Question 1

After the vendor has been selected, the buyer prepares a purchase order.

Accepted Answer

Once the vendor has been selected, the buyer prepares a purchase order, which includes details such as the type and quantity of goods or services ordered, delivery date, payment terms, and any other relevant information.

Question 2

In many organizations professional buyers do the actual buying.

Accepted Answer

Many organizations have professional buyers who are responsible for the actual buying process. These buyers have the necessary skills and knowledge to negotiate with suppliers, obtain the best prices and terms, and ensure that the goods or services meet the organization's needs.

Question 3

According to the context diagram for the purchasing process, when a purchase order is sent to the purchaser, the vendor responds by sending the goods along with a packing slip.

Accepted Answer

In the context of a purchasing process, when a purchase order is sent to a vendor, the vendor responds by sending the goods along with a packing slip to the purchaser, not the other way around.

Question 4

As used in the purchasing process chapter, the term "goods and services" refers to raw materials, merchandise, supplies, fixed assets, or intangible assets only.

Accepted Answer

The term "goods and services" encompasses a broader range of items, including but not limited to raw materials, merchandise, supplies, and fixed assets. It also covers services provided by other companies or individuals, not just tangible or intangible assets.

Question 5

Goal congruence exists when each individual manager's goals are achieved.

Accepted Answer

Goal congruence refers to the alignment of individual goals and objectives with the overall goals and objectives of the organization, not just the achievement of individual manager's goals.

Question 6

The purchase requisition is sent from the inventory control department to the purchasing department.

Accepted Answer

This is the typical flow of purchasing process where inventory control department creates the purchase requisition and sends it to the purchasing department, who are responsible for procuring the items needed.

Question 7

Notifications that a PO has been prepared and sent to the vendor are sent to the receiving department, the accounts receivable process, and the department or process that requested the purchase.

Accepted Answer

Notifications that a PO has been prepared and sent to the vendor are typically sent to the receiving department and the department or process that requested the purchase, but not to the accounts receivable process, as accounts receivable deals with incoming payments to the company, not outgoing orders or payments.

Question 8

The purchasing supervisor is responsible for receiving incoming goods, signing the bill of lading presented by the carrier, reporting the receipt of goods, and making prompt transfer of goods to the appropriate warehouse or department.

Accepted Answer

The purchasing supervisor is responsible for overseeing the purchasing process, negotiating contracts, and managing relationships with suppliers. The tasks of receiving incoming goods, signing the bill of lading, reporting the receipt of goods, and transferring goods to the appropriate warehouse or department are typically handled by the receiving department or warehouse staff, not the purchasing supervisor.

Question 9

The connections from the suppliers of merchandise and raw materials through to an organization's customers, including the flow of information, materials, and services, are its supply chain.

Accepted Answer

This statement defines the concept of a supply chain, which encompasses the flow of goods, services, and information from suppliers to customers. Therefore, it is true.

Question 10

When the data on the inventory record indicate a need to replenish the stock, the inventory system prepares a purchase order.

Accepted Answer

The answer of When the data on the inventory record...

Question 11

Supply chain management (SCM) is the combination of processes and procedures used to ensure the delivery of goods and services to customers at the lowest cost while providing the highest value to the customers.

Accepted Answer

This statement accurately describes the core objectives of supply chain management.

Question 12

A receiving report is an external request for the purchase of goods or services from a vendor.

Accepted Answer

A receiving report is actually a document generated internally by a business to confirm that goods or services have been received from a vendor. It typically includes details such as the quantity and condition of the items received, as well as any discrepancies or damages that may have been noted.

Question 13

In selecting a vendor, a buyer may need to obtain competitive bids by means of a document called a purchase order.

Accepted Answer

A purchase order is not a document used to obtain competitive bids. It is a document issued by a buyer to a vendor indicating the specific goods or services the buyer wishes to purchase. Competitive bidding is usually done through a separate process, such as a request for proposal (RFP) or request for quotation (RFQ).

Question 14

EOQ is a technique of analyzing all incremental costs associated with acquiring and carrying particular items of inventory.

Accepted Answer

EOQ (Economic Order Quantity) is a technique used to determine the ideal order quantity that minimizes the total cost of acquiring and holding inventory. It takes into account all costs including ordering costs, holding costs, and inventory carrying costs.

Question 15

The purchasing manager usually performs major buying activities as well as the required administrative duties of running a department.

Accepted Answer

The role of a purchasing manager includes both buying activities and administrative duties of running the department.

Question 16

A retailer could misread a demand signal doubling its normal order, and the wholesaler could respond and also double its order resulting in four times the retail order. This is an example of the bullwhip effect.

Accepted Answer

This is a classic example of the bullwhip effect, where small fluctuations in demand at the retail level can result in larger and more amplified fluctuations in orders at the wholesale and manufacturing levels.

Question 17

ABC analysis is a technique for ranking inventory items according to their relative importance.

Accepted Answer

ABC analysis, also known as Pareto analysis or the 80/20 rule, is a commonly used technique for ranking inventory items based on their value or usage, in order to prioritize management efforts and optimize inventory control. The items are classified into three groups based on their contribution to overall inventory cost or sales, with A items representing the most important and high-value items, B items representing moderate importance, and C items representing low-value or low-demand items.

Question 18

With continuous replenishment (CRP) a vendor obtains a buyer's current sales, demand, and inventory data in real time and replenishes the buyer's inventory.

Accepted Answer

With continuous replenishment (CRP), a vendor regularly obtains a buyer's sales, demand, and inventory data in real time to promptly replenish their inventory.

Question 19

Collaborative processes across the supply chain using a set of processes and technology models are called Collaborative Planning, Forecasting, and Replenishment (CPFR).

Accepted Answer

Collaborative Planning, Forecasting, and Replenishment (CPFR) is a set of processes and technology models that enable collaborative processes across the supply chain.

Question 20

Reorder point (ROP) analysis reorders inventory when the item reaches a certain inventory level that was determined in advance based on the item's purchase rate.

Accepted Answer

The answer of Reorder point (ROP) analysis reorders inventory when...

Quiz 12: The Purchasing Process