Chapter 1 — Introduction to Purchasing and Supply Chain Management
True / False
1. The development of strategic purchasing practices can only help a company maintain its competitive position in a
rapidly changing business environment.
a.
True
b.
False
False
Easy
Analytic
2. Global sourcing is a requirement and no longer a luxury for most firms.
a.
True
b.
False
True
Easy
Analytic
3. Sophisticated customers, both industrial and consumer, no longer talk about price increases – they demand price
reductions!
a.
True
b.
False
True
Easy
Analytic
4. An abundance of competitors and choices have conditioned customers to want higher quality, faster delivery, and
products and services tailored to their individual needs at a higher total cost.
a.
True
b.
False
False
Easy
Analytic
5. The availability of low-cost domestic supplier alternatives has led to the shift away from outsourcing and offshoring.
a.
True
b.
False
False
6. Competition today is no longer between firms; it is between the supply chains of those firms.
a.
True
b.
False
True
Moderate
Analytic
7. In the manufacturing sector, the percentage of purchases to sales averages 55 percent.
a.
True
b.
False
8. The traditional approach to purchasing and supply management is to build relations with suppliers to jointly pull costs
out of the product or service and expect suppliers to contribute innovate ideas that continually add value to a firm’s
products and services.
a.
True
b.
False
False
Moderate
Analytic
9. Most of the features that make their way into final products originate with suppliers.
a.
True
b.
False
False
Easy
Analytic
10. Purchasing and supply management has a major impact on product and service quality.
a.
True
Easy
Analytic
Chapter 1 — Introduction to Purchasing and Supply Chain Management
b.
False
True
Easy
Analytic
11. Supply management is a broader concept than purchasing.
a.
True
b.
False
True
Easy
Analytic
12. The routine ordering and follow-up of basic operational supplies is a strategic responsibility.
a.
True
b.
False
13. Supply chain management does not require the coordination of activities and flows that do not extend across
boundaries.
a.
True
b.
False
False
Moderate
Analytic
14. According to Porter, a firm’s value chain is composed of primary and support activities that can lead to competitive
advantage when configured properly.
a.
True
b.
False
True
Moderate
Analytic
Chapter 1 — Introduction to Purchasing and Supply Chain Management
15. Purchasing is becoming less responsible for sourcing indirect goods and services required by internal groups.
a.
True
b.
False
False
Moderate
Analytic
16. Distribution management involves the management of packaging, storing, and handling of materials at receiving
docks, warehouses, and retail outlets.
a.
True
b.
False
17. Today’s emphasis on supplier quality has shifted from detecting defects at the time of receipt or use to prevention
early in the materials-sourcing process.
a.
True
b.
False
True
Moderate
Analytic
18. The key to the success of any company is the quality of its employees.
a.
True
b.
False
19. Cost management is no longer an integral part of purchasing and supply chain management.
a.
True
b.
False
False
Analytic
20. Formal organizational charts portray the entirety of the workings of an organization.
a.
True
b.
False
False
Moderate
Analytic
21. There is a definitive and prescriptive set of supply chain measures that result in one best way to measure supply chain
performance.
a.
True
b.
False
False
Moderate
Analytic
22. In Period 4 of the evolution of purchasing and supply chain management, firms faced stable competition and had
access to abundant material – conditions that historically have diminished the overall importance of purchasing.
a.
True
b.
False
Multiple Choice
23. Which of the following is not one of the features of the new model of progressive purchasing?
a.
Developing closer relationships with important suppliers.
b.
Performing due diligence on suppliers before awarding longer-term contracts.
c.
Focusing primarily on price analysis and short term contracts.
d.
Conducting worldwide Internet searches for the best sources of supply.
e.
Inviting key suppliers to participate in product and process development.
Moderate
Analytic
Chapter 1 — Introduction to Purchasing and Supply Chain Management
24. Which of the following is not one of the factors driving an emphasis on supply chain management?
a.
An increasing emphasis on domestic sourcing due to the longer lead times and higher levels of pipeline
inventories associated with global sourcing.
b.
The cost and availability of information resources among entities in the supply chain that allow easy linkages
that eliminate time delays in the network.
c.
The level of competition in both domestic and international markets requires organizations to be fast, agile,
and flexible.
d.
Customer expectations and requirements that are becoming much more demanding.
e.
The ability of an organization’s supply chain to identify and mitigate risk minimizes disruptions in both supply
and downstream product or services to mitigate the impact on lost sales.
Moderate
Analytic
25. _____ is a functional group (i.e., a formal entity on the organizational chart as well as a functional activity (i.e.,
buying goods and services).
a.
Engineering
b.
Purchasing
c.
Quality assurance
d.
Logistics
e.
Treasury operations
26. The _____ is a change index, and generally a rating over 50 indicates that the economy is expanding.
a.
Consumer Price Index
b.
Producer Price Index
c.
ISM Report on Business
d.
rate of inflation
e.
None of the above.
27. According to the Institute for Supply Management, _____ is the identification, acquisition, access, positioning, and
management of resources and related capabilities an organization needs or potentially needs in the attainment of its
strategic objectives.
a.
supply chain management
b.
procurement
Chapter 1 — Introduction to Purchasing and Supply Chain Management
c.
logistics
d.
supply management
e.
distribution
28. Instead of adversarial relationships which characterize _____, _____ features a long-term, win-win relationship
between a buying company and specially selected suppliers.
a.
traditional purchasing….supply management
b.
traditional purchasing….logistics management
c.
supply management….traditional purchasing
d.
strategic sourcing….supply management
e.
supply chain management….strategic sourcing
Moderate
Analytic
29. A _____ is a set of three or more organizations linked directly by one or more of the upstream or downstream flows of
products, services, finances, and information from a source to a customer.
a.
process
b.
manufacturing system
c.
value chain
d.
social media chain
e.
supply chain
30. All of the following are typical processes involved in supply chain management except _____.
a.
new-product development
b.
customer-order fulfillment
c.
supplier evaluation and selection
d.
demand and supply planning
e.
cash flow management
31. According to Michael Porter, a firm’s _____ is composed of primary and secondary support activities that can lead to
competitive advantage when configured properly.
a.
supply chain
b.
process
c.
value chain
d.
marketing channel
e.
core competency
32. The _____ states that success is a function of effectively managing a linked group of firms past first-level suppliers or
customers.
a.
supply chain orientation
b.
value chain concept
c.
traditional purchasing perspective
d.
extended enterprise concept
e.
process orientation
33. _____ are those items provided by suppliers and used directly during production or service delivery.
a.
Direct materials
b.
Indirect materials
c.
Indirect services
d.
Internal materials
e.
Vendor managed inventories
34. Which of the following is an example of a purchased direct item for a manufacturing firm?
a.
Parts and components.
b.
Travel.
c.
Office and janitorial supplies.
Analytic
Chapter 1 — Introduction to Purchasing and Supply Chain Management
d.
Advertising and media.
e.
Personal computers.
Easy
Analytic
35. Within the downstream portion of a supply chain, _____ are responsible for the actual movement of materials between
locations.
a.
buyers
b.
trucking firms
c.
logistics managers
d.
accountants
e.
purchasing managers
36. Which of the following is not an example of a typical resource shared between a buyer and supplier?
a.
Dedicated capacity.
b.
Specific information.
c.
Technological capabilities.
d.
Direct financial support.
e.
Advertising and media.
Moderate
Analytic
37. All of the following are examples of demand planning activities except _____.
a.
forecasts of anticipated demand
b.
accounts payable
c.
inventory adjustments
d.
orders taken but not filled
e.
spare parts and aftermarket requirements
Moderate
Analytic
Chapter 1 — Introduction to Purchasing and Supply Chain Management
38. _____ schedules the firm’s output; while _____ is the process of taking demand data and developing a supply,
production, and logistics network capable of satisfying demand requirements.
a.
Inventory control….quality control
b.
Quality control….supply planning
c.
Order processing….material control
d.
Demand planning….customer service
e.
Demand planning….supply planning
39. _____ involves generating the materials release, contacting a supplier directly concerning changes, and monitoring the
status of inbound shipments.
a.
Order processing
b.
Material control
c.
Warehousing
d.
Customer service
e.
Quality control
40. _____ helps ensure that customers receive material when and where they require it and represents the key link
between the producer and the external customer.
a.
Order processing
b.
Inbound transportation
c.
Customer service
d.
Scheduling
e.
Inventory control
41. The _____ activity involves physically getting a product ready for distribution to the customer.
a.
customer service
b.
material control
c.
materials handling
d.
quality control
e.
shipping
Chapter 1 — Introduction to Purchasing and Supply Chain Management
42. Which of the following is not one of the four enablers of purchasing and supply chain management?
a.
Sufficient cash flow and large on-hand cash deposits.
b.
Capable human resources.
c.
Proper organizational design.
d.
Real-time collaborative technology capabilities.
e.
Right measures and measurement systems.
43. Recent research indicates that all of the following are top knowledge areas for purchasers except _____.
a.
supplier relationship management
b.
total cost analysis
c.
supplier analysis
d.
consumer behavior
e.
competitive market analysis
44. _____ refers to the process of assessing and selecting the structure and formal system of communication, division of
labor, coordination, control, authority, and responsibility required to achieve organizational goals and objectives,
including supply chain objectives.
a.
Supply chain orientation
b.
Human resource management
c.
Demand planning
d.
Organizational design
e.
Extended value chain
45. _____ seeks to improve forecast accuracy, optimize production scheduling, reduce working capital costs, shorten
Chapter 1 — Introduction to Purchasing and Supply Chain Management
cycle times, cut transportation costs, and improve customer service; while _____ helps obtain materials and manage
physical flows from suppliers through downstream distribution to ensure that customers receive the right products at the
right location, time, and cost.
a.
RFID….GPS
b.
Execution software….planning software
c.
Customer service….inbound transportation
d.
The process approach….cost management
e.
Planning software….execution software
46. All of the following are roadblocks between measurement and improved performance except _____.
a.
up–to-date information technology
b.
too many metrics
c.
debate over the correct metrics
d.
constantly changing metrics
e.
old data