Deck 7: Purchasing

Question 1

_________include items made to specification or for which quotations from several sources are received. These can generally be negotiated.

A) Commodities
B) Standard products
C) Items of small value
D) Made- to- order items

Answer 1

Made- to- order items

Question 2

Purchasing includes:

A) procurement
B) supplier follow- up
C) supplier scheduling
D) all of the above

Answer 2

D

Question 3

To make a particular component requires an overhead fixed) cost of $112,000 and a variable unit cost of $635 per unit. What is the total cost and the average cost of producing a lot of 100?

Answer 3

total cost/number of units = fixed cost/number of units + variable cost per unit =
112,000/100 + $635 = $1,755

Question 4

_________enables customers and suppliers to electronically exchange transaction information such as purchase orders, invoices, and material requirements planning information.

A) The Internet
B) Electronic data interchange
C) Vendor- managed inventory
D) Supplier responsiveness

Question 5

To make a particular component requires an overhead fixed) cost of $5000 and a variable unit cost of $6.50 per unit. What is the total cost and the average cost of producing a lot of 1000?

Question 6

A fair price:

A) allows the buyer to ultimately to sell at a profit
B) gives the seller a profit
C) is competitive
D) all of the above

Question 7

How can functional specifications be described?

Question 8

Often decisions are not based on just product price, but instead on _________.

A) value
B) total cost
C) neither total cost and value
D) both total cost and value

Question 9

Discuss the steps in the purchasing cycle.

Question 10

The _________is an internal net that is normally used within the boundaries of a company.

A) extranet
B) Internet
C) intranet
D) all of the above

Question 11

What is single souring?

Question 12

What are the advantages of using standard specifications?

Question 13

_________includes several activities with the intent to build and maintain a strong customer base.

A) SRM
B) VMI
C) EDI
D) CRM

Question 14

Companies competing in a __________ environment depend on suppliers to quickly deliver small quantities of product.

A) TQM
B) engineer- to- order
C) multiple sourcing
D) JIT

Question 15

When the volume is_________ that the break- even point, a __________ is incurred.

A) less, loss
B) less, profit
C) greater, profit
D) both A and C

Question 16

To make a particular component requires an overhead fixed) cost of $10,000 and a variable unit cost of $11 per unit. What is the total cost of producing a lot of 1000?

Question 17

If suppliers were to be rated on the following basis, what would be the ranking of the two suppliers listed? $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text {Rating of Suppliers}$ $\quad$$\quad$$\quad$$\text {Ranking of Suppliers}$

$\begin{array}{lcll}\text { Factor } & \text { Weight } & \text { Supplier A } \quad \text {Supplier B } & \text {Supplier A } \quad \text {Supplier B }\\\\\text { Function } & 8 &\quad\quad 8 \quad \quad\quad\quad\quad9 \\\text { Cost } & 5 &\quad\quad 9 \quad\quad\quad\quad\quad 5 \\\text { Technical Assistance } & 7 &\quad\quad 5\quad\quad\quad\quad \quad 7 \\\text { Credit Terms } & 2 & \quad\quad8 \quad\quad\quad\quad\quad 4\end{array}$

Question 18

_________is most commonly used for lower- value products that have a relatively standard design, such as fasteners and standard electrical equipment.

A) VMI
B) The Internet
C) EDI
D) Contract buying

Question 19

To make a particular component requires an overhead fixed) cost of $5000 and a variable unit cost of $6.50 per unit. What is the break- even point?

Question 20

What is contract buying and when is it used?

Question 21

Function, quantity, service, and price are not related.

Question 22

Prices can be negotiated if the buyer has has the knowledge and the clout to do so.

Question 23

Standard specifications are usually expensive and time- consuming to develop.

Question 24

One critical reason for developing formal links and relationships in the supply chain is to help control the "bullwhip effect."

Question 25

Organizations that alter their perspective away from traditional purchasing toward supply chain management must recognize that their perspective toward managing the entire organization must also change.

Question 26

Because material requirements never change, suppliers do not need to react quickly to change.

Question 27

Manufacturing must be able to meet the specifications for the product consistently while producing as few defects as possible.

Question 28

In a modern business environment, the type of relationship between the supplier and the buyer is crucial to both. Ideally, the relationship will be ongoing with a mutual dependency.

Question 29

Prices have an upper and a lower limit. The market decides the lower limit.

Question 30

Internet technology has become the most quickly accepted communication medium ever.