SCM 486 Exam 2 – Flashcards
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The _________ function is taking on increasing importance in today's industrial economy. financial purchasing marketing human resources operations
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purchasing
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Since materials constitute the largest single percentage of their purchasing dollars, _____________ firms have turned to professionally operated purchasing departments to make sure they are getting full value for their outlays on materials. manufacturing results oriented profit oriented service retailing
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profit oriented
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__________ is the life blood of most businesses. Most firms store thousands of different items. Inventory Human resources Capital Supplies Buying
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Inventory
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The type of business a firm is in will usually determine how much of the firm's assets are invested in ___________. fixtures inventories machinery buildings locations
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inventories
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Management of inventories is a major interest of purchasing managers. In many industries, the investment in inventories comprises a substantial share of the firm's assets. If the productivity of the inventory asset can be enhanced, the improvement will go directly to the bottom line. True False
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True
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In order to manage the various types of inventory, attributes of the items first must be analyzed in terms of all the following with one exception. Which one is the exception? quality cost past usage the nature of demand lead time
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quality
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Independent demand is related to the demand for other items. True False
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False
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In the area of inventory management, the purchasing professional should make explicit decisions regarding which of the following? What to stock How much to invest How much service to offer All the above A and B only
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All the above
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In the case of a manufacturing firm, you must consider whether the production process is ____________, ___________, or some hybrid of the two. Retail Telzon Pure Computerized Management
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Pure
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The purchasing manager must have a clear understanding of the role of inventory in the ________ management system. production purchasing distribution materials supply
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materials
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The inventory items that are the most important for a specific industry or firm should be items that account for the greatest ___________. number of sales dollar value mark-up total value profit margin
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dollar value
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In the case of a manufacturing firm, you must consider whether the production process is ____________, ___________, or some hybrid of the two. custom made / made to stock matrix / made to request made to order / made to specs continuous / assembly line make to order / make to stock
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make to order / make to stock
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If you analyze what sells the most and what costs the most, a predictable pattern will emerge with most distribution inventories. As a result of this general pattern, a small percentage of the total item usage accounts for a large proportion of total usage value. It is hypothesized that ____ percent of the total inventory cost is vested in approximately ____ percent of the items. 20 / 80 60 /40 50 / 50 70 / 30 80 / 20
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80 / 20
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There are five primary functions of inventories. One of the following is incorrect. Which one? Safety stocks Cycle stocks Seasonal inventories Coupling Pipeline inventory
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Coupling
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The objective of an inventory system is the minimization of total operating costs. The unavoidable costs of operating pure inventory systems are ___________. ordering costs, stockout costs, and backorder costs ordering costs, delivery costs, and holding costs ordering costs, stocking costs, and holding costs shipping costs, stockout costs, and pricing costs ordering costs, stockout costs, and holding costs
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ordering costs, stockout costs, and holding costs
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The acronym EOQ is defined as _______________. economical order quantity equal order quantity economic order quantity equal opportunity quantity economic organizational quantity
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economic order quantity
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The classical EOQ model is based, in part, on four of the following assumptions. One of the following in not one of the assumptions. Which one? Intermittent demand Constant lead time Fixed holding cost per unit Fixed order cost per order Constant unit price
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Intermittent demand
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From time to time, buying firms receive discounted price schedules from their suppliers. This usually means that the price per unit is lower if larger orders are purchased. It _____________ to the buyer's advantage to accept the quantity discount. may be may not be is may or may not be could be
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may or may not be
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The classical EOQ model assumes that the per-unit material price is fixed. The quantity discount condition _______________ the total cost curve. supports validates enhances lowers invalidates
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invalidates
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A ________ method can easily be used for determining the minimum cost order quantity. simple four-step complex three-step five-step
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five-step
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___________ is extra inventory held to protect against randomness in demand or lead time. Random stocks Warehouse stocks Lead time stocks Safety stock Backorders
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Safety stock
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__________ is needed to cover the demand during the replenishment lead time in case actual demand is greater than expected demand. Safety stock Random stocks Safety orders Warehouse stocks Lead time stocks
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Safety stock
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____________ (statistical inventory control) techniques are based on the assumption of uniform requirements per unit time. If this assumption of the demands is unrealistic, these techniques can lead to inappropriate inventory decisions. Order-point Reorder point Telzon Order control SICT
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Order-point
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________ systems utilize substantially better information on future requirements than is possible by the traditional non-time-phased order-point system. PRM MPD IRA MRP QTR
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MRP
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_______ systems are helpful for companies with assembled products that have component requirements dependent on the final product. PDQ MRP IRA ARA MRA
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MRP
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The ______ concept provides the basis for projecting future inventories in a ____________ operation. MRP / manufacturing PDQ / manufacturing RAP / retailing AAP / auto service MAP / service
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MRP / manufacturing
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_______ can help improve the traditional non-time-phased order-point system because it allows the _____________ to plan requirements (raw material, component parts) to meet the final assembly schedule. PDQ / buyer AAR / sales manager MRA / purchasing manager MRP / operating manager MAPS / production manager
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MRP / operating manager
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The general __________ problem is to batch requirements to minimize the sum of ordering and carrying cost each time an order is to be placed. ordering buying cost analysis transportation lot-sizing
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lot-sizing
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In situations where discounts are not available, the price per unit is constant regardless of the number of units ordered. True False
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True
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Among the better-known lot-sizing methods for the single item, non-discount, time-phased, certain-demand models are: (1) lot for lot, (2) economic order quantity, (3) periodic order quantity, (4) least unit cost, (5) McLaren s order moment, (6) Silver-Meal, and (7) the Wagner-Whitin dynamic programming algorithm. True False
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True
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The just-in-time (JIT) system is no longer a (n) _______________ in the manufacturing world today. In the face of intense global competition, many firms in the United States are looking at improved techniques to manage their manufacturing operations. manufacturing theory production concept management concept untried theory esoteric concept
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esoteric concept
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JIT is also referred to as _______ production. mass quality lean custom short run
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lean
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The following practices are considered essential for a comprehensive JIT implementation: Uniform production (also known as heijunka), Quick set times, Small lot sizes, Short lead times. True False
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True
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The following practices are considered essential for a comprehensive JIT implementation: Regular maintenance, Diverse workforce, Supplier development, Kanban production control. True False
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True
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JIT is Toyota's manufacturing philosophy to minimize _______, and the JIT production system is a subsystem controlled by ________. costs / computer waste / kanban expenses / kanban costs / kanban waste / computer
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waste / kanban
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The ________ JIT production system has been erected based on the premise of minimizing _________________ (waste) by reducing or eliminating discrete batches. computer controlled/batches or lots computer controlled/inventories kanban-controlled/stock on hand kanban-controlled/work-in-process inventories computer controlled/stock on hand
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kanban-controlled/work-in-process inventories
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Kanban is the Japanese word for _____________. card container computer program system
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card
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The kanban card contains the part number, the part description, the type of container, and various workstation information. True False
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True
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The kanban production control system uses simple, visual signals to control the movement of materials between work centers as well as the production of new materials to replenish those sent downstream to the next work center. True False
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True
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There are two main types of kanban: __________ signals the need to produce more parts. Each kanban is physically attached to a container. __________ signals the need to withdraw parts from one work center and deliver them to the next work center. Reorder kanban / Production kanban Withdrawal kanban / Production kanban Quality circle kanban / Withdrawal kanban Production kanban / Withdrawal kanban Production kanban / Zero defects kanban
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Production kanban / Withdrawal kanban
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In a ____________, removing an end item (or a fixed lot of end items) triggers the order release, by which the flow of materials or components is initiated. In contrast, ____________ allow for the production or material flow in anticipation of future demand. push system / pull systems pull system / push systems CIT system / CAM systems diverse system / traditional systems traditional system / push systems
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pull system / push systems
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Thus, a kanban system is referred to as a __________ because the kanban is used to ______ parts to the next production stage only when they are needed. push system / push pull system / pull traditional system / ship traditional system / transfer pull system / push
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pull system / pull
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Rule One (1) of the dual card kanban is: No parts are made unless there is a production kanban to authorize production. If no production kanban are in the in box at a work center, the process remains idle, and workers perform other assigned activities. This rule enforces the pull nature of the process control. True False
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True
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The cost of raw materials has traditionally, been a serious concern of top management. Over the years, material cost as a proportion of total cost of the end product has risen sharply and is as high as ______ percent in some instances. 50 60 70 80 90
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80
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The role of the purchasing function in a manufacturing organization has become increasingly important. The _____________ production control system focuses on reducing both raw materials and work-in-process inventories. JUST-ON-TARGET MBO just-in-time strategic just-in-line
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just-in-time
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The ____________ is to provide a firm with component parts and raw materials. ____________ also must ensure that high-quality products are provided on time, at a reasonable price. manufacturing department / Manufacturing operations division / Operations function of purchasing / Purchasing procurement department / Operations buying function / Manufacturing
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function of purchasing / Purchasing
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One of the most crucial elements of the ____________ system is small lot sizes. just-in-time management ordering and buying just-on-target purchasing computer ordering and buying
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just-in-time
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Traditionally, long and infrequent production runs have in the past been considered beneficial for the overall productivity of a manufacturing organization. However, long production runs usually lead to ____________ of raw-material and finished-goods inventories. stable levels low levels steady flows intermittent flows high levels
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high levels
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JIT purchasing facilitates reduction in _____________ and the associated _____________ costs. the cost of materials / storage the cost of shipping / holding the cost of inventory / storage inventory levels / materials inventory levels / inventory holding
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inventory levels / inventory holding
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Lower levels of __________ contribute significantly to reduced working capital requirements for the firm. waste supplies materials safety stock inventory
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safety stock
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As cooperation and relationships between suppliers and manufacturers build up in a JIT system, so do the opportunities to ______________________ and focus on ________________________. lower costs of materials and supplies / reducing waste and shrinkage conduct an extensive competitive analysis / reducing selling prices conduct an extensive value analysis / reducing the cost of parts purchased analyze competition / developing competitive strengths conduct cost analysis / reducing the costs of doing business
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conduct an extensive value analysis / reducing the cost of parts purchased
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A comprehensive JIT progress report indicates that supplier costs were reduced by ________ when they adopted the JIT system in cooperation with their customers. significant amounts 11 percent twenty fold 100 percent 10 percent
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11 percent
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Because of ____________ and frequent delivery schedules, suppliers are in a position to receive quick feedback regarding any potential manufacturing or design problems. Also, manufacturing is in a position to implement engineering changes quicker because of the _________ inventory levels. large orders / increased computerization / flat smaller orders / increased computerized ordering systems / reduced smaller lot sizes / reduced
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smaller lot sizes / reduced
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The JIT progress report mentioned in the textbook indicates that supplier quality improved by ______ percent since the JIT system was adopted. 26 16 36 6 46
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26
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It is well documented that JIT reduces physical inventory level. Reductions in physical inventory will also have a favorable impact on: Reduced insurance premiums associated with the storage of inventory, Reduced inventory holding costs, Reduced labor cost in store rooms and material handing costs, Reduced clerical and administrative costs, Reduced waste from the manufacturing process, Reduced obsolescence costs, Reduced deprecation of handling and storage equipment, Each of the cost savings will result in a leaner more profitable operation. True False
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True
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Effective development and implementation of the just-in-time system requires integration of important functional areas such as ______________________. (Choose the best answer) purchasing manufacturing quality production and transportation all of the above
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all of the above
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The _________ see little incentive in adopting the JIT approach when the primary benefits of the program go to the buyer. customers suppliers employees stockholders stakeholders
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suppliers
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Many firms report lack of support from __________ as being one of the major problems encountered in the implementation of JIT (Lean) purchasing. stakeholders their employees their stockholders their bankers their lenders
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their employees
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Very often, resistance is encountered because the employees are required to change their _____________, or because they interpret the new system as being _____________ jobs. long-standing work habits / a threat to their work stations / unnecessary to their job descriptions / an intrusion in their job standards / an evaluation of their personal work habits / a change in the expectations of their
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long-standing work habits / a threat to their
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__________ percent of the firms surveyed using JIT practices in the United States indicated that they had serious problems regarding lack of support from engineering. Nineteen Twenty-nine Sixty-nine Forty-nine Thirty-nine
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Thirty-nine
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If suppliers fail to provide materials of _____________ on a regular basis, production slow-downs and stoppages will occur regularly. adequate quantity acceptable quantity adequate quality high quality acceptable quality
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adequate quality
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A crucial issue to be considered is the relevance of _________ in the successful implementation of the just-in-time system in a country. culture procedure communication style life styles policy
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culture
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It takes time to ___________ of the workforce and _____________ relationships with suppliers. change habits / improve change attitudes / nurture long-term improve the attitudes / build change old habits / nurture long-term change attitudes / maintain short-term
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change attitudes / nurture long-term
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All marketing strategies are compatible with the JIT system. True False
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False
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The transition to ______ has not necessarily been a smooth one for many companies in the United States. But this does not imply that switching from a pure ____ system to a __________ system was a mistake for most companies. JOT / MRI / JOT or hybrid JIT / MBO / JIT or hybrid JIT / MRP / JIT or hybrid JOT / MRP / JOT or matrix JIT / MRI / JIT or hybrid
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JIT / MRP / JIT or hybrid
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_________________ is a stockless inventory method for ordering and stocking MRO and related items. The use of ________________ will aid the firm in reducing ordering and inventory costs. Purchase Order Systems / Purchase Order Systems Systems contracting / systems contracting Systems procurement / systems procurement Contracting systems / contracting systems Materials contracting / materials contracting
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Systems contracting / systems contracting
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The _____________ process requires the use of a negotiated agreement between buyers and sellers. contracting systems systems procurement Purchase Order Systems materials contracting systems contracting
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systems contracting
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The negotiated agreement between buyers and sellers includes the following terms: the type of material, ________________, stocking policy, and delivery requirements. scope of contract price billing policy All of the above. B and C only
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All of the above.
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Recognizing that purchase price is but one element of the total cost picture, the scope of ____________ goes far beyond the purchase price for any given item. systems contracting contracting systems Purchase Order Systems materials contracting
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systems contracting
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To extend the commitment to increasing productivity in all departments within a given facility, many companies have adopted the concept of __________. cost centers profit centers profit groups cost groups cost divisions
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profit centers
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__________ professionals are primarily charged with the responsibility for controlling the total cost of ownership (TCO). Accounting Purchasing Marketing Buying Operating
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Purchasing
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Many of the e-procurement software vendors fail to take into account __________________________ and getting suppliers to participate in the e-procurement system. the total cost of implementing these systems the difficulty of realizing savings during the development and deployment phases of the transition the cost of training employees All of the above. A and C only
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All of the above.
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__________ materials are directly related to the production of the finished goods. Finished Direct Raw Custom Indirect
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Direct
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__________ materials are any commodity or service that is not directly involved in the production of finished goods. Raw Indirect Custom Direct Finished
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Indirect
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E-purchasing has lead to significant cost saving and coordinated efficiency. True False
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True
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It is a good idea to implement e-procurement on systems that have a high supply risk and low profit impact, especially if there are a very limited number of suppliers to choose from. True False
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False
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Anything that will immediately impact profits or bottleneck your operations is not a good place to experiment with a new electronic procurement system. True False
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True
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Indirect purchasing can be divided into two categories: organizational resources management and management of repairs and operations organizational resource management / maintenance resources and operations operating resource management and maintenance repair and operations operations repair management and management of resources and operations organizational repairs and maintenance / management of resources and organization
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operating resource management and maintenance repair and operations
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______ purchasing is a term used for purchasing office equipment, furniture, office supplies, forms, computers, travel services, maintenance services, light bulbs, janitorial supplies, and many other relatively low-cost items. CCM DOP MRO MBO ORM
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ORM
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_____ purchasing is concerned with critical maintenance and replacement parts, highly engineered machine parts, and manufacturing equipment.. MRO MBO ORM DOP CCM
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MRO
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One problem with indirect purchasing is the tendency for employees to intermittently buy indirect items off contract. This practice is referred to as ________________. IOC purchasing local purchasing OC purchasing MP maverick purchasing
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maverick purchasing
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The seven (7) steps to effectively implement e-procurement are: 1. Start with non-critical items. 2. Bring all internal stakeholders on board with your new procurement process to establish internal customer behavior. 3. Streamline, map, test, troubleshoot, and improve the process before expanding it to external suppliers. Work with a favored supplier to test the system. 4. Leverage your system once it s running. Exploit your full purchasing power by using reverse auctions. 5. Aggregate buyers within your organization to increase your purchasing power and gain better pricing. 6. Use an incremental approach to expand your system. 7. Once the bumps have been ironed out of the system, move on to the manufacturing operations. True False
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True
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Businesses that use reverse auctions, or e-auctions, have given testimonials of savings of more than ____ percent. 80 70 50 90 60
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50
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With __________, conditions are somewhat different. First, the buying firm initializes the auction by submitting a description of the product or service. Sellers then place bids based on their offer to fulfill the buyer's needs. traditional auctions eBay silent auctions Amazon.com reverse auctions
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reverse auctions
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In a reverse auction the competition between the sellers drives the price _______, instead of _______, so the buyer pays _________ at the expense of the seller. down / up / less up / down / more down / down / less up / down / less up / up less
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down / up / less
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__________ may not be the solution for all commodity buying. As an example, if there are too few sellers, ___________ will not yield the best price. Traditional auctions / reverse auctions Traditional auctions / traditional auctions Reverse auctions / traditional auctions Reverse auctions / reverse auctions
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Reverse auctions / reverse auctions
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A more devastating downside of ______________ is the buyer/seller relationship damage that may result from this method of buying. The buyer runs the risk of alienating both current and potential sources for the goods/services. traditional auctions silent auctions eBay Overstock.com reverse auctions
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reverse auctions
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To maintain trust and cooperation between buying and selling firms, reverse auctions should be used carefully. True False
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True
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______ is the direct computer transmission of orders and other transaction information. FDIC EDS EDI ESC DEI
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EDI
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The main elements of an EDI system are: computer hardware,software computer compatibility between the sender and receiver subscription to a common network All of the above. A and B only
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All of the above.
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There are many benefits to using EDI. For a smaller company, EDI may help ________ keep a valued trading partner or customer gain new customers or trading partners all of the above none of the above
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all of the above
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There are many benefits to using EDI. For larger firms, the main benefit(s) is (are) generally ________________ the cost savings to be known as a leading-edge company all the above none of the above
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all the above
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There are some definite benefits to utilizing ______. The first major benefit is reduced labor. Higher information quality due to a reduction in data entry errors also can be attributed to ______ EDI / EDI CSI / CSI FDIC / FDIC RAF / RAF EID / EID
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EDI / EDI
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According to the Lewin-Schein theory of change the change process consists of the following three steps: Unfreezing / Formulating / Refreezing Unfreezing / Moving / Training Unfreezing / Training / Moving Analyzing / Formulating / Freezing Unfreezing / Moving / Refreezing
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Unfreezing / Moving / Refreezing
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The way in which the process of developing and implementing an EDI system is managed can greatly influence the success of implementation. Four key areas are: middle management support, commitment to the project, evaluation, and institutionalization. top management support, commitment to the project, influence, and institutionalization. middle management support, knowledge of the project, influence, and institutionalization. top manage support, knowledge of the project, evaluation, and institutionalization. top management support, knowledge of the project, commitment, and influence.
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top management support, commitment to the project, influence, and institutionalization.
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Top management support has long been recognized as one of the _______ important ingredients necessary for the ___________ of any organizational change, and the same holds true for the ____________ of an EDI system. most / planning / designing least / implementing / designing most / scheduling / implementation most / introduction / introduction least / planning / designing
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most / introduction / introduction
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As EDI really takes hold and international EDI becomes more commonplace a major stumbling block will be overcoming the language barriers that now exist. The most widespread EDI language in the United States is _________________ ANSA X12 standard EDIFACT standard EDIFACT X10 standard ODETTE ANSI X12 standard
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ANSI X12 standard
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_____________________ is a universal term given to any technology that uses radio waves to identify and track items. Point of Sale, or POS Telzon Radio frequency identification, or RFID IBMR OASIS
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Radio frequency identification, or RFID
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Unlike the barcode-based tracking system, a radio frequency identification system offers a __________________________________ . fully supported, efficient reading and tracking system. no-contact, no-line-of-sight reading and tracking system. contact, no-line-of-sight reading and ordering system. cost effective, line-of-sight reading and tracking system. point of sale reading and ordering system.
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no-contact, no-line-of-sight reading and tracking system.
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RFID tags can be read through snow, fog, ice, paint, and crusted grime, unlike the barcode system. The tag also can be programmed to hold information such as the item s serial number, color, size, manufacture date, and current price, as well as a list of all distribution points the item reaches as it moves before arriving at a store. True False
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True
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E-Procurement benefits by category are: Indirect, Direct, and __________ Decentralized Centralized Low cost Resourcing Sourcing
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Sourcing
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Buyers and sellers located on different continents can meet electronically. E-sourcing will also lead to higher transactional accuracy and cost reductions for the entire supply chain. E-sourcing creates value by : 1. Reducing the total cost of ownership. 2. Streamlining the purchasing process and 3. Business innovation True False
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True
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Traditional purchasing professionals who act as little more than order placers are giving way to __________ involved ___________ managers who control vital inputs to the production process. strategically / analytical highly/ operations highly / participative strategically/ general highly / general
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strategically / analytical
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Buying firms select _____________ based on their capabilities, and not purely on the competitive process. employees materials the workforce managers and supervisors suppliers
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suppliers
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The use of outsourcing has quickly become _____________ for an increasing number of businesses. necessary a competitive weapon an advantage a major strength a way of operating
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a competitive weapon
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The following are key mistakes in the make-versus-buy decision: 1) In most cases, businesses are not proficient at identifying their core capabilities. Buyers usually rationalize in-house decisions based on capacity capabilities. 2) Buying organizations wait too late to assess the value of consultants or strategic partners. 3)Buyers do not recognize that the product or service is approaching maturity. 4) There are always new competitors with new technology attacking the market. True False
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True
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_____________ gives a firm more control over the part in question. However, the greater the percentage of internal parts an assembly firm produces, the greater their need to have ___________ in each of the areas involved. Horizontal integration / competence Horizontal integration / diversity Vertical integration / diversity Vertical integration / good people Vertical integration / competence
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Vertical integration / competence
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The buying firm must be highly skilled at ____________________________. specifying product attributes forecasting expected requirements ensuring the right quality at a reasonable price all the above A and C only
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all the above
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Buyers should be experts ___________ and in specific _____________. on the industry / raw materials or component parts in the company / technologies in manufacturing processes / technologies on material and parts / manufacturing procedures in engineering / design techniques
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on the industry / raw materials or component parts
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The _____________________ process is based on the idea of efficient resource coordination and teamwork. re-supply management supply chain management strategic chain management wholesale chain management supply chain assistance
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supply chain management
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The counterproductive relationship is undesirable because: 1) it does not promote a positive rapport between buying and supplying firms involved and 2) neither organization achieves its goals. True False
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True
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________________ relationships are those in which each organization (buying and supplying) is so focused on getting what is best for it that each puts the other at a disadvantage. Competitive Collaborative Counter-collaborative Counterproductive Cooperative
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Counterproductive
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One model that explains supply chain relationship management includes which of the following behavioral dimensions? counterproductive (lose-lose) / competitive (win-lose) counter-cooperative (lose-win) / counter-collaborative (win-lose) collaborative (win-win) relationships / cooperative (win-win) All of the above. A and C only
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A and C only
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A ______________ relationship is almost required with transactional/tier-_______ suppliers and assumes that the buying firm can lower prices to help keep its competitive edge in the market. collaborative / two competitive / three cooperative / three competitive / five counterproductive / four
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competitive / three
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____________ relationships recognize the potential value of both organizations getting what they want and maximize the potential of having a long-term relationship. Counter-cooperative Counterproductive Competitive Cooperative Collaborative
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Cooperative
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Although it is a strong relationship, a cooperative alliance lacks the ___________ that is needed between the various buying and supplying firms in order to optimize the benefits for all of the members of the supply chain. cooperation resources teamwork communication commitment
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teamwork
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Collaboration or collaborative relationships, usually found with the buying firm s strategic/tier-______ suppliers, include the ___________ component that is missing in a cooperative relationship. three / team one / team two / communication one / communication five / team
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one / team
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In collaboration, the two organizations truly realize the benefits of working together to optimize outcomes for both organizations. The two firms work together to develop a ___________ to deliver a high-quality product or service on time and under budget. process program strategy plan goal
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strategy
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Once the system is developed, it then forces the various functions in the buying firm to evaluate which suppliers truly add value. The rankings are aggregated to enable a ranking of all suppliers. The company will then categorize the suppliers into one of three categories: standard, preferred, or cooperative. standard, competitive, or preferred. strategic, preferred, or. transactional. preferred, critical, or transactional. strategic, competitive edge, or standard.
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strategic, preferred, or. transactional.
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___________ suppliers are those that are most important to the buying firm. They supply the buying firm with essential materials and capabilities that are not easily replaced. standard Preferred Strategic Competitive Collaborative
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Strategic
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___________ suppliers are those that are important to the buying firm, but alternative suppliers could be found with some effort. Standard Strategic Cooperative Competitive Preferred
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Preferred
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___________ suppliers are those that can be easily replaced in a short time. Standard Transactional Preferred Cooperative Common
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Transactional
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There are two main categories of supplier evaluations, ___________________. specification-based evaluations and quality-based evaluations procedure-based evaluations and quality-based evaluations process-based evaluations and quality-based evaluations quality-based evaluations and performance-based evaluations process-based evaluations and performance-based evaluations
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process-based evaluations and performance-based evaluations
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The _________ evaluation is an assessment of the supplier s production or service process. ______________ evaluations are based on objective measures of performance. process-based / Performance-based performance-based / Process-based procedure-based / Quality-based process-based / Quality-based quality-based / Performance-based
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process-based / Performance-based
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In addition, large buying organizations increasingly are demanding that their suppliers become certified through third-party organizations, such as ____________ certification or _______________ National Quality Awards. ISO 0900 / Malcolm Jones UFO 1000 / Mayfield POS 2001 / Malcolm Baldrige ISO 9001 / Malcolm Baldrige ISO 9000 / Mae Baldrige
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ISO 9001 / Malcolm Baldrige
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The three general types of supplier evaluation systems in use today are the _________________________. categorical method, the price-ratio method, and the circular averaging method categorical method, the cost-ratio method, and the linear averaging method circular method, the cost-ratio method, and the linear averaging method cost-ratio method, the gross margin method, and the linear averaging method categorical-ratio method, the quality-ratio method, and the linear averaging method
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categorical method, the cost-ratio method, and the linear averaging method
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In general, the guiding factors in determining which system is best are ____________ and _______________ of the system. quality / cost quality / cost of implementation ease of implementation / cost of implementation reliability / cost ease of implementation / overall reliability
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ease of implementation / overall reliability
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The __________ method involves categorizing each supplier s performance in specific areas defined by a list of relevant performance variables. performance-based process-based circular-ratio based categorical-ratio based categorical
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categorical
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The advantages associated with implementing the ________________ evaluation program are that it can be implemented almost immediately and is the least expensive of the three evaluation systems discussed in the textbook. categorical process-based performance circular-ratio procedure-based
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categorical
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The ____________ method s major disadvantage is its dependence on the judgment of its users. The system is largely dependent on the memories of personnel to explain what unsatisfactory or good means. With this method, there is no concrete supporting data. performance categorical process categorical-ratio circular-ratio
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categorical
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The ___________ method evaluates supplier performance by using standard cost analysis. price-cost-ratio cost-ratio performance process categorical
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cost-ratio
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The __________ method is probably the most commonly used evaluation method. linear averaging categorical process performance cost averaging
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linear averaging
question
Relationships with strategic suppliers need to be closely managed. One way to keep up on supplier relationships is for a __________ organization is to compile ___________ for each strategic __________. partner / buyer profiles / supplier buying / supplier profiles / supplier supplier / buyer profiles / partner buying / supplier profiles / partner manufacturing / supplier standards / partner
answer
buying / supplier profiles / supplier
question
In addition to the strategic _________ profiles, the buying firm should clearly establish expectations for the strategic _________ and discuss future product and _______ development plans; this is typically done with an annual review period. buyer / buyers / buyer s partner / partners / partner s buyer / suppliers / partner s supplier / suppliers / supplier supplier / buyers / partner s
answer
supplier / suppliers / supplier
question
_______________ and ______________ are necessary in order to keep costs down and create trust with strategic suppliers. Quality circles / just-in-time delivery Regular meetings / continuous two way communications Cost reduction / continuous process improvement Management by objectives / two way communication Staff awareness / regular quality meetings
answer
Cost reduction / continuous process improvement
question
___________________, one type of supplier development program (SDP), are an attempt to meet current and future business needs by improving supplier performance and capabilities. Supplier training Supplier evaluations Supplier workshops Supplier seminars Supplier discussions
answer
Supplier evaluations
question
Buying firm managers should focus their _____ implementation efforts on suppliers that exhibit commitment to the buying firm. Although the buying firm's perceptions of the supplier's commitment are inherently biased, it represents the best proxy for the supplier's commitment. MOD PODS SDP POS SOP
answer
SDP
question
Much debate has taken place concerning the number of suppliers a firm should use. One side of the debate is the _____________ side. This involves the use of two or more suppliers. The other side of the debate is the ____________ policy, in which only one supplier is used to supply a particular part. multiple-sources / single-source matrix-sources / hybrid-source metroplex / single-source tri-source / mono-source multi-source / mono-source
answer
multiple-sources / single-source
question
The main arguments for __________ sourcing are competition and assured supply. mono metro multiple matrix multi
answer
multiple
question
The major arguments in favor of _________ sourcing are that with the certainty of large volumes that the supplier can enjoy lower costs per unit and increased cooperation. solo mono single multi multiple
answer
single
question
A ________ approach can be used that is known as ____________. With this method, the supplier base is expanded without increasing the actual number of suppliers. multi / multiple-sourcing matrix / cross-sourcing hybrid / mono-sourcing solo / single-sourcing hybrid / cross-sourcing
answer
hybrid / cross-sourcing
question
The advantages of multiple sourcing can be viewed as the disadvantages of single sourcing and vice versa. True False
answer
True
question
Single sourcing advocates may want to address the following issues regarding long-term impacts of single sourcing. In the long-run, if everyone reduces their supplier base, there will be fewer suppliers to deal with and overall competition will decrease as there are fewer suppliers. A supplier consolidation will give suppliers less power in the long run. True False
answer
False
question
Grade methods are those that are based on a score or grade given to the supplier by the buyer for some attribute. The most common attributes are _____________________. cost, reliability, and delivery quantity, quality, and reliability quality, price, and delivery effectiveness, cost, and terms quality, price, and terms
answer
quality, price, and delivery
question
The second group of methods used to reduce the number of suppliers a firm uses is what the textbook refers to as the _________ methods. matrix hurdle saddle barrier effectiveness
answer
hurdle
question
Supplier ______________ are very useful tools to evaluate the quality capabilities of a supplier. review programs bargaining programs certification programs evaluations negotiations
answer
certification programs
question
The certification criteria can be changed and updated as recertification may be required. Thus, the hurdle can be lowered until there are a few suppliers left. True False
answer
False
question
Outsourcing can be defined as the ___________ transfer of a business process that has been traditionally ________________ internally to an independently owned external service provider. partial / owned and supported complete / operated and managed first / supervised business / owned and managed process / owned and supervised
answer
complete / operated and managed
question
A complete transfer means that the ______________________________ and other assets are no longer maintained internally once the business process is outsourced. people, plants, warehouses, headquarters, facilities, equipment, machinery, people, facilities, equipment, people, facilities, equipment, technology, people, facilities, technology,
answer
people, facilities, equipment, technology
question
Outsourcing is also sometimes thought to be similar to subcontracting, joint venturing, and contract manufacturing. Contracting is the purchasing of goods or services to facilitate a business process owned by the buyer. The outsourcing point of departure from these concepts is the ________________ of all associated internal business process activities. date of implementation agreement for the outsourcing need to reduce the costs desire to reduce the expenses complete transfer
answer
complete transfer
question
In a recent study, executives categorized their outsourcing activities. Table 9.1 in the textbook illustrates the diverse set of outsourced activities that were reported on. Not surprisingly, information technology outsourcing (ITO) represented the largest number of responses at 25.8 percent. Approximately 35 percent of the responses represented the outsourcing of some type of manufacturing activity, with the remainder being _________________. business practices administration (BPA) business process outsourcing (BPO) business accounting technology (BAT) business owners administration (BOA) business technology administration (BTA)
answer
business process outsourcing (BPO)
question
Outsourcing can be conceptualized as a _________ rather than simply an event. This __________ begins with the development of a strategic and financial business case for outsourcing. method / method strategy / strategy process / process practice / practice program / program
answer
process / process
question
The crafting of the business case is followed by implementing the ____________________ and, ultimately, managing the relationship with the provider. plan external sourcing model contract outsourcing model Internal sourcing model
answer
external sourcing model
question
Global business process outsourcing alone has surpassed the US$________ mark. A recent Booz Allen report posits the expectation that U.S. business process outsourcing will continue to grow at about _____ percent per year in the near term. 9 trillion/12 5 trillion/9 4 trillion/11 6 trillion/8 6 trillion/10
answer
6 trillion/10
question
According to a recent Deloitte Consulting study, 64 percent of respondents indicated that they had brought outsourced services back in-house. Fifty percent of respondents identified ______________ as the primary problem encountered with outsourcing, while 44 percent _________ realize cost savings. contractual expenses / did relationships / did not hidden costs / did not relationships / did hidden costs / did
answer
hidden costs / did not
question
Another study reported similar findings from a Bain survey of large and medium-sized firms. They found that only ____ percent of the firms were highly satisfied with the costs they were saving, and nearly _____ percent failed to achieve cost savings expectations 5/44 6/60 10/75 10/50 12/50
answer
10/50
question
a 2005 study reported that, based on the experience of the global consulting firm Booz Allen Hamilton, they would estimate that approximately one in three outsourcing efforts fails to achieve outsourcing expectations. These anecdotal findings suggest that there is a troubling gap between expectations and reality; however, outsourcing is ____________. here to stay being revised being cut back here for the next couple of years fading out
answer
here to stay
question
It is virtually impossible to generalize why organizations outsource various business processes. The final outsourcing decision depends on whether the CEO, CFO, or CIO initiates the outsourcing proposal. Whichever executive initiates the outsourcing proposal, a reduction in __________________ is usually the primary driver. hidden costs indirect costs labor costs direct operating costs hidden operating costs
answer
direct operating costs
question
The cost reduction must be significantly lower than the current direct operating costs in order for an outsourcing proposal to be attractive. The generic strategic benefits of outsourcing are listed below with one exception. Which one is not one of the strategic benefits? Refocusing the organization to its core competencies is accomplished by focusing what the organization does best and/or transforming the business to focus on new products and services. Increased market share and revenue is accomplished by assessing the providers network and accelerating expansion into new markets. Cost minimization is accomplished by reducing direct operating costs, eliminating overhead costs, and transforming fixed costs into variable costs. Improvement in the organization s core competencies by increasing productivity, reducing indirect operating expenses, lowering overhead, and expanding services. Improvement in operating performance is accomplished by increasing quality, increasing productivity, and obtaining new capabilities technologies from external sources.
answer
Improvement in the organization s core competencies by increasing productivity, reducing indirect operating expenses, lowering overhead, and expanding services.
question
Some of the specific benefits of outsourcing are to reduce and control operating costs. Improve quality. Change company focus. Acquire external capabilities. Refocus scarce resources for alternative uses. Reduce cycle time. Obtain cash infusion. Reduce risks. Gain flexibility. Turn fixed costs into variable costs. True False
answer
True
question
While a contract is required to legally protect one's interests, an extensive strategic assessment and a true commitment to a cooperative relationship with the service provider are both necessary to realize expected outsourcing benefits. These insights offer valuable guidance to __________________ in terms of where and how ______________ should be applied. business partners / outsourcing techniques outsourcing practitioners / outsourcing benefits business practitioners / sourcing techniques procurement departments / outsourcing benefits outsourcing practitioners / sourcing resources
answer
outsourcing practitioners / sourcing resources
question
Outsourcing initiatives must ___________. The type of management and relationship skills and capabilities must be developed through training and/or recruitment within the outsourcing organizations. create value create profits reduce costs improve quality create turnover
answer
create value
question
If sourcing internally, firms must estimate the costs of ________ prevention, the costs of _____________, the cost of ___________, and the cost of ____________. shrinkage / quantity appraisal / internal losses / external losses defect / quality appraisal / internal failure / external failure defect / quantity appraisal / internal problems / external problems turnover / quality appraisal / internal problems / external problems shrinkage / quality appraisal / internal losses / external failure
answer
defect / quality appraisal / internal failure / external failure
question
The buying firm will need to ensure that proper mechanisms are in place to make sure that they are capable of detecting _____________ by an external source. delivery failures quantity failures safety failures cost failures quality failures
answer
quality failures
question
It has long been recognized in both the strategy and operations literature that the most effective external sourcing relationships involve considerable _______________ and ____________. resources / time commitment / communication management time / coordination management effort / two-way communications management effort / relationship building
answer
management time / coordination
question
While internal coordination costs are unique to external sourcing alternatives, they must be contrasted against the _______________ and ____________ associated with internally sourcing a product or service. management time / turnover costs internal coordination / overhead costs external coordination / implementing costs external coordination / expected benefits external coordination / overhead costs
answer
internal coordination / overhead costs
question
In general, one can think of __________ coordination costs as those overhead expenses incurred solely due to the decision to _________ source a product or service. internal / externally external / internally external / externally management / internally internal / internally
answer
internal / internally
question
Presumably, _______________ induces higher levels of many overhead administrative functions such as payroll, benefits management, utility expenses, IT expenses, and so forth. sourcing internally outsourcing sourcing externally sourcing alternative sourcing
answer
sourcing internally
question
The relationship between higher levels of vertical integration and an increase in bureaucratic costs has been noted in the extant academic literature. Some firms have cast the decision to _____________ versus the decision to externally source as a comparison between the costs of bureaucracy and the cost of _____________. vertically integrate / external coordination horizontally integrate / internal coordination merge / management coordination expand horizontally / supervision vertically integrate / internal coordination
answer
vertically integrate / external coordination
question
During the transition period, firms incur additional costs related to internal staff providing _______________. There is usually lower efficiency and effectiveness at the beginning of the contract. additional resources advice and assistance additional support and duplicate resources duplicate services training and advice
answer
additional support and duplicate resources
question
Dunn and Bradstreet found that 20 to 25 percent of all outsourcing relationships fail within __________ and nearly half fail within ____ years. This implies that the likelihood of incurring these expenses again, or experiencing costs associated with re-internalizing an outsourced activity, is ___________. Another critical financial consideration with outsourcing is the impact on the ___________. two months / ten / relatively high / environment two years / eight / good / internal workforce two years / five / relatively high / internal workforce two years / five / somewhat low / environment two months / five / relatively high / internal workforce
answer
two years / five / relatively high / internal workforce
question
Some of the often hidden costs of outsourcing include training internal employees to become relationship managers rather than technical managers. The hidden costs also include ______________________________________ required to thwart labor disputes. golden parachutes, severance packages, temporary employees, and supervision retention bonuses, severance packages, employee turnover, and management time retention bonuses, employee training, redundant activities, and management time management time, severance packages, employee training, and golden parachutes performance bonuses, temporary employees, employee turnover, and employee training
answer
retention bonuses, severance packages, employee turnover, and management time
question
One of the most influential factors in _______________ decisions is the coordination requirements. Perhaps nowhere is this more evident than when considering new product or service development. horizontal integration strategic alliance merger vertical integration acquisition
answer
vertical integration
question
If considering international sourcing alternatives, it is important that the decision makers develop a complete understanding of the costs involved with _____________________ ____________________________________________________________. moving key personnel to the company of choice, setting up communication links, and building the appropriate facilities ensuring compliance with governmental laws, regulations, and even local business customs setting up environmental friendly operations, complying with the local customs, adapting to local regulations, and adjusting to the local culture. learning local customs, adapting to the culture, meeting local regulations, and adjusting to the language adjusting to local laws, complying with the local customs, and adapting to the culture
answer
ensuring compliance with governmental laws, regulations, and even local business customs
question
Tariff rates in ______________ countries are typically less than 10 percent but can be much higher for _________________ nations and for certain products such as agriculture. These environmental parameters may be highly dynamic, requiring analysts to be on the ground and well connected to develop a deep understanding of the _______________. developed / lesser-developed / evolving environment lesser developed / developed / evolving environment developed / lesser developed / evolving business climate lesser developed / evolving / local customs developed / lesser developed / target country
answer
developed / lesser-developed / evolving environment
question
A report by Cranfield University to the Department for Transport in England recognized outsourcing as one of the key factors driving increased levels of ____________. The idea of ______________ should underlie all of the previously discussed cost categories. insurance / insurance management losses / loss prevention shrinkage / shrinkage prevention supply chain losses / preventing losses supply chain risk / risk management
answer
supply chain risk / risk management
question
Broadly, risk can be defined as a measure of the probability and severity of adverse effects. One can divide risk management into four iterative phases. Which of the following is not one of the iterative phases? contingency planning Risk mitigation Loss prevention Risk monitoring Risk assessment
answer
Loss prevention
question
________________ involves answering three questions: (1) What adverse events could happen? (2) What is the probability of these events happening? and (3) What is the financial impact if these events occur? contingency planning Risk mitigation Loss prevention Risk monitoring Risk assessment
answer
Risk assessment
question
_____________ involves a detailed analysis of what can be done to reduce or eliminate the probability and severity of adverse events while also considering the trade-offs involved. Contingency planning Risk mitigation Loss prevention Risk monitoring Risk assessment
answer
Risk mitigation
question
______________ involves continuously evaluating supply chain conditions so that potential issues may be avoided or at least lessened by being more proactive. Contingency planning Risk mitigation Loss prevention Risk monitoring Risk assessment
answer
Risk monitoring
question
A commonly cited source of financial benefit from outsourcing is the vendor's better ______________. quality cost structure expertise and knowledge economies of scale quality and technology
answer
economies of scale
question
The __________________ is especially concerned with how to coordinate diverse production skills and integrate multiple streams of technology. lean production system PDF concept strength and weakness system RAP concept core competency concept
answer
core competency concept
question
The organization must have a set of ______________ that ensure survival in a competitive marketplace. values beliefs strategic plans contingency plans core capabilities
answer
core capabilities
question
The concept of _______________ along with the resource-based view of the organization provides the basis for the assertion that in considering outsourcing, the decision making team must have a thorough understanding of _______________ capabilities and how they relate to an organization s competitive advantage. PDF systems / PDF and non-PDF RFD Systems / RFD and non-RFD core competencies / core and non-core advanced technologies / advanced and non-advanced technology core technologies / core and non-core technology
answer
core competencies / core and non-core
question
Only organizations that are diligent about understanding and avoiding the pitfalls of _______________ outsourcing and that apply total business-outcome-focused outsourcing will be successful. international external cost focused quality focused price reductions
answer
cost focused
question
Initially, outsourcing decisions predominantly involved ___________, _______________, and activities of ____________ strategic value. non-standard products / common processes / high standardized processes / traditional products / relatively high standardized processes / commoditized products / extremely low standardized processes / commoditized products / extremely high non-standardized processes / technology related products / extremely low
answer
standardized processes / commoditized products / extremely low
question
Firms are increasingly considering more strategic capabilities for outsourcing, making the strategic evaluation much more complex. Firms are discouraged from making outsourcing decisions piecemeal, but rather encourage organizations to make them as part of a __________________. contingency plan strategic business plan outsourcing plan comprehensive production strategy comprehensive sourcing strategy
answer
comprehensive sourcing strategy
question
The _____ step in the make-or-buy decision is to understand the strategic importance (value) of the activity or system. second fourth first fifth third
answer
first
question
Potential outsourcing suppliers must be _____________ and ___________. recruited / interviewed identified / investigated interviewed / selected selected / qualified qualified / available
answer
identified / investigated
question
In addition to the supplier profiles, the buying organization should clearly establish expectations for the potential suppliers and discuss the __________ and the _________________ for the outsourcing activity. standards / employee training costs / delivery scope of work / appropriate pricing quality / quantity type of work / quality
answer
scope of work / appropriate pricing
question
The buying and selling organizations must follow the specific roles outlined in the contract. The buying organization also must appoint a __________ manager. The __________ manager and the suppliers must merge their independent plans into one consensus plan. coordinating / coordinating relationship / relationship contract / contract purchasing / purchasing supply / supply
answer
relationship / relationship
question
It is important to make sure that all ______________ feel as though their interests were represented and considered in making the decision. employees stockholders managers stakeholders union members
answer
stakeholders
question
It is crucial to treat _____________ both survivors of and those directly impacted by outsourcing with respect and dignity during the decision-making and implementation process. stakeholders employees managers managers and employees stockholders and stakeholders
answer
employees
question
Failing to appreciate the ___________ concerns and proactively manage them will have an adverse impact on the outsourcing engagement. managers' stockholders' stakeholders' employees' bankers'
answer
employees
question
In order to effectively cultivate the outsourcing relationship, the buying organization should be active in _______________ performance and ____________________. managing / identifying problems monitoring and evaluating / solving problems monitoring / ensuring quality evaluating / discussing problems managing quality / identifying problems
answer
monitoring and evaluating / solving problems
question
The ____________ establish (es) the performance measures, deliverables, due dates, and the expected supplier requirements. Performance measurement is the cornerstone of the buyer supplier relationship. Without measurement there is no control. Without control there can be no relationship to manage. negotiating team original contract buying organization supplier buyer and supplier jointly
answer
original contract
question
Outsourcing risks include breaches in intellectual property, provider shirking, and opportunistic renegotiation. The combination of contractual incompleteness, asset specificity, and uncertainty gives rise to these risks when firms pursue external sourcing. Outsourcing organizations must have a clear _____________________. legally binding contract understanding of the contract understanding of true supplier intentions definition of supplier roles and responsibilities understanding of the supplier s role and responsibilities
answer
understanding of true supplier intentions
question
____________ is the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit. Political capital Operating capital Total assets Social Capital Cash flows
answer
Social Capital
question
For long-term relationships to work, it initially requires _________________ from both parties. Although these longer term relationships can bear significant benefits for the customer and service provider, the road will not always be a smooth one. a strong commitment a strong communications system a good understanding of each other a meeting of the minds a pledge to work together
answer
a strong commitment
question
Equitable distribution of pain and gain will ultimately lead to __________ partnership performance. Along with having a contract that defines performance incentives by means of penalty and reward structures, the relationship also must be able to work through unforeseen conditions in a productive manner. reduced enhanced lower less equal
answer
enhanced
question
A final key element of an effective buyer supplier relationship is ____________________. the performance evaluation the monitoring of performance the control element the reward element the incentive to perform well.
answer
the performance evaluation
question
It appears clear that effective buyer supplier relationships should include a formalized procedure for ______________ the buyer's expectations and _____________ the supplier's performance. communicating / evaluating setting / monitoring establishing / evaluating communicating / changing establishing / changing
answer
communicating / evaluating
question
The focus has been on a single aspect of outsourcing: the __________ of jobs, and, in particular, the outsourcing of ___________ jobs. reduction / blue-collar reduction / manufacturing migration / white-collar migration / service sector migration / service sector
answer
migration / white-collar
question
A few countries, notably ______________, are often targeted as the ones that are displacing American workers by offering cheap labor. Japan and China South Korea and China South Korea and Taiwan India and Japan India and China
answer
India and China
question
The intense attention on the outflow of work to overseas locations has generated ________ about which jobs or professions will be outsourced next. fear concern stress interest joy
answer
fear
question
The costs of global sourcing include some of the same costs found in domestic sourcing; there are also costs that are different. These costs are grouped into the following categories: _________________. administrative foreign common all of the above
answer
all of the above
question
Exclusively foreign costs are those that would not be incurred if a domestic source were found. Examples of these costs are _________________. duty charges custom fees import fees currency exchange costs all of the above
answer
all of the above
question
Many of the exclusively foreign costs are established by ___________ and are very difficult to avoid. agreements suppliers governments negotiations international companies
answer
governments
question
Direct labor and materials costs, lead-time costs, transportation costs, and inventory costs are a part of both domestic and offshore sourcing. _________________ tend to be higher when sourcing globally. Transportation costs, inventory costs, and lead-time costs Transportation costs, materials costs, and lead-time costs Materials costs, transportation costs, and inventory costs Transportation costs and inventory costs (only) Transportation costs and lead-time costs (only)
answer
Transportation costs, inventory costs, and lead-time costs
question
One of the most important variables to consider is the exchange rate of currencies. Since predicting the fluctuation in currency markets is relatively easy, foreign purchases may actually cost less than negotiated depending on the length of the contract. True False
answer
False
question
Depending on the performance and strength of the dollar, goods can cost American firms different amounts from what s expected. True False
answer
True
question
When the dollar has a weak performance over the life of a contract, a firm can realize savings through the exchange rates True False
answer
False
question
There are many ethical considerations that (companies) must learn in order to be successful. This is one reason that many companies hire _________ to do their sourcing. agents importers nationals brokers wholesalers
answer
brokers
question
Lead times and delivery times can create problems also. Longer times can _______________________. The extended lead time also might push back the date at which a firm is able to introduce new products to the market. increase inventory and drive down carrying costs increase inventory needs and drive up carrying costs reduce inventory needs and drive up ordering costs increase inventory needs and drive up ordering costs expand inventory and drive up production costs
answer
increase inventory needs and drive up carrying costs
question
A third problem companies face in global sourcing is ___________. Many times there are delays and confusion in translations. negotiating bargaining communication contracting understanding one another
answer
communication
question
The associated qualitative risk profiles of _____________________ in some foreign countries must be evaluated. the impact of national interest the ethical consequences of sweat shop labor hazardous working conditions all of the above B and C only
answer
all of the above
question
The general uncertainty associated with the ______________ makes offshore sourcing a risky proposition. government regulations business cycle exchange rate tariffs taxes
answer
business cycle
question
The buying professional who is considering offshore sourcing must be prepared to fully analyze both the _______________ factors. financial and competitive competitive and cost quantitative and capacity capacity and quality qualitative and quantitative
answer
qualitative and quantitative
question
The distance between the buying and selling firm is significant in terms of time zones and physical location. Internet capabilities usually provide a partial solution. True False
answer
True
question
Communication can be described as the _______ that holds together a sourcing relationship. substance lubricant glue process procedure
answer
glue
question
Most of the global risk issues are ____________________________. distance and communication time value of money and quality issues pipeline problems and staffing issues competition all of the above
answer
all of the above
question
Since most offshore deals require the use of a ___________ the buying firm loses the use of funds when the ________ is established secured credit account / account letter of credit / letter wire transfer / transfer letter of recommendation / letter credit card / card
answer
letter of credit / letter
question
The buying firm must spend the necessary time to correctly specify and articulate quality expectations. Then evaluation makes sure that the sample is from a legitimate production run. Prototypes/lab samples should not be analyzed. True False
answer
True
question
___________ inventory issues will always occur when a third party (the shipper) is involved. The problems become pronounced when offshore sourcing is used. Pipeline Back up Reserve Safety stock Suppl
answer
Pipeline
question
If a buying firm is to be effective with an offshore sourcing strategy, it must either hire experts or develop specialists that are assigned to offshore suppliers. Ideally, these individuals must have experience in purchasing management, quality control, and basic accounting. This cost also must be considered in the evaluation process. True False
answer
True
question
The direct and indirect costs (discussed in the textbook) tend to add unexpected costs to purchased items. However, the significant benefits associated with offshore sourcing enable the buying firm to ______________ domestic suppliers gain leverage over compete effectively with reduce costs as compared to negotiate more effectively with reduce the number of
answer
gain leverage over
question
According to the ________________________, export controls and restrictions may be imposed for a range of specific purposes including national security; protection of life, health, and the environment; and the preservation of national treasures. 2001 Fair Trade Act of the European Union Trade Protection Act of the European Communities 1992 Import and Export Protection Act 1991 Trade Policy Review of the European Communities 1998 Fair Trade and Tariffs Act of the EU
answer
1991 Trade Policy Review of the European Communities
question
When it comes to negotiations Americans can assume that the English and American businesses operate in the same manner True False
answer
False
question
Due to technical expertise, German negotiators are extremely cautious. The opponent should be well prepared on technical details. True False
answer
True
question
When doing business in France, (a buyer) will often go through a (n) _________ whose credentials are impeccable. (The) choice of __________ is important. banker / a banker exporter / an exporter chief export director / a CED intermediary contact / an intermediary secretary of exports / secretary
answer
intermediary contact / an intermediary
question
China is now a _______ player in the world economy and accounts for more than 6 percent of world trade. This is remarkable for a developing economy. There has been strong import growth, both for processing trade and for domestic consumption relatively new minor major major-minor first class
answer
major
question
The major problems when doing business in China are the language barrier, business practices, and a fluid and diverse legal system. A well-specified _______________ is a basic requirement when buying from China. procurement strategy game plan policy and specification statement competitive strategy operational plan
answer
procurement strategy
question
Any business or individual wanting to import goods into the United States will have to work with the Export Administration (EA) of the U.S. Department of Commerce. Several steps that (a company needs) to be aware of are the following: 1. Determine whether the item (s) in question is subject to the exclusive jurisdiction of a State agency. 2. Determine if the technology or software is privately available. 3. For an item in a foreign country, the cost of the item must be determined. 4. For items made in a foreign country, determine whether it is a decontrolled item in the US. 5. Determine whether the foreign made item is subject to selective prohibition. True False
answer
False
question
The FTC Act of 1934 created ___________ to encourage exports from foreign countries. The act allowed for the storage of goods within the U.S. boundaries without payment until the goods passed to the buying company. Bill Stowe's Hair tax-free zones transit zones trade zones free tariff zones
answer
trade zones
question
___________ is the exchange of goods for goods in full or partial payment of a sales transaction. Progressive companies must participate in ____________ or risk losing market share. Exporting / exporting Exchange trading / exchange trading Market trading / market trading Import trading / importing Counter trade / counter trade
answer
Counter trade / counter trade
question
Some of the more popular forms of counter trade are as follows with one exception. Which one is the exception? Offsets Indirect offsets Coproduction Production transfer Licensed production
answer
Production transfer
question
_________ are commercial compensation practices required as a condition of purchase of goods and services. Offsets Indirect offsets Coproduction Sub-contractor production Licensed production
answer
Offsets
question
_______________ occur where products or services transferred in an offset arrangement are unrelated to the specific products referred to in the export agreement. Offsets Indirect offsets Coproduction Sub-contractor production Licensed production
answer
Indirect offsets
question
____________ is a form of agreement that involves the purchaser being given a share in the manufacture of a foreign designed product. Offsets Indirect offsets Licensed production Sub-contractor production Coproduction
answer
Coproduction
question
___________________ is when the recipient obtains a share of the production work for its own order. Offsets Indirect offsets Coproduction Sub-contractor production Licensed production
answer
Licensed production
question
_____________ is when a prime contractor substitutes an existing supplier with one located in the buying country. Offsets Sub-contractor production Indirect offsets Coproduction Licensed production
answer
Sub-contractor production
question
________________________ occur as a result of an offset are research and development agreements conducted in the buying country. Offsets Indirect offsets Technology transfers Coproduction Licensed production
answer
Technology transfers
question
_________ is the non monetary exchange of goods-for-goods. Barter Offsets Indirect offsets Coproduction Licensed production
answer
Barter
question
__________ is when the seller exchanges products for compensatory amounts of commodities. Offsets Indirect offsets Coproduction Counter-purchase Licensed production
answer
Counter-purchase
question
____________ is a form of agreement that involves the purchaser being given a share in the manufacture of a foreign designed product. Offsets Indirect offsets Licensed production Sub-contractor production Coproduction
answer
Coproduction