Deck 7: Purchasing Procedures, E-Purchasing, and Systems Contracting

Question 1

more devastating downside of ______________ is the buyer/seller relationship damage that may result from this method of buying. The buyer runs the risk of alienating both current and potential sources for the goods/services.

A) traditional auctions
B) silent auctions
C) eBay
D) Overstock.com
E) reverse auctions

Answer 1

E

Question 2

usinesses that use reverse auctions, or e-auctions, have given testimonials of savings of more than ____ percent.

A) 50
B) 60
C) 70
D) 80
E) 90

Answer 2

A

Question 3

Requests for quotes (RFQs) are more traumatic for maintaining healthy relationships between buying and selling firms.

Answer 3

False

Question 4

There are many benefits to using EDI. For a smaller company, EDI may help ________

A) keep a valued trading partner or customer
B) gain new customers or trading partners
C) all of the above
D) none of the above

Question 5

__________ may not be the solution for all commodity buying. As an example, if there are too few sellers, ___________ will not yield the best price.

A) Traditional auctions / traditional auctions
B) Traditional auctions / reverse auctions
C) Reverse auctions / traditional auctions
D) Reverse auctions / reverse auctions

Question 6

There are some definite benefits to utilizing ______. The first major benefit is reduced labor. Higher information quality due to a reduction in data entry errors also can be attributed to ______

A) EDI / EDI
B) EID / EID
C) FDIC / FDIC
D) RAF / RAF
E) CSI / CSI

Question 7

y definition, the price in ____________ is driven down by __________, so if only limited competition exists, then the price will not __________ enough to save the buyer a substantial amount of money.

A) reverse auctions / competition / decrease
B) traditional auctions / competition / decrease
C) reverse auctions / competition / increase
D) traditional auctions / participation / increase
E) reverse auctions / participation / decrease

Question 8

To maintain trust and cooperation between buying and selling firms, reverse auctions should be used carefully.

Question 9

______ is the direct computer transmission of orders and other transaction information.

A) FDIC
B) EDS
C) EDI
D) ESC
E) DEI

Question 10

nything that will immediately impact profits or bottleneck your operations is not a good place to experiment with a new electronic procurement system.

Question 11

Reverse auctions should be used to gain market information (new suppliers, prices, new methods, etc.) and should be used as a routine sourcing method.

Question 12

The main elements of an EDI system are:

A) computer hardware, software
B) computer compatibility between the sender and receiver
C) subscription to a common network
D) all of the above
E) "A" and "B" only

Question 13

Implementing the reverse auction process requires some of the following steps with one exception:

A) Define market specifications
B) Identify suppliers
C) Perform post-award review
D) Approve suppliers listing
E) Identify specific terms and conditions

Question 14

irms routinely place orders with suppliers online and in real time. Perhaps the most significant change in the purchasing process is the advent of ___________.

A) eBay
B) reverse auctions
C) Amazon.com
D) silent auctions
E) traditional auctions

Question 15

-purchasing has lead to significant cost saving and coordinated efficiency.

Question 16

There are many benefits to using EDI. For larger firms, the main benefit(s) is (are) generally ________________

A) the cost savings
B) to be known as a leading-edge company
C) all the above
D) none of the above

Question 17

The seven (7) steps to effectively implement e-procurement are:
Start with non-critical items.ring all internal stakeholders on board with your new procurement process to establish internal customer behavior.Streamline, map, test, troubleshoot, and improve the process before expanding it to external suppliers. Work with a favored supplier to test the system.Leverage your system once it's running. Exploit your full purchasing power by using reverse auctions.ggregate buyers within your organization to increase your purchasing power and gain better pricing.Use an incremental approach to expand your system.Once the bumps have been ironed out of the system, move on to the manufacturing operations.

Question 18

ritical items and systems are not the first place to apply a new e-procurement system.

Question 19

It is a good idea to implement e-procurement on systems that have a high supply risk and low profit impact, especially if there are a very limited number of suppliers to choose from.

Question 20

The Internet has revolutionized ___________.

A) commodity purchasing
B) home entertainment
C) stock trading
D) manufacturing
E) retailing

Question 21

In most cases, large multidivisional firms like IBM, Ford, and General Motors usually establish a set of ___________ based on the overall corporate missions.

A) rules
B) procedures
C) guidelines
D) short range plans
E) systematic policies

Question 22

_________________ is a stockless inventory method for ordering and stocking MRO and related items. The use of ________________ will aid the firm in reducing ordering and inventory costs.

A) Purchase Order Systems / Purchase Order Systems
B) Systems procurement / systems procurement
C) Materials contracting / materials contracting
D) Systems contracting / systems contracting
E) Contracting systems / contracting systems

Question 23

Top management support has long been recognized as one of the _______ important ingredients necessary for the ___________ of any organizational change, and the same holds true for the ____________ of an EDI system.

A) most / scheduling / implementation
B) least / planning / designing
C) most / planning / designing
D) least / implementing / designing
E) most / introduction / introduction

Question 24

typical purchasing department is responsible for:

A) developing the company's goals.
B) writing the company's mission statement.
C) the acquisition of a broad range of materials and supplies.
D) monitoring the executives' expense accounts.
E) selling a broad range of materials and products.

Question 25

The following are the first five steps in the Procurement Order Cycle Standard Procedure with the exception of:

A) Requisition material
B) Solicit bids
C) Issue a purchase order
D) Follow and expedite delivery
E) Document receipt of material

Question 26

The driving force behind any purchasing corporate policy considers the following objectives with the exception of:

A) Purchase the standard materials in the right quantities, at the right time and lowest cost, from any local source.
B) Practice the highest level of ethical standards to ensure confidence among all parties.
C) Operate in a professional manner.
D) Spend corporate funds wisely.

Question 27

The _____________ process requires the use of a negotiated agreement between buyers and sellers.

A) systems contracting
B) systems procurement
C) materials contracting
D) contracting systems
E) Purchase Order Systems

Question 28

This automation (RFID) provides reductions in the need for the manual scanning of products and the time required for labor-intensive duties, which, in turn, can increase the overall labor costs for companies.

Question 29

Increased shrinkage.

Question 30

There are also some risks when using EDI that should be considered. Which of the following should be considered when using EDI?

A) The machine and training cost will add up to a large amount and cutting corners may cost a company more than it saves.
B) Security is also an issue Procedural safeguards have not kept up with technology in this area.
C) The problem is exposure to outside users, which opens up a doorway to false messages These messages may come in the form of a person who is not a supplier sending data or the data being interrupted and/or altered.
D) A decision must be made whether to trade singularly through EDI or use both EDI and traditional methods
E) all of the above

Question 31

The negotiated agreement between buyers and sellers includes the following terms: the type of material, ________________, stocking policy, and delivery requirements.

A) scope of contract
B) price
C) billing policy
D) all of the above
E) "B" and "C" only

Question 32

RFID tags can be read through snow, fog, ice, paint, and crusted grime, unlike the barcode system. The tag also can be programmed to hold information such as the item's serial number, color, size, manufacture date, and current price, as well as a list of all distribution points the item reaches as it moves before arriving at a store.

Question 33

ompanies must ask themselves many questions before implementing an RFID system. Some such questions follow, with one exception. Which is the exception?

A) Does the company need RFID to keep pace with its competitors?
B) Will RFID offer a competitive advantage for the company?
C) Will the company have the power to manage its business without accurate information about its processes and inventory that could be gained from RFID?
D) Will RFID increase the costs of the company to serve its customers?
E) Will RFID save the company money eventually (long term)?

Question 34

The textbook discusses the significant difference between buying and purchasing. In general the purchasing process refers to buying goods and services for _______________. Buying typically means procuring items for ________.

A) use by the buying organization / external use
B) vendors / wholesale
C) use by client organizations / resellers
D) use by the buying organization / resale
E) resale / use by the buying organization

Question 35

ccording to the Lewin-Schein theory of change the change process consists of the following three steps:

A) Unfreezing / Moving / Refreezing
B) Unfreezing / Formulating / Refreezing
C) Analyzing / Formulating / Freezing
D) Unfreezing / Moving / Training
E) Unfreezing / Training / Moving

Question 36

s EDI really takes hold and international EDI becomes more commonplace a major stumbling block will be overcoming the language barriers that now exist. The most widespread EDI language in the United States is _________________

A) EDIFACT standard
B) EDIFACT X10 standard
C) ANSA X12 standard
D) ANSI X12 standard
E) ODETTE

Question 37

traveling requisition also may include information regarding the ___________ and ____________________ for inventory control purposes.

A) sales / manufacturer
B) reorder quantity / vendor
C) vendor / economic order quantity
D) order point / economic order quantity
E) order point / vendor

Question 38

Unlike the barcode-based tracking system, a radio frequency identification system offers a __________________________________ .

A) fully supported, efficient reading and tracking system.
B) no-contact, no-line-of-sight reading and tracking system.
C) cost effective, line-of-sight reading and tracking system.
D) contact, no-line-of-sight reading and ordering system.
E) point of sale reading and ordering system.

Question 39

Introducing new technologies into organizations will almost always result in some combination of social, technical, psychological, and structural changes. When managers or employers resist the logical arguments presented in support of EDI, they may not be resisting the technical aspects of the proposed change as much as the perceived _______________________ ramifications.

A) social or cultural
B) personal or psychological
C) cultural or psychological
D) social or psychological
E) technological or structural

Question 40

The way in which the process of developing and implementing an EDI system is managed can greatly influence the success of implementation. Four key areas are:

A) top manage support, knowledge of the project, evaluation, and institutionalization.
B) top management support, commitment to the project, influence, and institutionalization.
C) middle management support, commitment to the project, evaluation, and institutionalization.
D) middle management support, knowledge of the project, influence, and institutionalization.
E) top management support, knowledge of the project, commitment, and influence.

Question 41

Indirect purchasing can be divided into two categories:

A) operations repair management and management of resources and operations
B) organizational resources management and management of repairs and operations
C) organizational repairs and maintenance / management of resources and organization
D) organizational resource management / maintenance resources and operations
E) operating resource management and maintenance repair and operations

Question 42

The world of _________________ commerce has become essential to the purchases of ORM and MRO items.

A) business-to-consumer
B) consumer-to-consumer
C) manufacturer-to-manufacturer
D) vendor-to-vendor
E) business-to-business

Question 43

To extend the commitment to increasing productivity in all departments within a given facility, many companies have adopted the concept of __________.

A) cost centers
B) profit centers
C) profit groups
D) cost groups
E) cost divisions

Question 44

The __________ has become an indispensable part of modern management effectiveness.

A) accounting division
B) advertising department
C) buying department
D) marketing division
E) purchasing function

Question 45

Procurement is a very broad term. There is a broad push by _______________________ for companies to migrate all types of purchasing to e-procurement.

A) top management
B) the federal government
C) the MIS function
D) e-procurement software vendors
E) vendors

Question 46

It is important to first understand the two broad purchasing categories of purchasing materials, goods, and services in order to fully appreciate the role of e-purchasing.The two major purchasing categories are __________ and _________ materials.

A) direct / indirect
B) custom / common
C) regular / irregular
D) hard / soft
E) finished / raw

Question 47

s a __________, each department makes a direct contribution to the overall success of the total organization.

A) cost center
B) profit center
C) profit group
D) cost group
E) cost division

Question 48

In most cases, the best place to apply electronic procurement is in circumstances where ___________________ and ___________________, especially when developing new products or technologies.

A) there is a casual relationship / a significant number of vendors are available
B) a very close business relationship must be established / ongoing cooperation is needed with suppliers
C) a close business relationship exists / a limited number of suppliers exists
D) a close business relationship exists / ongoing cooperation is needed
E) there is a casual relationship / cooperation is needed among suppliers

Question 49

__________ professionals are primarily charged with the responsibility for controlling the total cost of ownership (TCO).

A) Accounting
B) Purchasing
C) Marketing
D) Buying
E) Operating

Question 50

_____ purchasing is concerned with critical maintenance and replacement parts, highly engineered machine parts, and manufacturing equipment..

A) MRO
B) ORM
C) CCM
D) MBO
E) DOP

Question 51

__________ materials are any commodity or service that is not directly involved in the production of finished goods.

A) Raw
B) Custom
C) Finished
D) Direct
E) Indirect

Question 52

Recognizing that purchase price is but one element of the total cost picture, the scope of ____________ goes far beyond the purchase price for any given item.

A) contracting systems
B) Purchase Order Systems
C) systems contracting
D) materials contracting

Question 53

______ purchasing is a term used for purchasing office equipment, furniture, office supplies, forms, computers, travel services, maintenance services, light bulbs, janitorial supplies, and many other relatively low-cost items.

A) MRO
B) ORM
C) CCM
D) MBO
E) DOP

Question 54

Systems contracting is a purchasing management technique that seeks __________ of an item from the time a need is recognized to the time that need is fulfilled.

A) on time delivery
B) an overall increase in the quality
C) an overall increase in the price
D) an overall increase in the effectiveness
E) overall reduction in the cost

Question 55

The commercial purchasing literature on e-procurement has suggested ____________________ for businesses and organizations can be realized by migrating to electronic procurement systems for all of their purchasing requirements.

A) increases in sales or revenues
B) shorter delivery times
C) significant savings
D) more accurate order processing
E) less down time

Question 56

__________ materials are directly related to the production of the finished goods.

A) Raw
B) Custom
C) Finished
D) Direct
E) Indirect

Question 57

nother problem (with indirect purchasing) is the tendency for employees to intermittently buy indirect items "off contract." This practice is referred to as ________________.

A) local purchasing
B) OC purchasing
C) maverick buying
D) MP
E) IOC purchasing

Question 58

Many of the e-procurement software vendors fail to take into account __________________________ and getting suppliers to participate in the e-procurement system.

A) the total cost of implementing these systems
B) the difficulty of realizing savings during the development and deployment phases of the transition
C) the cost of training employees
D) All of the above
E) "A" and "C" only

Question 59

The problem with _____________________ is the lack of standardization, tedious paper work, delays, and errors.

A) direct buying
B) direct purchasing
C) centralized buying
D) indirect purchasing
E) decentralized purchasing