Deck 8: The Procurement of Equipment

Question 1

All of the following are primary sources of used equipment: used equipment dealers,retail sales outlets and brokers.

Answer 1

False

Question 2

Operating leases are usually long-term and are used by most firms to facilitate business operations.

Answer 2

False

Question 3

The length of a financial lease is usually shorter than the life of the equipment.

Answer 3

True

Question 4

All of the following are primary sources of used equipment: used equipment dealers,for sale by the owner and brokers.

Question 5

Among the reasons that firms utilize leases are: they would like to purchase the equipment at a later time and the firm wants freedom and flexibility.

Question 6

The following factors are major "nuances" or considerations that make the purchase of capital equipment much more different than materials and services: they are

A) Non-recurring and size of expenditure
B) Operating and maintenance costs are often more important than price
C) Lead times are longer
D) Installation is often a major percentage of total cost
E) All of the above

Question 7

The length of a financial lease is usually longer than the life of the equipment.

Question 8

Financial leases are usually short term.

Question 9

Among the reasons that firms utilize leases are: they are not interested in ownership and the firm wants freedom and flexibility.

Question 10

Capital equipment becomes an employed asset and affects ROI.

Question 11

Sourcing for capital equipment often requires a team for sourcing and a project manager because capital equipment goes on the books as an "employed asset," the _________ department must be on this team.

A) Engineering
B) Operations
C) Marketing
D) Purchasing
E) Finance

Question 12

Supply management personnel often function as facilitators,coordinators,contract administrators,and consultants in procurement of equipment.

Question 13

Prior to purchasing used equipment,a buyer should check the reputation of the supplier,inspect the equipment,observe the equipment under power and determine the age.

Question 14

Financial leases are usually long term.

Question 15

In many situations,the purchase of used capital equipment is necessary because a firm may:

A) Only have occasional use for the equipment
B) New equipment is not available
C) Not have sufficient capital to buy new
D) Lack of lead time
E) All of the above

Question 16

A cross-functional team must develop the need for and description of the capital equipment.

Question 17

All of the following is usually included in a lease contract: responsibility of the parties,acceptance testing and inspection conditions,guarantee conditions and potential penalties.

Question 18

Operating leases are short-term and are used by most firms to facilitate business operations.

Question 19

Supply management personnel should have little involvement in procurement of equipment.

Question 20

Prior to purchasing used equipment,a buyer should check the reputation of the supplier,inspect the equipment,conduct destructive testing and determine the age.

Question 21

When proposals for capital equipment are received,the sourcing team must tabulate and run comparisons for a total profitability analysis.The key input in this analysis is:

A) Delivery time
B) Maintenance
C) Labor
D) TCO
E) Pay off time

Question 22

When buying used equipment,most often the old adage of _________ applies.

A) Read the fine print in the contract
B) Make sure there is a full warranty
C) Check for spare tooling
D) Caveat Emptor
E) Make sure all the manuals for the equipment are available

Question 23

Which of the following is not true about operating leases and the firms that use them?

A) Used by most firms to facilitate business operations
B) Many operating leases are non-cancelable
C) Firm is usually not interested in ownership
D) Most operating leases are short term
E) Most often used when firm wants freedom/flexibility

Question 24

The sourcing team for capital equipment must determine the supplier's:

A) Reputation, time in business, location
B) Technical production and commercial capabilities'
C) Engineering staff and installation procedure, skill
D) Delivery lead time and history of on time completion
E) All of the above

Question 25

Which of the following is not one of the primary sources of used equipment?

A) Buying from a competitor
B) Through a used equipment dealer
C) For sale by the owner
D) Arrangement through a broker
E) Through auctions, both online and traditional

Question 26

Which of the following is usually not a necessary activity to conduct prior to purchasing used equipment?

A) Check the reputation of the supplier
B) Inspect the equipment
C) Observe the equipment under power
D) Check for brand name parts
E) Determine the age

Question 27

Which of the following is usually not included in a lease contract?

A) Responsibility of both parties
B) Acceptance testing and inspection
C) Guarantee conditions
D) Maintenance refund arrangements
E) Penalties

Question 28

Which of the following is not true about financial leases and the firms that use them?

A) Primary motivation is to obtain financial benefits
B) Usually they are long term
C) Most often used when firm wants freedom/flexibility
D) Length is usually shorter than the life of the equipment
E) Many financial leases are non-cancelable