Deck 2: Purchasing Decisions and Business Strategy

Question 1

Purchasing can give the firm advantages over its competitors. In essence, firms must design their __________________ to emphasize the competitive strategy.

A) plans
B) purchasing manual
C) policies
D) purchasing actions
E) marketing program

Answer 1

D

Question 2

The development of a strategic purchasing plan requires all of the following with one exception. Which one is incorrect?

A) A complete understanding of corporate strategies and marketing plans
B) An extensive evaluation/study of current suppliers, how performance is measured, and the expectation of suppliers relative to the industry.
C) Study of the degree of local purchasing opportunities.
D) Identification of total costs associated with current purchasing department/function, budgets, staffing, and so forth.

Answer 2

C

Question 3

firm can compete in two broad alternate ways. It can either seek competitive advantages on ________ or _______________ itself from its competitors.

A) cost / distinguish
B) cost / choose to differentiate
C) quality / choose to differentiate
D) price / separate
E) quality / distinguish

Answer 3

D

Question 4

The two generic competitive advantages- _______________ -are operationalized in terms of cost, quality performance, quality conformity, product flexibility, volume flexibility, and customer service.

A) delivery speed and reliability
B) price and quality
C) market leadership and quality
D) delivery speed and price
E) price and reliability

Question 5

The characteristics of buyer-seller relationships exist on a continuum beginning with the traditional approach of ____________, with a single short-term contract that presents minimal risk to both parties. The opposite extreme is ________ integration, where the parties are fully integrated as one unit.

A) open-market / horizontal
B) closed-market / vertical
C) open-market / vertical
D) closed-market / horizontal
E) supper-market / horizontal

Question 6

s inventory levels are reduced throughout the supply chain, each member becomes more insulated from demand variation.

Question 7

Suppliers with ____________ and who are reliable in meeting their _________ minimize the problem of material shortages for the manufacturer; as a result, the company's production can be more dependable in meeting the customers' ____________.

A) long lead times / goals / expectations
B) short lead times / delivery times / expectations
C) high expectations / due dates / due dates
D) short lead times / expectations / expectations
E) short lead times / due dates / due dates

Question 8

.Phase 3. Implementation and Evaluation
In this phase, a thorough indoctrination of the company with long range strategy, implementation of current procedures, monitoring of marketing activities, feedback mechanism for evaluation, and refinement of sourcing processes is conducted.

Question 9

ompanies participate in a variety of supplier relationships and take on a variety of roles.

Question 10

firm competing on ________ must give high priority to purchasing costs. A firm competing on flexibility must give high priority to _________ in buying material.

A) selling price / just-in-time
B) cost / lead time
C) cost / quality
D) selling price / lead time
E) quality / lead time

Question 11

Purchasing managers need to devise ______________ such that they are consistent with each other and with the firm's competitive strategy.

A) negotiations
B) purchasing actions
C) pricing policies
D) marketing strategies
E) business programs

Question 12

The ________ on which the buyer's performance is evaluated can influence the effectiveness of purchasing actions and effectiveness in making the firm competitive.

A) expectations
B) criterion
C) contract
D) plan
E) statistics

Question 13

s competitive forces diminish, customers demand better products, faster delivery, increased service, and decreased costs.

Question 14

Supplier partnerships can be categorized using five factors. Which of the following is not one of the five factors?

A) degree of risk/reward
B) type of relationship
C) product type
D) infromation
E) asset ownership

Question 15

Purchasing decisions or actions that constitute purchasing strategy are determined by the firm's ___________________________________.

A) competitive priorities
B) its resource capabilities
C) marketing initiatives
D) all the above
E) "A" and "B" only

Question 16

.Phase 2. Organizational Development
This phase involves development of sourcing strategies; setting of clearly outlined areas to cut costs and improve profitability; establishment of a sourcing control system based on frequent analysis and systematic approach; formulation of incentive programs; and provisions for training by taking advantage of local ISM seminars and in-house sessions on how to establish purchasing monitoring systems.

Question 17

In the formulation of purchasing strategy, the organization's ___________, the organization's ___________________, and the competitive environment must be considered.

A) market share / competitive strategy
B) competitive strategy / weaknesses
C) market share / strengths and weaknesses
D) competitive priorities / strengths and weaknesses
E) strengths / weaknesses

Question 18

Purchased inputs offer a potential source for helping a company develop _____________ against its competitors.

A) leverage
B) a plan
C) a competitive strategy
D) a competitive edge
E) a long term plan

Question 19

Phase 1. Sourcing Audit
The sourcing audit is used as a planning process that identifies opportunities for increased profitability.

Question 20

The buyer ________________ or __________ criteria are other factors that influence the purchase criteria.

A) programs / selection
B) performance plan / reward
C) performance measures / selection
D) performance measures / reward
E) performance programs / salary

Question 21

Six sigma suppliers focus on three things. Which of the following is not one of those?

A) defects per million units as a standard metric
B) provision of employee pay for performance
C) the reduction of non-value-added activities
D) All of the above are correct

Question 22

In dynamic business environments, __________________ is a major survival factor.

A) reducing costs
B) increasing sales maintaining a competitive advantage
C) maintaining a competitive advantage
D) improving quality
E) controlling expenses

Question 23

Phase 4. In-House Training Sessionslasses should be conducted in groups of no more than ____ individuals.

A) 10
B) 36
C) 12
D) 15
E) 20

Question 24

long-term relationship provides the ability to ____________ and integrate planning, technology, and processes.

A) share assets strategize
B) share liabilities
C) strategize
D) reduce inventory
E) reduce assets

Question 25

The cost per unit of material depends on __________________.

A) the volume or amount purchased
B) the quality level desired
C) the desired lead time
D) all of the above
E) "A" and "C" only

Question 26

The buyer must ensure that the ___________ of material is purchased to satisfy the demand; otherwise, ___________ may occur, resulting in _______ customer service.

A) right quality / shortages / poor
B) right quality / excesses / poor
C) right quantity / shortages / poor
D) right quantity / excesses / good
E) right quantity / longages / poor

Question 27

Supplier lead time affects a firm's flexibility and service to its own customers. Firms that compete in ________ markets and face rapidly changing ________________ require greater flexibility than firms competing in _______ markets.

A) volatile / consumer demands / stable
B) volatile / product or technology / stable
C) stable / product or technology / volatile
D) competitive / consumer demands / stable
E) competitive / consumer demands / volatile

Question 28

The ____________ there is in a vendor's lead times; the ____________ it is to manage the production process.

A) less uncertainty / less difficult
B) more uncertainty / less difficult
C) less uncertainty / more difficult
D) more uncertainty / more difficult
E) more certainty / more difficult

Question 29

buyer must not only satisfy cost, quality, and lead-time goals, but also stay within ______________ constraints.

A) quality and inventory
B) financial and budgetary
C) quality and budgetary
D) technological and budgetary
E) quantity and consumer

Question 30

The quality level of material purchased must meet the desired objective as defined by the firm's competitive priorities. The _______ the acceptable defect rate, the __________ the quality level of the material purchased.

A) lower / lower
B) higher / lower
C) higher / higher
D) lower / higher
E) more reasonable / better

Question 31

The advent of supply chain management has led to a more complicated operating environment. Not only does the individual firm have to maintain its ____________ , the entire supply chain must be __________.

A) competitive edge / competitive
B) quality / flexible
C) technological edge / cutting edge
D) market share / competitive
E) quality / cost conscious

Question 32

The decision maker faces multiple goals in making the buying decision.The __________________ (is the only / are some of the) issue(s) that a decision maker faces in making the buying decision.

A) cost per unit
B) quality
C) lead time
D) all the above
E) "A" and "B" only

Question 33

The supply chain relationship pegging system consists of four phases.Which of the following is not one of the four phases?

A) Phase I is an assessment of the current performance gaps in the process.
B) Phase II consists of questionnaire development, interviews, or other data collection methods.
C) Phase III is the certification and planning phase.
D) The final phase (Phase IV) is the interpretation stage.