Which of the following is not an example of cost differentials that arise between
countries?
a. Lower labor rates.
b. Fewer documentation requirements.
c. Possible willingness to accept a lower profit margin.
d. Exchange rate differences.
e. Government subsidies.
There is no dollar threshold on the Foreign Corrupt Practices Act, making it illegal to
offer even a dollar as a bribe.
a. True
b. False
The term _____ refers to the set of purposes, principles, and rules of action that guide
an organization.
a. government regulation
b. procedure
c. guideline
d. work rule
e. policy
The routine ordering and follow-up of basic operational supplies is a strategic
responsibility.
a. True
b. False
Which of the following is not an advantage of centralized or center-led purchasing
structures?
a. Enhanced product development support at the business unit level.
b. Leverage purchase volumes.
c. Coordination of purchasing strategies and plans.
d. Development of specialized expertise.
e. Reduced duplication of purchasing effort.
Regarding supply base risk, every sourcing decision will be different and must be
carefully evaluated regarding its own particular situation.
a. True
b. False
_____ occurs when a purchasing department purchases materials for the personal needs
of its employees.
a. Reciprocity
b. Sharp practice
c. Personal buying
d. Conflict of interest
e. Influence
Exceeding both actual and apparent authority can have dire consequences; an individual
may be held directly liable by the supplier or other third party.
a. True
b. False
Under penetration pricing, using final price as a basis, the product is disaggregated into
major subsystems, each of which has its own target cost.
a. True
b. False
In _____, one party (usually the buyer) gets a lower price as the parties work jointly to
reduce the sellers costs or the joint transaction costs of doing business together.
a. logroll
b. expand the pie
c. cut the costs for compliance
d. find a bridge solution
e. use non-specific compensation
Which of the following is not a typical supplier development activity?
a. Providing incentives to suppliers for improved performance.
b. Promoting competition among suppliers.
c. Raising prices paid for purchased goods and services.
d. Directly involving buyer personnel with suppliers.
e. Conducting training and process improvement initiatives.
Buying firms use competitive bidding when _____ is a dominant criterion and the
required items or services have ______ specifications.
a. price¦.unique
b. delivery¦.unique
c. product performance¦.straightforward
d. design¦.unique
e. price¦.straightforward
A cost-based approach to supplier pricing is feasible when the seller contributes high
added value to an item through direct or indirect labor and specialized expertise.
a. True
b. False
The _____ function monitors the day-to-day management of purchased and in-process
inventory at each using location.
a. inventory control
b. buying
c. material handling
d. expediting
e. transportation