Deck 7: Purchasing

Question 1

Which of the following is the most important responsibility of a purchasing officer?

A) getting the best price
B) getting the best quality
C) selecting the best source
D) ensuring goods are delivered on time

Answer 1

C

Question 2

In which of the following situations would a company probably specify by brand?

A) when buying small quantities
B) when the item to be bought is patented
C) when the item to be bought is made to an industry standard
D) a and b above
E) b and c above.

Answer 2

D

Question 3

Which of the following is NOT a factor to consider when selecting a supplier?

A) technical ability
B) manufacturing capability
C) reliability
D) price
E) size of organization

Answer 3

E

Question 4

Long-term supplier partnerships are supported by which of the following types of sourcing:

A) Sole
B) Multiple
C) Single
D) Buyer/planner

Question 5

The replacement of internal capacity and production with that of a supplier's is known as:

A) Capacity buying
B) Outpartnering
C) Outsourcing
D) Capacity cushioning

Question 6

Functional specifications set out:

A) how the product is to work
B) the purpose for which the product is required
C) all those aspects or characteristics of a product that are determined by its final use
D) none of the above.

Question 7

Which of the following will help a purchasing officer select potential sources of supply?

A) trade journals
B) purchasing department's own records
C) advertising
D) all the above

Question 8

Which of the following terms identifies materials whose price is set by market supply and demand?

A) Commodities
B) Standard products
C) Items of small value
D) Made-to-order items

Question 9

Purchasing departments usually have the responsibility and authority to:

A) legally commit the company to a contract
B) satisfy the needs of the user department
C) determine price and source
D) all of the above

Question 10

originates with the department or person who will be the ultimate user:

A) A purchase requisition
B) A purchase order
C) Vendor selection
D) any of the above

Question 11

The decision on what is the "best buy" involves consideration of:

A) functional requirements
B) price
C) quantity required
D) all of the above

Question 12

Which of the following is FALSE regarding description of a product by specification?

A) allows purchase from a number of sources
B) developing specifications is an inexpensive process
C) the minimum specifications set by the buyer are likely to become the maximum furnished by the supplier
D) all the above
E) b and c above.

Question 13

Which of the following is NOT a phase in providing user satisfaction?
I) Quality and production planning.
II) Quality and product design.
III) Quality and manufacturing.
IV) Quality and use.

A) all the above are phases in providing user satisfaction
B) I only
C) II only
D) III only
E) IV only.

Question 14

is concerned with the end use of the item and what it is expected to do:

A) Quantity required
B) Functional specification
C) Production department
D) all of the above

Question 15

Supplier relationships are necessary because:

A) the buyer can expect price concessions
B) the buyer can expect presents from the vendor
C) the buyer and vendor depend upon each other for communication and problem solving
D) all of the above

Question 16

Which of the following is an objective of purchasing?
I) Obtain goods and services of the required specification and quality.
II) Obtain goods and services at the lowest cost.
III) Be sure the best possible service and delivery are provided by the supplier.

A) I only
B) II only
C) III only
D) IV only
E) all are objectives of purchasing.

Question 17

Which of the following is NOT a step in the purchasing cycle?

A) receipt and analysis of purchase requisition
B) selection of vendor
C) make up the specification for the product
D) issue a purchase order
E) receive and accept the goods.

Question 18

Which of the following applies to standard products?

A) their prices are comparatively stable
B) they are readily available
C) they are purchased ONLY after firm quotations
D) only a and b above apply
E) all of the above apply.

Question 19

Buyers should realize that when they make a continuing purchase they buy more than the supplier's product. They also buy the supplier's:

A) managerial capabilities
B) procurement capabilities
C) production capabilities
D) technical capabilities
E) all the above.

Question 20

Which of the following terms is an inquiry sent to multiple suppliers to receive information?

A) Purchase requisition
B) Material authorization
C) Purchase order
D) Request for quote

Question 21

The fluctuation in the supply upstream in a supply chain generated by a small change in demand downstream in the supply chain is known as:

A) Forecast error
B) Bullwhip effect
C) Break-even point
D) Demand variation

Question 22

Which of the 3R's has the most positive impact on the environment?

A) Reduce.
B) Reuse.
C) Recycle.
D) All of the above have equal impact.

Question 23

Which of the following is (are) a qualification(s) of a good supplier?

A) has adequate plant and facilities
B) has a sound financial position
C) has reasonable prices
D) all the above are qualifications of a good supplier

Question 24

If the fixed cost to produce an item is $500, labor is $2.00 per unit and materials are $2.50 per unit; then the unit cost for an order of 1,000 would be:

A) $6.50
B) $5,000
C) $5.00
D) $504.50

Question 25

A Purchasing Agent, wishing to dispose of waste plastic from one of their processes should first contact:

A) Plant Maintenance.
B) A buyer of waste materials.
C) Local Government regulators.
D) The supplier.
E) The customer who buys the products.

Question 26

Special items will generally be purchased on the basis of a quotation. The purchasing agent will select on the basis of:

A) the lowest price
B) the most reliable bidder
C) the preference of the department that will use the item
D) consideration of all the above

Question 27

Which of the following is a function of supplier scheduling and follow-up?

A) selecting suppliers
B) establishing specifications
C) taking corrective action on issues
D) price determination
E) negotiation.

Question 28

When using the ranking method of evaluating suppliers:

A) each supplier is ranked for overall suitability
B) important factors are selected and assigned a "weight"
C) suppliers are rated against each factor
D) weight and rating of each supplier is multiplied for each factor and the total taken as the ranking of the supplier
E) all the above are used.

Question 29

After the supplier's invoice is received which document(s) are needed to approve payment?

A) The approved budget and the purchase order.
B) The purchase order and the receiving report.
C) The purchase order and the invoice.
D) The bill of lading and the receiving report.
E) Approval can be made from the purchase order.

Question 30

A price that is competitive and allows the seller to make a profit is considered to be a price that is:

A) Optimal.
B) Fair.
C) An incentive.
D) The final price.
E) The lowest price.

Question 31

Which of the following statements is true about planner/buyers?
I) Planner/buyers handle more components than planners do.
II) Planner/buyers issue material releases to suppliers.
III) Planner/buyers establish supplier delivery priorities.
IV) Planner/buyers negotiate prices with suppliers.

A) I and II are true
B) II and III are true
C) III and IV are true
D) I, II, and III are true
E) II, III, and IV are true.

Question 32

Which of the following departments is most likely to be familiar with knowledge of waste products, the legislation governing their handling and other uses in the company.

A) Purchasing.
B) Maintenance.
C) Engineering.
D) Direct Customer Sales.
E) Human Resources

Question 33

Which of the following is not an objective of the Purchasing Department?

A) Ensuring the best possible service and prompt delivery by the supplier.
B) Developing good supplier relations.
C) Issuing a regular quantity of purchase orders.
D) Selecting products that reduce the impact on the environment.
E) Obtaing goods and services at the lowest cost.

Question 34

Which of the following statements is true?

A) in contract buying, price and delivery are negotiated each time an order is released.
B) contract buying assures suppliers they have a given amount of business and commits them to allocating that amount of their capacity to the customer
C) contract buying is useful for short term purchases
D) EDI does not eliminate much of the paper work associated with buying

Question 35

Verifying shipments for quantity and having no damage is the responsibility of:

A) The quality department.
B) The purchasing department.
C) Accounts payable.
D) The receiving department.
E) The shipping department.

Question 36

Which of the following refers to a means of replenishing inventory through a supplier's review and responsibility to maintain targeted inventory levels?

A) Safety stock
B) Vendor-managed inventory
C) Environmentally-responsible purchasing
D) Enterprise resource planning

Question 37

Intranet stands for...

A) a net that includes all who are connected to it.
B) an external net that can be used by all people
C) an internal net normally used within the boundaries of the company
D) an net shared by two or more companies

Question 38

In comparing prices, which of the following factors should be considered?

A) base price
B) shipping point
C) installation and tooling costs
D) all the above should be considered