Question 1

Building relationships for key suppliers and preparing contingency plans in case of supply interruptions is vital for products or services found in the:

Accepted Answer

The critical quadrant includes products or services that are both important to the business and have a high supply risk. Therefore, building relationships with key suppliers and preparing contingency plans in case of supply interruptions is essential in this quadrant.

Question 2

The use of supply chain partners to provide products or services is called:

Accepted Answer

The use of supply chain partners to provide products or services is commonly known as outsourcing. This involves contracting with an external party to handle certain aspects of the production process or to provide products or services that the company does not have the resources or expertise to produce.

Question 3

A sourcing strategy in which two suppliers are used for the same purchased product or service is:

Accepted Answer

Dual sourcing is the sourcing strategy in which two suppliers are used for the same purchased product or service. This strategy helps in reducing the risk of supply chain disruptions, improving quality, and driving competition which results in cost savings. Cross sourcing, contingency sourcing, and multisourcing are not applicable or relevant in this scenario.

Question 4

A supplier that has previously demonstrated its performance capabilities through purchase contracts may well receive:

Accepted Answer

A supplier that has demonstrated its performance capabilities through purchase contracts is likely to be considered a reliable and trustworthy supplier. This may result in the buyer designating the supplier as a preferred supplier, which could lead to increased opportunities for future business. Maverick status means that a person has a reputation for being independent-minded and not conforming to standards or norms. A request for description would typically be made when the buyer wants more information about a supplier's products or services. A request for proposal is a formal invitation from a buyer to suppliers to submit a bid for a specific project or service.

Question 5

In a typical portfolio analysis, office supplies are placed in the:

Accepted Answer

Office supplies are typically considered routine items that do not require high levels of attention or strategic analysis. Therefore, they are placed in the routine quadrant of a portfolio analysis where they can be easily managed and expenses can be minimized.

Question 6

Single sourcing is a better choice than multiple sourcing because of the following:

Accepted Answer

Single sourcing often allows for closer collaboration between the buyer and supplier, which can include access to the supplier's unique design and engineering capabilities. This can lead to better integration of the supplier's products or services into the buyer's operations, potentially resulting in improved innovation and customization. Choices A, B, and C are generally considered advantages of multiple sourcing, not single sourcing.

Question 7

When compared with single sourcing, multiple sourcing has the advantage of:

Accepted Answer

Multiple sourcing spreads the risk of relying on one supplier, as there are multiple suppliers that can provide the required goods or services. This reduces the chances of supply chain disruptions due to unforeseen events such as natural disasters or supplier bankruptcy.

Question 8

The deans' suite hoped to cut costs and decided to perform a total cost analysis on its vodka supplier. Consumption was currently 6,000 bottles per semester and this was predicted to maintain that level for the next few years. Their current source, Byron's, charged $9.50 per bottle and packed 288 bottles in a crate. The cost to ship the crate was $15. Another potential source of vodkas was Pancho's, who charged $9.00 per bottle but could ship only 100 bottles in a crate and at a higher price, $20. Assume that a partial crate may be purchased. What is the total annual cost to supply vodka from their current supplier?

Accepted Answer

The total annual cost from the current supplier, Byron's, can be calculated as follows: The cost per bottle is $9.50, and there are 6,000 bottles needed per semester. Since there are two semesters in a year, the total annual consumption is 12,000 bottles. The cost for the bottles alone is 12,000 bottles * $9.50 = $114,000. The shipping cost per crate is $15, and each crate contains 288 bottles. Therefore, the total number of crates needed annually is 12,000 bottles / 288 bottles per crate = 41.67 crates. Since a partial crate can be purchased, we consider the shipping cost for 42 crates, which is 42 crates * $15 = $630. The total annual cost is the sum of the cost for the bottles and the shipping, which is $114,000 + $630 = $114,630. However, none of the provided options match this calculation, suggesting a mistake in the calculation or misunderstanding of the question's requirements. Given the options, the closest to the expected calculation process is option D, but the correct calculation based on the provided details should have led to a different total. This indicates a need to reevaluate the calculation or the interpretation of the provided options.

Question 9

Competitive bidding, active sourcing, and using industry standards are all actions that are appropriate if the sourcing strategy is to:

Accepted Answer

Competitive bidding and active sourcing are both methods used to obtain the best possible price and terms from suppliers, which aligns with a strategy to maximize commercial advantage. Using industry standards can also help ensure that the products or services being sourced meet certain quality and performance standards, which can further enhance a company's competitive position. Forming partnerships with suppliers and simplifying the acquisition process may be important objectives, but they are not directly related to maximizing commercial advantage. Ensuring supply continuity is important but does not necessarily require the use of competitive bidding or active sourcing.

Question 10

The deans' suite hoped to cut costs and decided to perform a total cost analysis on its vodka supplier. Consumption was currently 6,000 bottles per semester and this was predicted to maintain that level for the next few years. Their current source, Byron's, charged $9.25 per bottle and packed 500 bottles in a crate. The cost to ship the crate was $5. Another potential source of vodkas was Pancho's, who charged $9.20 per bottle but could ship only 100 bottles in a crate. Assume that a partial crate may be purchased. At what annual shipping price per crate from Pancho's would the college face equal total costs?

Accepted Answer

To find the annual shipping price per crate from Pancho's that would make the total costs equal, we first calculate the total annual cost from Byron's. Since the consumption is 6,000 bottles per semester, it's 12,000 bottles annually. Byron's charges $9.25 per bottle and ships 500 bottles per crate with a shipping cost of $5 per crate. Therefore, the total cost from Byron's is:$$ \text{Cost of bottles} = 12,000 \times \$9.25 = \$111,000 $$$$ \text{Number of crates} = \frac{12,000}{500} = 24 $$$$ \text{Shipping cost} = 24 \times \$5 = \$120 $$$$ \text{Total cost from Byron's} = \$111,000 + \$120 = \$111,120 $$For Pancho's, the cost of the bottles remains the same except for the price per bottle, which is $9.20. So, the cost of bottles from Pancho's is:$$ \text{Cost of bottles} = 12,000 \times \$9.20 = \$110,400 $$Let $x$ be the shipping price per crate from Pancho's. The number of crates needed for 12,000 bottles, given that each crate holds 100 bottles, is:$$ \text{Number of crates} = \frac{12,000}{100} = 120 $$The total cost from Pancho's, including shipping, would be:$$ \text{Total cost from Pancho's} = \$110,400 + (120 \times x) $$Setting the total costs equal to solve for $x$:$$ \$111,120 = \$110,400 + 120x $$$$ 120x = \$720 $$$$ x = \$6 $$Therefore, at an annual shipping price per crate of $6 from Pancho's, the college would face equal total costs.

Question 11

A company using portfolio analysis decides to streamline the purchasing process for a few items by use of EDI and automated requisitions to the greatest extent possible. The quadrant that these items fall in is most likely the:

Accepted Answer

Items that a company decides to streamline the purchasing process for through EDI (Electronic Data Interchange) and automated requisitions are typically those that fall into the routine quadrant. This is because these items are generally low in value but high in volume, making the process efficiency a priority to reduce time and costs associated with their procurement.

Question 12

Which of these is a direct cost associated with outsourcing?

Accepted Answer

The price from the invoice is a direct cost associated with outsourcing as it is the actual cost incurred for the outsourced service or product. Direct material and direct labor are usually associated with the cost of producing goods or services by the company itself, while variable overhead is a more indirect cost that may be associated with outsourcing but is not specifically tied to it.

Question 13

The primary goal of this quadrant is to ensure a continuous supply of products or services found in the:

Accepted Answer

The bottleneck quadrant is responsible for ensuring a continuous supply of products or services.

Question 14

Dusty is evaluating three bids to supply fence hardware for the 5 acres of pasture that need to be fenced. Breezy submits a bid of $40 per unit with a defect rate of 2%; Lady's bid is $50 per unit with a defect rate of 0.5%; and Spike's bid is $30 per unit with a defect rate of 5%. If a section of fence fails, it costs an average of $500 in losses and herding costs to round up all of the capybaras, giant rodents native to Brazil. Dusty believes it will take 1000 units to fence in this pasture configuration; what is the BEST choice for supplier?

Accepted Answer

The answer of Dusty is evaluating three bids to supply...

Question 15

Which of the following is required in order to execute a successful spend analysis?

Accepted Answer

In order to execute a successful spend analysis, the ability to analyze large quantities of data is crucial. While graphics capabilities and statistical software may be helpful, they are not necessarily required for a successful spend analysis. The amount of time needed to complete a spend analysis can vary depending on the scale of the analysis, but there is no set minimum of six months.

Question 16

One advantage of outsourcing is that it:

Accepted Answer

Outsourcing can give a company access to state-of-the-art products and processes that they may not have had access to otherwise. This can help improve the quality of their products or services, increase efficiency, and stay competitive in the market.

Question 17

The deans' suite hoped to cut costs and decided to perform a total cost analysis on its vodka supplier. Consumption was currently 6,000 bottles per semester and this was predicted to maintain that level for the next few years. Their current source, Byron's, charged $9.50 per bottle and packed 288 bottles in a crate. The cost to ship the crate was $15. Another potential source of vodkas was Pancho's, who charged $9.00 per bottle but could ship only 100 bottles in a crate and at a higher price, $20. Assume that a partial crate may be purchased. What is the total annual cost to supply vodka from Pancho's?

Accepted Answer

To calculate the total annual cost to supply vodka from Pancho's: First, find the cost per bottle including shipping. Since Pancho's ships 100 bottles per crate at $20 per crate, the shipping cost per bottle is $20 / 100 = $0.20. The total cost per bottle from Pancho's is $9.00 + $0.20 = $9.20. With a consumption of 6,000 bottles per semester, the annual consumption is 12,000 bottles. Therefore, the total annual cost is 12,000 bottles * $9.20 per bottle = $110,400. However, this calculation is incorrect based on the options provided, indicating a mistake in my calculation. The correct approach is to calculate the total cost directly: 12,000 bottles * $9.20 = $110,400, but since this result does not match any of the options and considering the consumption and costs provided, let's correctly calculate the total cost for Pancho's: Annual consumption is 12,000 bottles. At $9.00 per bottle, the cost for the bottles alone is 12,000 * $9.00 = $108,000. The number of crates needed is 12,000 / 100 = 120 crates. The shipping cost is 120 * $20 = $2,400. Adding the cost of the bottles and shipping gives $108,000 + $2,400 = $110,400. Given the mistake in the initial calculation and the options provided, it seems there was an error in the process. Correctly recalculating based on the given options and the premise: For Pancho's, the correct calculation without the mistake would involve correctly applying the costs and shipping as per the options provided, which seems to have been misunderstood in the explanation. The correct total annual cost calculation should align with the provided options, taking into account the price per bottle and the shipping cost per crate correctly.

Question 18

Flingers Inc. reveals the following information in their annual report for FY 2017
 $$\begin{array}{l}
\text { Earnings and Expenses }\
\begin{array} { | l | c | } 
\hline \text { Sales } & \$ 10,000,000 \
\hline \text { Cost of goods sold } & \$ 5,000,000 \
\hline \text { Pretaxearnings } & \$ 500,000 \
\hline & \
\hline \text { Selected Balance Sheet Items } & \
\hline \text { Merchandise inventory } & \$ 80,000 \
\hline \text { Total assets } & \$ 2,000,000 \
\hline
\end{array}
\end{array}$$ They plan to aggressively pursue cost savings in the purchasing area for FY 2018 and expect to lower their cost of goods sold by 8% while maintaining the same level of sales. Calculate Flingers' leverage effect for 2017and their expected leverage effect for 2018. Compare the two results for your leverage effect calculations and provide insight as their relative magnitude.

Accepted Answer

The answer of Flingers Inc. reveals the following information in...

Question 19

Which of these is an indirect cost associated with insourcing?

Accepted Answer

Maintenance is considered an indirect cost associated with insourcing because it is not directly tied to the production of a specific product or service but is necessary for the overall operation.

Question 20

The purchasing team examined all of its purchasing patterns in order to identify any irregularities or possible areas of cost savings. This refers to:

Accepted Answer

This refers to a spend analysis, which involves reviewing purchasing patterns in order to identify any areas of cost savings or irregularities. Internal auditing refers to a broader examination of an organization's financial practices, while purchase consolidation involves combining multiple smaller purchases into one larger purchase to achieve cost savings. "Cooking the books" refers to fraudulent accounting practices.

Quiz 7: Supply Management