Chapter 19 — Performance Measurement and Evaluation
True / False
1. Although this sounds difficult, it is often easy to develop measures that direct behavior or activity exactly as intended.
a.
True
b.
False
False
Easy
Analytic
2. Few measures include a standard or target against which to evaluate performance results or outcomes.
a.
True
b.
False
False
Easy
Analytic
3. It is difficult to develop performance improvement plans without understanding the areas in which performance falls
short.
a.
True
b.
False
True
Easy
Analytic
4. Measurement fails to motivate and direct behavior toward desired end results.
a.
True
b.
False
False
Easy
Analytic
5. Measuring and evaluating performance historically has had certain problems and limitations.
a.
True
b.
False
True
Easy
6. Having too little data is the most common problem an organization has with its measurement system.
a.
True
b.
False
False
Easy
Analytic
7. A serious problem in measurement is that the data that managers pay attention to are often the wrong data.
a.
True
b.
False
True
Easy
Analytic
8. Few measures drive behavior that is not what is intended or needed.
a.
True
b.
False
False
Easy
Analytic
9. The problem with measuring behavior is that there is no guarantee the behavior will lead to desired results.
a.
True
b.
False
True
Easy
Analytic
10. The most common price performance measures include actual purchase price versus planned purchase price
comparisons, actual purchase price(s) compared to a market index, comparisons of actual-to-actual purchase prices for
individual and aggregated items between operating plants or divisions within an organization, and target prices achieved.
a.
True
b.
False
True
Analytic
11. Purchase price versus market index measures are least appropriate for market-based products where pricing is
primarily a function of supply and demand.
a.
True
b.
False
False
Moderate
Analytic
12. Actual prices for similar items should not be compared between plants, divisions, or business units due to differing
market conditions.
a.
True
b.
False
False
Easy
Analytic
13. Although firms are increasingly focusing on cost versus price, price performance measures are no long popular.
a.
True
b.
False
False
Easy
Analytic
14. Cost avoidance figures almost always require manual calculation and are sometimes subject to exaggeration.
a.
True
b.
False
True
Easy
Analytic
15. Customer defects per supplier is a measure of the number of defects from individual suppliers to indicate comparative
quality performance among competing suppliers.
Moderate
Analytic
Chapter 19 — Performance Measurement and Evaluation
a.
True
b.
False
16. The PPM measure indicates the incidence of failures of components, assemblies, and systems or services when
actually incorporated into the final product or service and supplied to external customers.
a.
True
b.
False
False
Moderate
Analytic
17. It is uncommon to have measures that track different aspects of a firm’s inventory investment.
a.
True
b.
False
False
Easy
Analytic
18. On-time delivery or responsiveness measures indicate the degree to which suppliers are able to meet customer
schedule requirements.
a.
True
b.
False
True
Easy
Analytic
19. Transportation costs can be measured only in total dollars and never as a percentage of cost of goods sold or sales
revenue.
a.
True
b.
False
False
Analytic
20. Salaries traditionally take the largest share of the purchasing administrative budget.
a.
True
b.
False
True
Easy
Analytic
21. The most common method of establishing a budget uses the current administrative budget as a starting point.
a.
True
b.
False
True
Easy
Analytic
22. With the current budget plus adjustment approach, the administrative budget for purchasing is a percentage of another
measure that reflects purchasing’s workload.
a.
True
b.
False
False
Easy
Analytic
23. Supply managers should emphasize purchasing efficiency over purchasing effectiveness as a strict measure of
performance.
a.
True
b.
False
False
Easy
Analytic
24. Purchasing requires measures that reflect its ability to support overall corporate and functional goals, which means a
reduced emphasis on pure efficiency measures and greater emphasis on effectiveness measures.
a.
True
b.
False
True
25. Each location of an organization must use the same performance objectives or performance criteria.
a.
True
b.
False
False
Easy
Analytic
26. The measurement system should rely on quantitative data instead of qualitative feelings and assessments.
a.
True
b.
False
True
Easy
Analytic
27. Well-defined measures use data that are available and accurate.
a.
True
b.
False
True
Easy
Analytic
28. A common misconception is that a performance evaluation system should not measure every activity.
a.
True
b.
False
False
Easy
Analytic
29. Joint participation means that the personnel responsible for each measure participate in developing the measure or
establishing the measure’s performance objective.
a.
True
b.
False
Moderate
Analytic
Chapter 19 — Performance Measurement and Evaluation
30. Performance measurement systems receiving their data from automated or computerized systems are generally more
susceptible to data manipulation.
a.
True
b.
False
False
Easy
Analytic
31. A performance objective must reflect the realities of the firm’s competitive environment.
a.
True
b.
False
True
Easy
Analytic
32. Purchasing and supply chain managers often use the historical approach with effectiveness-related measures.
a.
True
b.
False
False
Easy
Analytic
33. Historical data provide substantial insight about the performance capabilities of competitors or other leading firms.
a.
True
b.
False
False
Easy
Analytic
34. A sound measurement and evaluation system provides sporadic reporting of performance results.
a.
True
Chapter 19 — Performance Measurement and Evaluation
b.
False
False
Easy
Analytic
35. Some individuals resist the benchmarking process because of a reluctance to recognize the value of a competitor’s
way of doing business – the “not invented here” syndrome.
a.
True
b.
False
True
Moderate
Analytic
36. The original premise of the balanced scorecard was that a total reliance on financial measures was leading
organizations to make poor decisions.
a.
True
b.
False
True
Moderate
Analytic
37. Measurement is virtually free.
a.
True
b.
False
False
Easy
Analytic
38. All aspects of performance lend themselves to quantitative measurement.
a.
True
b.
False
False
Easy
Analytic
39. There is no one best way to measure performance.
a.
True
b.
False
True
Easy
Analytic
40. A single, overall productivity measure representing purchasing and supply chain performance is feasible.
a.
True
b.
False
False
Easy
Analytic
Multiple Choice
41. _____ refers to the extent to which, by choosing a certain course of action, management can meet a previously
established goal or standard.
a.
Operational benchmarking
b.
Efficiency
c.
Support-activity benchmarking
d.
Effectiveness
e.
None of the above.
42. _____ refers to the relationship between planned and actual sacrifices made to realize a previously agreed-upon goal.
a.
Strategic benchmarking
b.
Effectiveness
c.
Efficiency
d.
Operational benchmarking
e.
None of the above.
43. Which of the following is one of the reasons for measuring performance?
a.
Support better decision making.
b.
Support better communication.
c.
Provide performance feedback.
d.
Motivate and direct behavior.
e.
All of the above.
44. Which of the following is not one of the common problems in measuring performance?
a.
Too much detail.
b.
Too much and wrong data.
c.
Measures that are short-term focused.
d.
Drive the wrong performance.
e.
Measures of behavior versus accomplishments.
45. A _____ is the increase or decrease in cost resulting from a change in purchasing strategy or practice brought about by
an individual or a group.
a.
cost change
b.
cost avoidance
c.
target cost
d.
target price
e.
purchase price variance
46. _____ is the process of determining what the external customer is willing to pay for a product or service and then
assigning specific cost targets to the components, assemblies, and systems that make up the product or service.
a.
Specific costing
b.
Target pricing
c.
Total cost analysis
d.
Cost avoidance
e.
None of the above.
47. _____ represents the difference between a price paid and a potentially higher price (which might have occurred if
purchasing had not obtained the lower price through a specific effort or action).
a.
Target cost
b.
Cost reduction
c.
Target price
d.
Cost avoidance
e.
None of the above.
48. A/An _____ demonstrates the impact of purchasing and supply strategies and actions on revenues of the firm.
a.
income measure
b.
target cost
c.
revenue measure
d.
target price
e.
cost avoidance measure
49. The _____ measure expresses a maximum number (in absolute or percentage terms) of level of defects allowable for
any particular product, assembly, or service.
a.
Effectiveness
b.
Efficiency
c.
TQM
d.
Cost avoidance
e.
PPM
50. A/An _____ is the amount of time (in weeks or months) from concept to first shipment or provision of a product or
service to the external customer.
Moderate
Analytic
Chapter 19 — Performance Measurement and Evaluation
a.
on-time delivery measure
b.
time-to-market target
c.
responsiveness measure
d.
first insight measure
e.
cost avoidance measure
51. A/An _____ would typically link to a contractual agreement whereby, for new technologies, the buying firm may get
insight, some period of time before new technology developments are shared with other organizations.
a.
TQM measure
b.
first insight measure
c.
cycle time reduction
d.
responsiveness measure
e.
None of the above.
Moderate
Analytic
52. _____ focus on achieving standardization of components, systems, and services and application of currently used
purchased items or the use of industry-standard versus unique items.
a.
First insight measures
b.
Standardization measures
c.
Responsiveness measures
d.
Cycle time reduction measures
e.
Flexibility measures.
53. _____ measures include tracking actual transportation costs against some preestablished objective, demurrage and
detention costs, and premium transportation.
a.
Transportation cost avoidance
b.
PPM
c.
Field failure rate
d.
Target prices achieved
e.
Transportation cost reduction
54. All of the following are examples of customer order measures except _____.
a.
percentage of on-time delivery
b.
total time from customer order to customer delivery
c.
returned orders
d.
warranty claims
e.
inventory turns
Easy
Analytic
55. A/An _____ is one that personnel cannot inappropriately influence the results of.
a.
efficient measure
b.
qualitative measure
c.
quantitative measure
d.
non-manipulable measure
e.
None of the above.
56. All of the following are examples of e-transaction measures except _____.
a.
days/weeks/months of supply of inventory
b.
absolute number of suppliers
c.
percentage of suppliers
d.
percentage of advanced shipping notices
e.
electronic funds transfer
Moderate
Analytic
57. _____ is the continuous measuring of products, services, processes, activities, and practices against a firm’s best
competitors or those companies recognized as industry or functional leaders.
a.
Benchmarking
b.
TCO
Easy
Analytic
Chapter 19 — Performance Measurement and Evaluation
c.
TQM
d.
Effectiveness
e.
Efficiency
58. _____ involves a comparison of one firm’s market strategies against those of another.
a.
Functional benchmarking
b.
Strategic benchmarking
c.
Operational benchmarking
d.
Support-activity benchmarking
e.
None of the above.
59. _____ is a process that the purchasing function follows when it performs benchmarking comparisons.
a.
Strategic benchmarking
b.
Support-activity benchmarking
c.
Process capability
d.
Operational benchmarking
e.
Outsourcing
60. Which of the following is not one of the benefits of benchmarking?
a.
Helps identify the best business or functional practices to include in a firm’s business plans.
b.
Determines internal customer needs and wants.
c.
Breaks down a reluctance to change.
d.
Serves as a source of market intelligence.
e.
Uncovers a previously unrecognized technological breakthrough.
Moderate
Analytic
61. All of the following are phases in the benchmarking process except _____.
a.
planning
b.
analysis
c.
integration
d.
maturity
e.
total cost analysis
62. According to Kaplan and Norton, a balanced scorecard includes all of the following key performance measurement
areas except the _____.
a.
customer satisfaction perspective
b.
operational excellence perspective
c.
innovation perspective
d.
human resource perspective
e.
financial perspective