Ch. 10 Q&A – Flashcards
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All of the following are supply management goals EXCEPT: A. Ensure timely availability of resources B. Purchase at the Lowest price C. Enhance quality D. Assess technology and innovation
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B. Only B is not a goal of supply management. Rather than reduce purchase price, the appropriate goal is reduce total cost of Ownership.
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In its own country, a former supplier to your company recently began selling its own product that is identical to a product that was developed by your company. This is an example of: A: supply risk B. sustainability C. insourcing D. Strategic sourcing
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A. Theft of intellectual property is one type of supply risk.
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Zanda Corp. had outsourced its production to a company located in Asia. Recently it decided to continue to outsource, but bring the production back to a company located in the United States. This decision was likely made after Zanda: A: Conducted a spend analysis B. conducted a make or buy analysis C. examined total cost of ownership D. Developed supplier certification processes
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C. The decision to bring production closer to home could only come after an analysis of total cost of ownership.
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If you are evaluating whether a supplier's workforce is receiving fair wages, you are most likely doing a(n): A. spend analysis B. assessment of sustainability C. ISO 9000 assessment D. total cost of ownership assessment
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B. Wage disputes can affect the ability of a supplier to deliver on its commitments.
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Which of the following would NOT be a step in conducting a make/buy analysis? A. assessing quantitive costs of outsourcing B. Evaluating new suppliers who could make the SKU C. assessing the relationship of the product to the firm's core competencies D. Conducting a detailed internal audit of purchasing practices.
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D. All are steps in make/buy analysis except reviewing internal purchasing practices
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Outsourcing is often a good choice when: A. there are only a few suppliers B. a product is in the mature phase of the life cycle C. technology is new D. the product is critical to a firm's competitiveness
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B. Outsourcing is often good choice for mature products. There should be many capable suppliers and known technology. Critical competitive items generally shouldn't be outsourced.
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Qualitative factors that should be assessed when making an insourcing/outsourcing decision include all of the following EXCEPT: A. compatibility of the supplier's organizational culture and values with your company. B. the importance assigned to the suppliers location C. The skills and knowledge of the supplier's management team D. the costs incurred at the start of the contract
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D. The costs incurred at the start of a contract are quantitive, not qualitative costs.
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Which of the following is NOT a benefit of outsourcing? A. greater flexibility to change product specifications B. Better access to market information C. Lower supply management costs D. Less capital needed for investment.
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C. When outsourcing, a company has to spend more time and effort managing a supplier, so supply management costs are likely to increase rather than to decrease.
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The process of understanding how a firm is spending its money and with which suppliers is called: A. strategic sourcing B. make or buy analysis C. market analysis D. spend analysis
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D. Spend analysis refers to analyzing the dollars spent with which suppliers.
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Aspen Corporation has discovered that it uses 10 different suppliers for a particular type of item, has bought 20 different models of that item, and total expenditures last year for the item were $100,000. Aspen is most likely conducting: A. supplier audits B. spend analysis C. supplier certification D. make or buy analysis
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B. spend analysis refers to analyzing the dollars spend with which suppliers.
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Jones Company has identified an item for which the supply risk is high and the value of the purchase to the firm is low. A recommended sourcing strategy for Jones is to: A. multiple source B. increase efficiencies C. build partnerships D. consolidate purchases
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A. when supply risk is high and the value of the purchase to the firm is low, multiple sourcing is recommended.
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Which approach is likely to be used for leverage purchases? A. purchasing cards B. vendor-managed inventory C. using executive champions D. standardizing purchases
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D. standardizing purchases across the company increases the purchase volume needed for leverage purchases. Purchasing cards and VMI are noncritical purchases, and executive champions are used for strategic purchases.
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Moderate to high risk purchases with low to moderate levels of spend are categorized as: A. noncritical B. leverage C. bottleneck D. strategic
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C. moderate to high risk purchases with low to moderate levels of spend are characterized as bottleneck.
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Benefits of single sourcing include all of the following EXCEPT: A. quantity discounts B. more consistent quality C. better supplier relationships D. less supply risk
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D. single sourcing increases supply risk.
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Squeky Klean, a small consumer products company, purchases custom-designed plastic bottles for its cleaning products that are made at a single plant in Cleveland, Ohio. To make these bottles, specialized tooling must be purchased at a high cost and installed at a supplier's plant. It's sourcing strategy for bottles should be to: A. use three or more suppliers B. dual source C. single source D. insource bottle production
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C
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A primary reason for using global suppliers is to: A. improve sustainability B. reduce transportation costs C. take advantage of free trade agreements such as NAFTA D. work with the same suppliers in many different regions of the world
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D. when expanding globally, many companies want their suppliers to be able to expand with them.
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A global good products company makes soups that are specifically tailored to the taste of consumers in individual countries. What sourcing strategy is the company likely to use for its fresh ingredients such as vegetables? A. local, close to its production plant when possible B. national, using supplies within each country C. global, using the same suppliers across the world D. low-cost country sourcing
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A. although the company is global, fresh ingredients such as vegetables should be purchased locally, if possible to ensure high quality.
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Which of the following is (are) advantages of full partnerships with suppliers, as compared to traditional adverbial relationships? I. They help reduce uncertainties for both buyer and supplier II. the full partnership is easier to establish and maintain than other relationships, so more suppliers can be dealt with III. the full partnership assures the lowest material price A. I only B. I and II only C. II only
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A. the information shared, such as production schedules and long-term forecasts as part of a full partnership, helps to reduce uncertainty for both the buyer and the supplier. Full partnerships focus on total cost, not on material price.
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Zanda Corp. is considering trying to develop a full partnership with a particular supplier. This suggest that the item Zanda buys from the supplier is: A. a noncritical part B. a "bottleneck" item C. a strategically important part D. an item appropriate for a "leverage strategy"
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C, full partnerships are appropriate for strategically important items
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A relationship with a supplier that is characterized by lack of trust, little communication, and short-term transactions is called an: A. adversial relationship B. arms-length relationship C. acceptance of mutual goals D. full partnership
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A.
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When you need to identify a supplier for a new purchase, the FIRST place that you should look is: A. the local trade show B. the list of your company's current suppliers C. the list of suppliers that your company has used in the past D. the web site of industry groups
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B. the starting point should be the list of current suppliers. if a current supplier can be used, the time required to evaluate and manage the supplier can be reduced.
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Preparing an RFQ or RFP is an important step in: A. negotiation B. Online reverse auctions C. supplier scorecards D. competitive bidding
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D.
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Which of the following is true about the use of weighted scoring models for supplier selection? A. once developed, the model weights should never change B. the supply management department should determine the weights C. the highest-scoring supplier should always be selected to receive the business D. there is a good deal of subjectivity in developing and using the model
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D.
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An online auction used for sourcing: A. typically drives prices up as suppliers compete against each other B. is used in situations similar to negotiation C. can hurt supplier relationships D. can only consider price
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C. typically, online auctions drive prices down; they are used in the same situations as competitive bidding, and the software can consider factors other than price.
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Negotiation is typically used when: A. price is the most important factor B. there are many equally qualified suppliers who are willing to compete C. early supplier involvement is needed in new product development D. there are standard product specification that are clear and complete
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C.
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A legally binding document that signals to a supplier that goods and services are needed is a(n): A. purchase requisition B. electronic data interchange C. purchase order D. supplier relationship management document
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C.
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All of the following are true about supplier scorecards, EXCEPT: A. they reduce the need for incoming quality inspection B. they are used to provide performance feedback to suppliers C. they are often used to categorize suppliers based on an overall score D. they are used to measure supplier performance based on key performance indicators
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A
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A company has decided that it no longer needs to extensively count and inspect the products it receives from a particular supplier. this suggests that the purchasing company has begun: A. spend analysis B. supplier certification C. process simplification D. time reduction analysis
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B
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Williams Inc. has acquired software to help manage interactions with its Supply Base. this suggests that Williams INC. is involved in: A. vendor-managed inventory B. supplier relationship management C. online reverse auctions D. supplier auditing.
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B.
