Question 1

Which of the following statements is FALSE?

Accepted Answer

Centralized purchasing is where purchasing decisions are made by one central department, not individual local departments.

Question 2

The term Supply Management is used to describe responsibilities above and beyond those of traditional purchasing.What are three of these key activities and why are they considered important to Supply Management?

Accepted Answer

The answer of The term Supply Management is used to...

Question 3

Which of the following is NOT a form of countertrade?

Accepted Answer

Kaizen blitz is a method of continuous improvement in manufacturing processes and is not a form of countertrade. The other options, barter, offset, and counterpurchase, are all examples of countertrade where goods or services are traded instead of using a currency.

Question 4

When using the Total Cost of Ownership concept, explain how a supplier with a higher unit price and higher tooling cost can end up being more cost effective than another supplier with a lower unit price and tooling cost.

Accepted Answer

The answer of When using the Total Cost of Ownership...

Question 5

Which of the following is an advantage of a centralized purchasing department?

Accepted Answer

Centralized purchasing allows for specialization in procurement and purchasing activities, leading to greater expertise and efficiency in the process.

Question 6

Answer the questions that follow, based on the diagram provided belw
  
a.What are the fixed costs for the buy decision?
b.What is the breakeven quantity for the two options illustrated?
c.At Q = 300, would you choose the make or buy option? Why?
d.At Q = 200, what will be the total cost associated with the best decision at this quantity?

Accepted Answer

The answer of Answer the questions that follow, based on...

Question 7

Which of the following is a reason that single sourcing is considered risky/bad?

Accepted Answer

Single sourcing puts all of the organization's sourcing needs and dependency on one supplier, which could lead to supplier interruptions due to various reasons such as political instability, natural disasters, or bankruptcy. This can result in delayed production or even a complete halt in manufacturing if the supplier is unable to provide the materials or goods needed to keep the operation running smoothly.

Question 8

Use what you understand about the outsourcing decision (Make vs.Buy) to answer this question.List and explain three reasons a restaurant might decide to buy pre-made desserts from a supplier rather than making the goods from scratch.

Accepted Answer

The answer of Use what you understand about the outsourcing...

Question 9

Use the following information to determine which supplier for steering wheels is more cost-effective using total cost analysis.Late delivery of the component results in 50% lost sales and 50% back orders of finished goods.
Table 1
  
Table 2
  
Here is the freight rates for
Truckload (TL ? 40,000 lbs): $0.90 per ton-mile
Truckload Less-than-truckload (LTL): $1.10 per ton-mile
Note: per ton-mile = 2,000 lbs.per mile; number of days per year = 365

Accepted Answer

The answer of Use the following information to determine which...

Question 10

The BOEHM Cell Phone Company has developed a new series of phones that it plans to bring to the market in the next 18 months.Management is considering whether to produce the product in-house or to contract out the purchasing and manufacturing of their new cell phones.
Provide FOUR conditions that would favor outsourcing and FOUR conditions that would favor making the cell phones in-house.

Accepted Answer

The answer of The BOEHM Cell Phone Company has developed...

Question 11

Which of the following NOT a reason firms are expanding their supply bases to include foreign suppliers?

Accepted Answer

Firms are not expanding their supply bases to foreign suppliers due to lower shipping rates from lower tariffs. Lower tariffs may reduce costs, but they do not directly affect shipping rates.

Question 12

Under which conditions would you most likely utilize a centralized purchasing system? List two advantages that would be gained by utilizing a centralized purchasing system.
Under which conditions would you most likely utilize a decentralized purchasing system? List two advantages that would be gained by utilizing a decentralized purchasing system.

Accepted Answer

The answer of Under which conditions would you most likely...

Question 13

Which of the following is a reason for favoring single sourcing?

Accepted Answer

Single sourcing can lead to reduced variabilities in quality levels because the buyer can work closely with the supplier to ensure consistent product specifications and quality standards.

Question 14

Global sourcing has become commonplace.Many companies now consider expanding their supply base to include foreign suppliers.List three reasons why companies choose to source globally.

Accepted Answer

The answer of Global sourcing has become commonplace.Many companies now...

Question 15

Which of the following is NOT a potential challenge for global sourcing?

Accepted Answer

Relaxed trade barriers actually facilitate global sourcing and make it easier to import goods from foreign suppliers. Therefore, it is not a potential challenge for global sourcing. On the contrary, it can be an advantage for companies that engage in this practice.

Quiz 2: Purchasing Management