Deck 6: Need Identification and Specification

Question 1

Packaging is an easy category to buy because it has few disposal, environmental, and transportation implications.

Answer 1

False

Question 2

Supply's growing involvement in the acquisition of services may be explained by:

A) declining technical knowledge of internal users of services.
B) the need for more of a personal relationship with the service supplier.
C) the fact that price and service-delivery requirements are complex.
D) the growing respect for supply managers as equals in the organization.
E) the high dollars spent on services and the opportunities to reduce costs.

Answer 2

E

Question 3

Capital items can be depreciated, are often bought under a separate budgetary allocation, and may require special financing arrangements.

Answer 3

True

Question 4

Early supply involvement can be accomplished by:

A) staffing the engineering department with supply professionals.
B) using cross-functional teams on new product development.
C) encouraging internal customers to regularly interact with suppliers.
D) empowering internal customers to evaluate and select suppliers.
E) co-locating accounting staff in the purchasing/supply department.

Question 5

MRO stands for Maintenance, Resale, and Operating Supplies.

Question 6

New technology frequently permits an organization to gain competitive advantage on the bases of different products and services at significantly lower cost.

Question 7

An advantage of buying by performance or function over other specification methods is that it provides:

A) evidence that the buyer has given thought and careful study to the need and the ways in which it may be satisfied.
B) the opportunity for the potential supplier to establish how to make the most suitable product.
C) the potential for equitable competition by ensuring that the suppliers are quoting for exactly the same material or service.
D) a standard for measuring and checking materials as supplied.
E) an opportunity to purchase identical requirements from a number of different sources of supply.

Question 8

Description by brand:

A) may be a preference of an internal user, but it is never a necessity.
B) is the least risky and lowest cost approach to attaining "best value."
C) may be a necessity because the manufacturing process is secret.
D) should always be discouraged by the buyer.
E) indicates a supplier has unduly influenced someone in the buyer's organization.

Question 9

Quality as a term covers both functionality: "Does it do the job we want done?" and conformance to specification: "Does it fit the specification agreed to?"

Question 10

Capital assets are long-term assets that:
A) are acquired for fairly small sums of money.

A) are bought and sold in the regular course of business.
B) have an expected use of less than one year.
C) have an ongoing effect on the organization's operations.
D) are generally expensed.

Question 11

For non-repetitive requirements, a system or process of acquisition can be designed.

Question 12

When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:

A) standard specification.
B) performance specification.
C) individual specification.
D) market grade specification.
E) customized specification.

Question 13

A buyer may be compelled to purchase by specification when:

A) a high degree of supplier expertise or skill is required and difficult to define.
B) the internal user's preferences are impossible to overcome.
C) a supplier holds a needed patent.
D) an opportunity exists to purchase identical requirements from several sources.
E) the buyer wants the supplier to decide how to make the most suitable product.

Question 14

The purpose of identifying the function of an item to be required is:

A) to provide the mathematics for a suitable inspection program.
B) to assist in the determination of what represents acceptable value.
C) to avoid having to purchase a branded item.
D) to avoid substitution.
E) to avoid engineering-purchasing arguments.

Question 15

The price of a semiprocessed material-steel sheets instead of ingots, frozen pork bellies instead of hogs, cocoa butter instead of beans-tends to move in the opposite direction of the price of the basic raw material.

Question 16

Supply chain risks include:

A) interruptions to the flow of goods or services.
B) actions that lower the company's attractiveness to the investment community.
C) lack of regulatory compliance.
D) a and c
E) a, b, and c

Question 17

Buying capital equipment differs from other types of purchases because determination of final cost includes estimates over the life of the equipment.

Question 18

Equipment, real estate, and construction are examples of capital acquisitions, but information technology is not.

Question 19

Standardization:

A) means agreement on definite sizes, design, and quality.
B) is essentially a marketing and sales concept.
C) is a reduction in the number of sizes and designs.
D) is a selective and commercial problem.
E) is an attempt to concentrate production on the most important sizes.

Question 20

Assets may be tangible or intangible.