Question 1

Measurement fails to motivate and direct behavior toward desired end results.

Accepted Answer

Measurement, when done correctly, can effectively motivate and direct behavior toward desired end results by providing clear targets, feedback, and a basis for rewards and improvements.

Question 2

Cost avoidance figures almost always require manual calculation and are sometimes subject to exaggeration.

Accepted Answer

Cost avoidance figures often involve estimating what costs would have been incurred without certain actions or decisions. These estimates may require manual calculation and can be subject to exaggeration or overestimation.

Question 3

Transportation costs can be measured only in total dollars and never as a percentage of cost of goods sold or sales revenue.

Accepted Answer

Transportation costs can be expressed as a percentage of cost of goods sold (COGS) or sales revenue. This helps in understanding the impact of transportation expenses on the overall profitability of a business.

Question 4

A serious problem in measurement is that the data that managers pay attention to are often the wrong data.

Accepted Answer

This statement is true. Managers may focus on easy-to-measure metrics that might not truly reflect the success or effectiveness of their organization. This can lead to misguided decision-making and ultimately harm the company in the long run. It is important for managers to carefully select meaningful and relevant metrics to monitor and assess organizational performance.

Question 5

Actual prices for similar items should not be compared between plants, divisions, or business units due to differing market conditions.

Accepted Answer

Comparing actual prices for similar items between plants, divisions, or business units can provide valuable insights into efficiency, pricing strategies, and potential areas for cost reduction, even if market conditions differ. Adjustments and considerations for those differing conditions can be made during analysis.

Question 6

Although firms are increasingly focusing on cost versus price, price performance measures are no long popular.

Accepted Answer

The statement is saying that price performance measures are NOT popular, but the word "no" should not be included. The statement should read: "Although firms are increasingly focusing on cost versus price, price performance measures are no longer popular." So the statement is false, and price performance measures are still popular.

Question 7

Few measures drive behavior that is not what is intended or needed.

Accepted Answer

Many measures, especially in management and policy contexts, can drive behavior that is not what is intended or needed due to unintended consequences or poorly designed incentives.

Question 8

Customer defects per supplier is a measure of the number of defects from individual suppliers to indicate comparative quality performance among competing suppliers.

Accepted Answer

Customer defects per supplier is a commonly used metric to compare the quality performance of individual suppliers. It calculates the number of defects found in the products or services of each supplier for a given period of time and helps in identifying the supplier with the lowest defect rate.

Question 9

Although this sounds difficult, it is often easy to develop measures that direct behavior or activity exactly as intended.

Accepted Answer

Developing measures that direct behavior or activity exactly as intended can be difficult, as people have varying motivations and may not always respond as expected.

Question 10

The most common price performance measures include actual purchase price versus planned purchase price comparisons, actual purchase price(s) compared to a market index, comparisons of actual-to-actual purchase prices for individual and aggregated items between operating plants or divisions within an organization, and target prices achieved.

Accepted Answer

This statement is true.

Question 11

The problem with measuring behavior is that there is no guarantee the behavior will lead to desired results.

Accepted Answer

Measuring behavior can only provide insight into what is happening, but it cannot ensure that the desired outcomes will be achieved. Other factors such as external circumstances or individual differences can also influence outcomes.

Question 12

Salaries traditionally take the largest share of the purchasing administrative budget.

Accepted Answer

Salaries of purchasing personnel, along with associated benefits and bonuses, often make up a significant portion of the purchasing administrative budget.

Question 13

Having too little data is the most common problem an organization has with its measurement system.

Accepted Answer

The most common problem an organization faces with its measurement system is not having too little data, but rather having too much data that is not relevant, not accurately collected, or not effectively analyzed and utilized for decision-making.

Question 14

The PPM measure indicates the incidence of failures of components, assemblies, and systems or services when actually incorporated into the final product or service and supplied to external customers.

Accepted Answer

The answer of The PPM measure indicates the incidence of...

Question 15

On-time delivery or responsiveness measures indicate the degree to which suppliers are able to meet customer schedule requirements.

Accepted Answer

On-time delivery and responsiveness are both measures of a supplier's ability to meet customer schedule requirements.

Question 16

Measuring and evaluating performance historically has had certain problems and limitations.

Accepted Answer

Traditional performance measures typically focus on short-term financial results and fail to consider broader stakeholder concerns, such as social and environmental impacts. Additionally, these measures may be subject to manipulation and may not accurately reflect the true performance of the organization. Finally, there may be challenges in comparing performance across different organizations or over time due to differences in size, industry, and other factors.

Question 17

Few measures include a standard or target against which to evaluate performance results or outcomes.

Accepted Answer

Most measures include a standard or target against which to evaluate performance results or outcomes, as this is essential for assessing effectiveness, efficiency, and progress towards goals.

Question 18

Purchase price versus market index measures are least appropriate for market-based products where pricing is primarily a function of supply and demand.

Accepted Answer

The answer of Purchase price versus market index measures are...

Question 19

It is uncommon to have measures that track different aspects of a firm's inventory investment.

Accepted Answer

It is common to have measures that track different aspects of a firm's inventory investment. Examples include inventory turnover, days inventory outstanding, and stock-out rates.

Question 20

It is difficult to develop performance improvement plans without understanding the areas in which performance falls short.

Accepted Answer

Without understanding the specific areas where performance is lacking, it is impossible to create targeted and effective improvement plans. Identifying the specific issues is a crucial first step in any performance improvement process.

Quiz 19: Performance Measurement and Evaluation