Chapter 12—The Purchasing Process Key
1. As used in the purchasing process chapter, the term “goods and services” refers to raw materials,
merchandise, supplies, fixed assets, or intangible assets only.
2. The purchasing manager usually performs major buying activities as well as the required administrative
duties of running a department.
3. The purchasing supervisor is responsible for receiving incoming goods, signing the bill of lading presented
by the carrier, reporting the receipt of goods, and making prompt transfer of goods to the appropriate warehouse
or department.
4. In many organizations professional buyers do the actual buying.
5. Goal congruence exists when each individual manager’s goals are achieved.
6. The connections from the suppliers of merchandise and raw materials through to an organization’s customers,
including the flow of information, materials, and services, are its supply chain.
7. When the data on the inventory record indicate a need to replenish the stock, the inventory system prepares a
purchase order.
8. The purchase requisition is sent from the inventory control department to the purchasing department.
9. Supply chain management (SCM) is the combination of processes and procedures used to ensure the delivery
of goods and services to customers at the lowest cost while providing the highest value to the customers.
10. With continuous replenishment (CRP) a vendor obtains a buyer’s current sales, demand, and inventory data
in real time and replenishes the buyer’s inventory.
11. Notifications that a PO has been prepared and sent to the vendor are sent to the receiving department, the
accounts receivable process, and the department or process that requested the purchase.
12. Collaborative processes across the supply chain using a set of processes and technology models are called
Collaborative Planning, Forecasting, and Replenishment (CPFR).
13. A retailer could misread a demand signal doubling its normal order, and the wholesaler could respond and
also double its order resulting in four times the retail order. This is an example of the bullwhip effect.
14. According to the context diagram for the purchasing process, when a purchase order is sent to the purchaser,
15. Reorder point (ROP) analysis reorders inventory when the item reaches a certain inventory level that was
determined in advance based on the item’s purchase rate.
16. EOQ is a technique of analyzing all incremental costs associated with acquiring and carrying particular
items of inventory.
17. ABC analysis is a technique for ranking inventory items according to their relative importance.
18. In selecting a vendor, a buyer may need to obtain competitive bids by means of a document called a
purchase order.
19. A receiving report is an external request for the purchase of goods or services from a vendor.
20. After the vendor has been selected, the buyer prepares a purchase order.
21. Inventory personnel use the vendor master data to select an appropriate vendor.
22. It is not uncommon for the copy of the PO available for the receiving department to be a carbon copy,
meaning that certain data is blanked out.
23. The business document that accompanies the purchased inventory from the vendor identifies the shipment
and triggers the inventory receiving process is the vendor packing slip.
24. The document used to record merchandise receipts is called a purchasing report.
25. Whereas a receiving report normally indicates that goods have been received, some organizations use an
acceptance report to acknowledge formally the satisfactory completion of a service contract.
26. The inventory master data contains a record of each vendor that is approved for use by the organization.
27. The purchase order master data is a compilation of open POs and includes the status of each item on order.
28. The warehouse master data contains a record of each inventory item which is stocked in the warehouse
and/or regularly ordered from a vendor.
29. The purchase receipts data is an event data store with each record reflecting a receipt of goods and services.
30. A paperless system would eliminate documents and forms as the medium for conducting business
transactions.
31. The warehouse number is the primary key for the relational table for inventory.
32. The item number is the primary key for relational table for vendors.
33. RFID tags are computer chips with an antenna that contains information about the object to which it is
attached.
34. An employee has a conflict of interest when he (she) has a financial interest (direct or indirect) in a
company with which the employer does business.
35. Digital signatures allow the vendor to determine that the sender of the message has the authority to send it
and thus prevents an unauthorized purchase.
36. E-procurement is the use of information technology to automate significant portions of the procurement
process.
37. The purchasing process is part of the ____ process for a merchandising firm.
38. The typical purchasing process would capture and record data related to the day-to-day operations of all of
the following except:
39. As used in the text, the term services specifically refers to:
A. items having a physical existence and value
40. Which of the following is least likely to report directly to the vice president of logistics?
41. Which of the following managers is most likely to report to the controller?
42. The typical information flows in a purchasing process might include all of the following except:
A. a purchase requisition is sent from inventory control to the purchasing department
43. The purchasing manager is evaluated by his/her supervisors based on purchasing inventory at the lowest
price. Consequently, the purchasing manager knowingly orders materials only based on price. This has resulted
in the purchase of inferior quality materials. This improved the purchasing manager’s performance evaluation,
but had a negative impact on production due to an increase in scrapped materials. This situation is an example
of a failure of:
44. Assume that one of the process bubbles in the Purchasing Process – Level 0 Diagram is called “order goods
and services.” The data flow between “order goods and services” and the “vendor” is called a:
45. Which of the following process bubbles would you not expect to see in the Purchasing Process – Level 0
Diagram?
46. Which of the following data stores would you least expect to see in the Purchasing Process – Level 0
Diagram?
A. inventory master data
47. In a purchasing process, once requirements are determined and a vendor selected, the next step is:
48. The purchasing process¾receive goods and services¾normally would be triggered by the data flow:
49. At the time that a purchasing orders goods and services, the process is likely to interact with all of the
following data stores except the:
50. At the time that a purchasing process places an order for goods or services, which of the following is
typically updated?
A. accounts payable master data
51. In the Purchasing Process – Level 0 Diagram, a data flow called “vendor packing slip” would most likely be
sent by the vendor to which of the following processes?
52. In the Purchasing Process – Level 0 Diagram, a data flow called “inventory’s purchase requisition” most
likely would be sent by the inventory management process to which of the following processes?
53. Outputs of a purchasing process normally might include all of the following except:
A. purchase order
54. Who usually authorizes a purchase requisition?
55. Which of the following techniques has the reorder point based on each inventory item’s sales rate?
56. Which of the following is a technique for ranking items in a group based on the value, activity, sales, or
other relevant metric for the items?
A. cyclical reordering
57. Which of the following techniques analyzes all incremental costs associated with acquiring and carrying
particular items of inventory?
58. Inventory carrying costs include all of the following except:
59. Which of the following is not a cost element as part of the inventory carrying costs?
60. When large or expensive items are purchased, most organizations make use of a procedure to obtain
competitive bids from multiple vendors. The document used to obtain competitive bids is called a(n):
61. The document one business sends to another business that identifies the goods or services to be purchased is
a:
62. In a purchasing process, receiving goods, but not a vendor invoice, from a supplier typically results in an
update to all of the following data stores except the:
63. Purchase orders are sent to:
64. Which of the following most likely would be “blinded” on a copy of the purchase order sent to the receiving
department?
65. A control that can ensure that receiving clerks are not influenced by quantity information while actually
counting incoming goods is to:
66. A “blind” copy of the purchase order should be sent to receiving so that:
A. receiving can anticipate the receipt of the goods from the vendor
67. The vendor packing slip triggers which process?
68. In the process of preparing a receiving report, the receiving department should perform all of the following
tasks except:
A. inspect and approve quality
69. In a purchasing process, the receiving report may be accessed by all of the following except:
70. A receiving report is to goods what a(n) ____ is to services.
71. Data about vendor compliance with the terms of the purchase order normally would be included in the:
72. The ____ is a compilation of open purchase orders and includes the status of each item on order.
A. accounts payable master data
73. In an entity-relationship (E-R) diagram for the purchasing process, you would expect that the word generate
would appear in the diamond showing the relationship between:
A. VENDOR and PURCHASE_ORDERS
74. In an entity-relationship (E-R) diagram for the purchasing process, you would expect that the word yield
would appear in the diamond showing the relationship between:
75. In a database containing (among others) six relations¾VENDORS, PURCHASE_REQUISITIONS,
PURCHASE_ORDERS, PURCHASE_RECEIPTS, INVENTORY, and EMPLOYEES¾you would expect that
the attribute Vend_No (vendor number) would be the primary key in the ____ relation.
76. Issues related to the purchasing function, such as kickbacks, bribes, conflicts of interest, and the like are
often addressed by ____.
77. Which of the following items is not a control plan of the purchasing process?
78. The resources for which the purchasing process wants to ensure security for which of the following:
79. The control plan compare vendors for favorable prices, terms, quality, and product availability is directed
primarily at which of the following control goals?
80. Supply chain management:
81. Which of the following is not included in the SCOR model as one of the five basic components of supply
chain management?
A. Plan
82. Which of the following is not a potential benefit of supply chain management?
83. Which of the following is a potential problem with supply chain management initiatives?
A. confused lines of responsibility
84. Which type of supply chain collaboration methods includes the vendor obtaining the buyer’s current sales,
demand, and inventory data in real time and replenishing the buyer’s inventory?
85. Which type of supply chain collaboration methods includes the vendor replenishing standard merchandise
while the buyer manages the replenishment of promotion merchandise?
86. Which type of supply chain collaboration methods includes the retailer and manufacturer forecasting
demand and scheduling production jointly?
87. Which type of supply chain collaboration methods includes collaborative processes across the supply chain
using a set of processes and technology models?
A. Continuous Replenishment (CRP) or Vendor Managed Inventory (VMI)
88. As used in the purchasing process chapter, the term ______________________________ refers to raw
materials, merchandise, supplies, fixed assets, or intangible assets.
89. The ______________________________ manager usually performs major buying activities as well as the
required administrative duties of running a department.
90. The ______________________________ supervisor is responsible for receiving incoming goods, signing
the bill of lading presented by the carrier, reporting the receipt of goods, and making prompt transfer of goods
to the appropriate warehouse or department.
91. In many organizations ______________________________ do the actual buying.
92. Goal ______________________________ exists when individual managers’ goals are in agreement with
overall organizational objectives.
93. The connections from the suppliers of merchandise and raw materials through to an organization’s
customers, including the flow of information, materials, and services, are its
______________________________.
94. When data on the inventory record indicate a need to replenish the stock, the inventory system prepares a(n)
______________________________.
95. The purchase requisition is sent from the inventory control department to the
______________________________ department.
96. Notification that a PO has been prepared and sent to the vendor is sent to the original requester, to
______________________________, and to ______________________________.
97. ______________________________ management is the combination of processes and procedures used to
ensure the delivery of goods and services to customers at the lowest cost while providing the highest value to
the customer.
98. With ______________________________ a vendor obtains a buyer’s current sales, demand, and inventory
data in real time and replenishes the buyer’s inventory.
99. ______________________________ features collaborative processes across the supply chain using a set of
processes and technology models.
100. A retailer could misread a demand signal doubling its normal order and the wholesaler could respond and
also double its order resulting in four times the retail order. This is an example of the
______________________________ effect.
101. According to the context diagram for the purchasing process, when a purchase order is sent to the vendor,
the vendor responds by sending the goods along with a(n) ______________________________.
102. ______________________________ reorders inventory when the item reaches a certain inventory level
that was determined in advance based on the item’s sales rate.
103. ______________________________ is a technique of analyzing all incremental costs associated with
acquiring and carrying particular items of inventory.
104. ______________________________ is a technique for ranking inventory items in a group based on the
value, activity, sales, or other relevant metric for the items..
105. In selecting a vendor, a buyer may need to obtain competitive bids by means of a document called a(n)
______________________________.
106. A(n) ______________________________ is an external request for the purchase of goods or services
from a vendor.
107. After the ______________________________ has been selected, the ______________________________
prepares a purchase order.
108. Documents requiring approval, such as a purchase requisition, may be routed for electronic approval using
______________________________ software.
109. Purchasing personnel use the ______________________________ data to identify potential suppliers that
have been approved for use by the organization.
110. A(n) ______________________________ copy of a document is one in which selected data are blanked
111. The business document that accompanies the purchased inventory from the vendor and identifies the
shipment and triggers the inventory receiving process is the ______________________________.
112. The document used to record merchandise receipts is called a(n) ______________________________.
113. Whereas a receiving report normally indicates that goods have been received, some organizations use a(n)
______________________________ to acknowledge formally the satisfactory completion of a service
contract.
114. The ______________________________ is a compilation of open purchase orders that includes the status
of each item on order.
115. The ______________________________ are an event data store with each record reflecting a receipt of
goods and services.
116. A(n) ______________________________ system would eliminate documents and forms as the medium
for conducting business.
117. The ______________________________ is the primary key for the relational table for inventory.
118. The ______________________________ is the primary key for relational table for vendors.
119. ______________________________ tags identify an instance of an item, not just an item type (e.g., this
box of Huggies, not any box of Huggies).
120. An employee has a(n) ______________________________ when he (she) has a financial interest (direct
or indirect) in a company with which the employer does business.
121. ______________________________ allow the vendor to determine that the sender of the message has the
authority to send it and thus prevents an unauthorized purchase.
122. The ______________________________ process is an interacting structure of people, equipment,
activities, and controls that is designed to accomplish the steps of requirements determination, purchase order
processing, and goods receipt.
123. Purchase requisitions are compiled in a(n) ______________________________ data store.
124. ______________________________ are particular Web sites or portals that may be used as sources of
supply in the procurement process.
125. Management should exercise the control plan ______________________________ to ensure that a
purchase is within an applicable budget and that the purchase is desirable.
126. In preparing a PO, buyers should ______________________________ to ensure that a purchase is being
made from a suitable vendor.
127. The control plan ______________________________ assumes that there is a segregation of duties
between the personnel who create vendor records and those that create and approve POs, record accounts
payable, and approve payments.
128. Before executing a purchase, buyers should compare vendors for favorable prices,
______________________________, quality and ______________________________to determine that they
have made an optimal choice for the purchase.
129. Management should exercise the control plan of ______________________________ to ensure that an
appropriate supplier has been selected and that the correct goods and services, for the correct amounts, are being
purchased.
130. To prevent duplicate purchase requests and to allow the requesting department to ensure that a purchase
order has been created, the purchasing department should ______________________________.
131. ______________________________ means that before a receipt can be accepted and recorded, the receipt
data should be compared with the PO master data to determine that an approved PO, prepared by someone other
than receiving personnel, is on file.
132. The receiving department or quality control function should ______________________________ to
ensure that the correct goods are received in acceptable condition.
133. ______________________________ is the use of information technology to automate significant portions
of the procurement process.