Question 1

Scenario planning begins with the creation of viable working strategies and plans that would allow managers to respond quickly in the event that a specific risk scenario should actually come about.

Accepted Answer

A) True 
 B)False

Question 2

Buyers rarely rely on suppliers for cost-reduction assistance.

Accepted Answer

A) True 
 B)False

Question 3

Central to the design of all supplier measurement systems is the decision about what to measure and how to weight various performance categories.

Accepted Answer

A) True 
 B)False

Question 4

The cost-based system is the most thorough and least subjective of the three supplier performance measurement systems.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not a typical qualitative service factor in a supplier performance measurement system?

Accepted Answer

A)  Problem resolution ability. 
B)  Technical ability. 
C)  Process capability. 
D)  Ongoing progress reporting. 
E)  Wavelength.

Question 6

The supplier performance index (SPI) equals (_____ plus _____) divided by _____.

Accepted Answer

A)  Total Purchases….Nonperformance Costs….Total Purchases 
B)  Nonperformance Costs….Total Purchases….Nonperformance Costs 
C)  Total Purchases….Appraisal Costs….External Failure Costs 
D)  External Failure Costs….Internal Failure Costs….Total Purchases 
E)  TransportationCosts….Appraisal Costs….Prevention Costs

Question 7

_____ is the process of identifying how many and which suppliers a buyer will maintain.

Accepted Answer

A)  Supply base optimization 
B)  Supply base rationalization 
C)  Six Sigma 
D)  Zero defects 
E)  Strategic sourcing

Question 8

According to ISM, _____ is defined as the ability to meet current needs without hindering the ability to meet the needs of future generations in terms of economic, environmental, and social challenges.

Accepted Answer

A)  Sustainability 
B)  Scenario analysis 
C)  Social responsibility 
D)  Supply chain risk management 
E)  Standardization

Question 9

All of the following are possible risks of maintaining fewer suppliers except _____.

Accepted Answer

A)  supplier dependency 
B)  supply disruption 
C)  overaggressive supply reduction 
D)  maintaining an all-foreign supply base 
E)  absence of competition

Question 10

Few international shipments of merchandise require insurance coverage.

Accepted Answer

A) True 
 B)False

Question 11

The categorical approach to supplier evaluation is commonly used by smaller organizations because it is both easy and relatively inexpensive to implement.

Accepted Answer

A) True 
 B)False

Question 12

Many buyers have now concluded that, if they select suppliers carefully and develop close and collaborative working relationships with fewer suppliers, supply risk can actually decrease.

Accepted Answer

A) True 
 B)False

Question 13

Maintaining small quantities of inventory has been the traditional methods of dealing with supply base risk.

Accepted Answer

A) True 
 B)False

Question 14

The _____ supplier evaluation system seeks to identify and quantify the total cost of doing business with a given supplier, as the lowest purchase price may not always result in the lowest total cost for an item or service.

Accepted Answer

A)  Six Sigma 
B)  zero defects 
C)  cost-based 
D)  categorical 
E)  weighted-point

Question 15

All of the following are common contingency management tools that can be effectively used at the tactical level to assist the supply manager in identifying, analyzing, reducing, and monitoring supply base risk except _____.

Accepted Answer

A)  single sourcing 
B)  inventory 
C)  automated visibility and early warning systems 
D)  use of third party intermediaries 
E)  scenario analysis

Question 16

A single source can never deliver cost and quality improvements over the life of a contract even if a buyer manages that supplier effectively.

Accepted Answer

A) True 
 B)False

Question 17

_____ involves a detailed analysis of the supply base to ensure that only the most capable and highest performing suppliers are kept in the supply base after it is rationalized.

Accepted Answer

A)  Supply base optimization 
B)  Outsourcing 
C)  Strategic sourcing 
D)  Supply base reduction 
E)  Supply base management

Question 18

If a supplier's product or service is deemed routine to the buyer, it should then be considered for supplier development.

Accepted Answer

A) True 
 B)False

Question 19

Regarding supply base risk, every sourcing decision will be different and must be carefully evaluated regarding its own particular situation.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a disadvantage of a weighted-point supplier evaluation system?

Accepted Answer

A)  Tends to focus on unit price. 
B)  Most complex, so implementation costs are high. 
C)  Most subjective. 
D)  Least reliable. 
E)  Cost accounting system required.

Exam 9: Supplier Management and Development: Creating a World-Class Supply Base

Scenario planning begins with the creation of viable working strategies and plans that would allow managers to respond quickly in the event that a specific risk scenario should actually come about.

Buyers rarely rely on suppliers for cost-reduction assistance.

Central to the design of all supplier measurement systems is the decision about what to measure and how to weight various performance categories.

The cost-based system is the most thorough and least subjective of the three supplier performance measurement systems.

Which of the following is not a typical qualitative service factor in a supplier performance measurement system?

The supplier performance index (SPI) equals (___ plus _) divided by ___.

_____ is the process of identifying how many and which suppliers a buyer will maintain.

According to ISM, _____ is defined as the ability to meet current needs without hindering the ability to meet the needs of future generations in terms of economic, environmental, and social challenges.

All of the following are possible risks of maintaining fewer suppliers except _____.

Few international shipments of merchandise require insurance coverage.

The categorical approach to supplier evaluation is commonly used by smaller organizations because it is both easy and relatively inexpensive to implement.

Many buyers have now concluded that, if they select suppliers carefully and develop close and collaborative working relationships with fewer suppliers, supply risk can actually decrease.

Maintaining small quantities of inventory has been the traditional methods of dealing with supply base risk.

The _____ supplier evaluation system seeks to identify and quantify the total cost of doing business with a given supplier, as the lowest purchase price may not always result in the lowest total cost for an item or service.

All of the following are common contingency management tools that can be effectively used at the tactical level to assist the supply manager in identifying, analyzing, reducing, and monitoring supply base risk except _____.

A single source can never deliver cost and quality improvements over the life of a contract even if a buyer manages that supplier effectively.

_____ involves a detailed analysis of the supply base to ensure that only the most capable and highest performing suppliers are kept in the supply base after it is rationalized.

If a supplier's product or service is deemed routine to the buyer, it should then be considered for supplier development.

Regarding supply base risk, every sourcing decision will be different and must be carefully evaluated regarding its own particular situation.

Which of the following is a disadvantage of a weighted-point supplier evaluation system?