C)analytic hierarchy process (AHP)
D)sourcing algorithm

Question 34

27)Which of the following is true for collaborative relationships?

A)They involve very little effort.
B)They require early supplier involvement.
C)They are suitable for noncritical or one-time purchases.
D)They are not intended for product innovation.

Question 35

22)Which of the following is NOT a characteristic of strategic purchases?

A)They exploit full purchasing power.
B)They are high-value/scarce items.
C)They emphasize long-term partnerships.
D)They are critical to company performance.

Question 36

24)Which of the following is NOT a category in classifying buyer-supplier relationships?

A)transactional
B)strategic alliance
C)conglomerate
D)collaborative

Question 37

30)A request for proposal (RPF)is sometimes called a ______.

A)request for pricing
B)request for quotation
C)request for information
D)request for invoice

Question 38

22)Supply base optimization means ______.

A)reducing the number of suppliers for better control and communication
B)determining the best number of suppliers to purchase from
C)engaging a large number of suppliers so backup supply is available
D)leaving the organization to be vulnerable to unexpected price increases

Question 39

25)A joint venture is an example of a ______.

A)transactional relationship
B)strategic alliance
C)collaborative relationship
D)collective relationship

Question 40

31)Which document contains the specifications for the product being purchased,quality and service requirements,payment terms,and so on?

A)request for information (RFI)
B)request for invoice (RFI)
C)request for purchase (RFP)
D)request for proposal (RFP)

Question 41

50)Which type of contract will be well suited for a college bookstore and the book publisher?

A)buyback
B)quantity-flexibility
C)cost-plus
D)fixed-price

Question 42

55)Which of the following statements is true?

A)Planned purchase orders are used for purchases made on approximate dates and in specified quantities when inventories run low.
B)Standard purchase orders are used for long-term purchases on multiple dates over a period of time.
C)Blanket purchase orders are used for one-time purchases.
D)Blanket purchases are used for purchases made on approximate dates and in specified quantities when inventories run low.

Question 43

47)A ______ contract includes a return clause that allows the supplier to buy back unsold inventory up to a specified amount at an agreed-upon price.

A)buyback
B)quantity-flexibility
C)revenue-sharing
D)cost-plus

Question 44

59)Purchase volume per transaction for indirect material purchases is ______.

A)very large
B)moderate
C)relatively small
D)large

Question 45

56)Replacement parts for machinery are examples of ______.

A)direct material purchases
B)indirect material purchases
C)centralized purchases
D)decentralized purchases

Question 46

57)Which of the following statements is true?

A)Money spent on indirect material purchases is always higher than money spent on direct material purchases.
B)Typically,an equal percentage of money is spent on direct and indirect material purchases.
C)Money spent on indirect materials is not as high as money spent on direct materials,but it can still be significant.
D)Money spent on direct materials is linearly related to the money spent on indirect materials.

Question 47

49)The supplier charges a lower price for items being purchased but in turn receives a percentage of the buyer's profits in a ________ contract.

A)buyback
B)quantity-flexibility
C)revenue-sharing
D)fixed-price

Question 48

58)Purchasing predictability is relatively high for ______.

A)direct material purchases
B)indirect material purchases
C)centralized material purchases
D)decentralized material purchases

Question 49

51)The supplier is paid in full for all reasonable expenses up to a preset limit and also an additional sum as profit on the transaction in a ______ contract.

A)buyback
B)quality-flexibility
C)cost-plus
D)fixed-price

Question 50

46)Which of the following is FALSE about fixed-price contracts?

A)The contract subjects the supplier to a large degree of financial risk in the event of cost escalations.
B)The contract includes a fair and reasonable incentive that requires the contractor to assume an appropriate share of the risk.
C)The administrative burden of signing the contract is very high.
D)The contract subjects the buyer to financial loss if the market price drops.

Question 51

43)Any difference in value to be gained between the supplier and buyer is called the ______.

A)bargaining surplus
B)collective bargaining excess
C)collateral bargaining value added
D)bargaining difference

Question 52

60)Which of the following statements is true about direct material purchases?

A)Their frequency of purchasing transactions is relatively low.
B)Their purchasing predictability is relatively low.
C)Their numbers of stakeholders are large.
D)Their buyer has less power and control.

Question 53

44)A ______ contract is desired when item specifications are clearly known and the supplier can estimate the production cost with reasonable accuracy.

A)buyback
B)fixed-price
C)quantity-flexibility
D)cost-plus

Question 54

48)The buyer can change the purchased quantity based on the updated demand forecasts for the product under the ______ contract.

A)buyback
B)quantity-flexibility
C)revenue-sharing
D)fixed-price

Question 55

42)Which approach is desirable when there is a high degree of supply risk or early supplier involvement is required?

A)English auction
B)negotiations
C)competitive bidding
D)second-price auction

Question 56

41)In which auction does the buyer review the submitted bids at the end of the auction period and award the contract to the supplier with lowest price?

A)English auction
B)Dutch auction
C)sealed-bid first-price auction
D)second-price auction

Question 57

54)Standard purchase orders are used for ______.

A)purchases to be made on approximate dates when inventories run low in specified quantities
B)long-term purchases on multiple dates over a period of time
C)one-time purchases
D)weekly purchases

Question 58

45)A ______ contract is desired when the purchases are expensive and the cost of material/labor to produce the products is uncertain.

A)buyback
B)fixed-price
C)quantity-flexibility
D)cost-plus

Question 59

52)The document that authorizes the supplier to produce,ship the item,and send the invoice to the buyer is called the ______.

A)supplier Invoice
B)purchase order
C)production order
D)delivery order

Question 60

53)Which of the following is used for long-term purchases on multiple dates over a period of time?

A)blanket purchase order
B)standard purchase order
C)planned purchase order
D)electronic purchase order

Question 61

78)News and financial articles about changes in a supplier's financial condition is an example of a(n)______.

A)internal source of information
B)external source of information
C)financial source of information
D)supplier source of information

Question 62

70)Which of the following is NOT one of the main reasons for companies to maintain an SPM database?

A)to analyze and compare the performance of suppliers
B)to select and reward suppliers who perform well
C)to eliminate suppliers with poor performance records
D)to eliminate long-term performing suppliers

Question 63

61)The ______ are part of the finished products,and the amount of usage can be tracked on a per-unit basis.

A)indirect materials
B)direct materials
C)centralized material purchases
D)decentralized material purchases

Question 64

75)Performance risk stems from the ______.

A)fluctuations in demand and inventory levels
B)choice of company's sourcing strategy
C)ongoing quality and financial issues with the supplier
D)supplier's inability to meet delivery lead times

Question 65

64)______ are used to rank suppliers and track their performance over time.

A)Supplier information cards
B)Performance guidelines
C)Supplier scorecards
D)Performance metrics

Question 66

79)The firm's experience with the quality of supplier's products,poor supplier responsiveness,delivery delays,and so on is an example of ______ about suppliers.

A)internal sources of information
B)external sources of information
C)financial sources of information
D)supplier sources of information

Question 67

66)Which of the following is an appropriate performance measure for a company whose corporate goal is to deliver quality products to its customers?

A)on-time delivery
B)ability to respond to last-minute order changes
C)proximity to the buyer's premises
D)delivery of defect-free products to buyer

Question 68

67)The focus of ______ is to resolve problems between suppliers and buyers before the problems become conflicts.

A)supplier performance management
B)supplier process management
C)a supplier scorecard
D)supplier information management

Question 69

80)Which of the following is a mitigation strategy for market risk?

A)using multiple suppliers and suppliers that have the flexibility to respond to demand changes
B)using approaches such as hedging,forward contracts,quantity discounts,or postponing decisions to counter volatility in market prices
C)identifying and selecting suppliers to minimize disruptions in production
D)choosing the right sourcing strategy upfront using reliable market intelligence

Question 70

72)Which of the following is the first step in creating a valuable supplier management information system?

A)Monitor the supplier's ability to produce quality services.
B)Assess the supplier's corporate social responsibility.
C)Collect and update all supplier information,and ensure all vendor and supplier purchases and contracts are centrally controlled.
D)Assess the supplier's financial position.

Question 71

73)Which type of risk arises from the choice of a company's sourcing strategy?

A)sourcing risk
B)strategy risk
C)market risk
D)implementation risk

Question 72

68)Which of the following is FALSE about supplier performance management (SPM)?

A)It requires uninterrupted exchange of information,synchronizing buyers' requirements and suppliers' capabilities.
B)It is not as comprehensive a tool as the supplier scorecard.
C)Its focus is to resolve problems between suppliers and buyers.
D)It determines whether the suppliers are meeting their contractual obligations.

Question 73

63)SPM in supplier management stands for ______.

A)supplier progress management
B)supplier process management
C)supplier production management
D)supplier performance management

Question 74

71)Which of the following features does NOT serve as standard for a basic supplier information management platform?

A)supplier's stability and financial standing
B)supplier's commitment to continuous improvement
C)supplier's ability to deliver goods and services on time
D)supplier's size and work culture

Question 75

77)A small family-run business may not have the resources to support a global sourcing strategy.This situation is an illustration of a(n)______.

A)sourcing risk
B)strategy risk
C)market risk
D)implementation risk

Question 76

62)It is difficult to determine the contribution to a company's savings on ______.

A)indirect materials
B)direct materials
C)centralized materials
D)decentralized materials

Question 77

69)Which of the following is NOT one of the steps in implementing an SPM process?

A)Develop the performance criteria suppliers should meet.
B)Collect qualitative and quantitative data.
C)Award contracts to suppliers.
D)Periodically review and recalibrate goals and metrics to respond to changing business needs.

Question 78

74)Which type of risk arises from suppliers' inability to meet delivery lead times or increase production because of capacity problems?

A)demark risk
B)market risk
C)implementation risk
D)strategy risk

Question 79

76)Using multiple suppliers and suppliers that have flexibility in capacity to respond to demand changes is a mitigation strategy for ______.

A)capacity risk
B)demand risk
C)performance risk
D)strategy risk

Question 80

65)Which of the following statements is FALSE about supplier scorecards?

A)The scorecard contains measures to evaluate the performance of suppliers.
B)The information on the scorecard cannot be used for supplier negotiations.
C)The performance measures on the scorecard should be derived from the buyer's corporate goals.
D)Each measure on the scorecard is assigned a percentage weight,and scores are combined into an overall score to rank the suppliers.