TEST BANK
CHAPTER 6: PROCUREMENT
Multiple Choice Questions (correct answers are bolded)
1. ___________ refers to the raw materials, component parts, and supplies bought from outside
organizations to support a company’s operations.
2. Procurement costs often range between ___________ and ___________ percent of an
organization’s revenues.
Application; AACSB Category 3: Analytical thinking]
3. Procurement’s historical focus in many organizations was to ___________.
4. Procurement and ___________ are viewed as synonymous terms.
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5. ___________ involves an increased focus on identifying and using data internally and across a
supply chain so that a company can consolidate its purchasing power for enhanced value.
6. Which of the following is not a potential benefit associated with procurement cards (p-cards)?
7. Which of the following is not a potential procurement objective?
8. A focus on satisfying internal customers is associated with which procurement objective?
9. The selection, development, and maintenance of supply sources is associated with which
procurement objective?
10. Buying the right products, at the right price, from the right source, at the right specifications,
in the right quantity, and for delivery at the right time to the right internal customer is associated
with what procurement objective?
11. What is the first step in supplier selection and evaluation?
AACSB Category 3: Analytical thinking]
12. With respect to the supplier selection and evaluation process, ___________ looks at both the
internal and external environment within which the supply decision is to be made.
13. What is the final step in the supplier selection and evaluation process?
14. Multiple sourcing uses more than one supplier in hopes of increased competition, improved
market intelligence, and ___________.
15. Single sourcing consolidates purchase volume with a single supplier in hopes of increasing
cooperation and communication in the supply relationship as well as ___________.
16. Which of the following statements is false?
17. Which of the following would not be part of a supplier audit?
18. Kraljic’s Portfolio Matrix ___________.
19. Bottleneck, leverage, and strategic are categories associated with ___________.
20. A degree of aggressive procurement involvement not normally encountered in supplier
selection refers to ___________.
21. Supplier development is synonymous with ___________.
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22. Which of the following is not a reason that purchasers are adopting a more proactive and
aggressive role in the procurement process?
23. Which of the following is false?
24. What is the first step in a global sourcing development model?
25. ___________ is often a major shortcoming of many global procurement plans.
26. What concept refers to when firms consider all the costs that can be assigned to the
acquisition, use, and maintenance of a purchase?
27. Procuring products from suppliers close to one’s own facilities refers to ___________.
28. Which of the following is not a dimension associated with socially responsible procurement?
29. With respect to gift giving and gift receiving, a ___________ refers to money paid before an
exchange.
30. With respect to gift giving and gift receiving, a ___________ refers to money paid after an
exchange.
31. ___________ identifies opportunities to recover revenues or reduce costs associated with
scrap, surplus, obsolete, and waste materials.
32. ___________ materials refer to stock that exceeds the reasonable requirements of an
organization.
33. ___________ materials are no longer serviceable, have been discarded, or are a by-product
of the production process.
34. ___________ materials have no economic value.
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35. ___________ refers to a set of technology and finance-based processes that strive to optimize
cash flow by allowing businesses to extend their payment terms to their suppliers while
simultaneously allowing their suppliers to get paid early.
True-False Questions
1. Procurement refers to the raw materials, component parts, and supplies bought from outside
AACSB Category 3: Analytical thinking]
2. Procurement’s costs often range between 40 and 60 percent of an organization’s revenues.
Application; AACSB Category 3: Analytical thinking]
3. Procurement’s historical focus in many organizations was to minimize the total number of
[LO 6.1: To compare procurement, purchasing, and supply management; Moderate; Synthesis;
AACSB Category 3: Analytical thinking]
4. A contemporary procurement manager might have responsibility for reducing cycle times
and for generating additional revenues by collaborating with the marketing department.
AACSB Category 3: Analytical thinking]
[LO 6.1: To compare procurement, purchasing, and supply management; Easy; Concept;
AACSB Category 3: Analytical thinking]
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6. Supply chain management refers to a relational exchange approach involving a limited
[LO 6.1: To compare procurement, purchasing, and supply management; Moderate; Concept;
AACSB Category 3: Analytical thinking]
7. Strategic sourcing involves an increased focus on identifying and using data internally and
across the supply chain so that a company can consolidate its purchasing power for enhanced
[LO 6.1: To compare procurement, purchasing, and supply management; Moderate;
Application; AACSB Category 3: Analytical thinking]
8. One benefit to procurement cards is that they are easily used outside of their domestic
[LO 6.1: To compare procurement, purchasing, and supply management; Moderate; Synthesis;
AACSB Category 3: Analytical thinking]
9. First and foremost, procurement’s objectives must manage the purchasing process effectively
[LO 6.2: To review procurement objectives; Moderate; Synthesis; AACSB Category 3:
Analytical thinking]
10. One of procurement’s most important responsibilities involves supplier selection and
[LO 6.3: To review supplier selection and evaluation approaches; Easy; Application; AACSB
Category 3: Analytical thinking]
[LO 6.3: To review supplier selection and evaluation approaches; Moderate; Synthesis; AACSB
Category 3: Analytical thinking]
12. A benefit to multiple sourcing is increased cooperation and communication in a supply
[LO 6.3: To review supplier selection and evaluation approaches; Moderate; Application;
AACSB Category 3: Analytical thinking]
13. Single sourcing consolidates purchase volume with a single supplier with the hopes of
[LO 6.3: To review supplier selection and evaluation approaches; Easy; Application; AACSB
Category 3: Analytical thinking]
[LO 6.3: To review supplier selection and evaluation approaches; Easy; Synthesis; AACSB
Category 3: Analytical thinking]
15. Supplier scorecards involve assessments of a supplier’s structure, resources, technology,
[LO 6.3: To review supplier selection and evaluation approaches; Moderate; Concept; AACSB
Category 3: Analytical thinking]
[LO 6.3: To review supplier selection and evaluation approaches; Moderate; Application;
AACSB Category 3: Analytical thinking]
17. Supplier selection and evaluation generally involve multiple criteria, and these criteria can
[LO 6.3: To review supplier selection and evaluation approaches; Moderate; Synthesis; AACSB
Category 3: Analytical thinking]
18. The Optimal Cost Reliability Model is used by many managers to classify corporate
[LO 6.4 To review Kraljic’s Portfolio Matrix; Moderate; Concept; AACSB Category 3:
Analytical thinking]
19. Bottleneck refers to the low importance, low complexity category of Kraljic’s Portfolio
[LO 6.4 To review Kraljic’s Portfolio Matrix; Moderate; Application; AACSB Category 3:
Analytical thinking]
20. Leverage refers to the high importance, low complexity category of Kraljic’s Portfolio
[LO 6.4 To review Kraljic’s Portfolio Matrix; Moderate; Application; AACSB Category 3:
Analytical thinking]
21. Supply management refers to a degree of aggressive procurement not normally encountered
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[LO 6.4 To review Kraljic’s Portfolio Matrix; Moderate; Concept; AACSB Category 3:
Analytical thinking]
[LO 6.4 To review Kraljic’s Portfolio Matrix; Easy; Concept; AACSB Category 3: Analytical
thinking]
23. One reason for the growth of the supplier development concept is that achieving competitive
advantage in the supply chain is predicated on purchasers adopting a more aggressive
[LO 6.4 To review Kraljic’s Portfolio Matrix; Moderate; Application; AACSB Category 3:
Analytical thinking]
[LO 6.5: To establish issues associated with global procurement; Easy; Concept; AACSB
Category 3: Analytical thinking]
25. Global procurement is primarily driven by the input-output and market-access strategies.
AACSB Category 3: Analytical thinking]
[LO 6.5: To establish issues associated with global procurement; Moderate; Synthesis; AACSB
Category 3: Analytical thinking]
27. Because global sourcing increases the distance that components and inputs must be moved,
AACSB Category 3: Analytical thinking]
[LO 6.5: To establish issues associated with global procurement; Moderate; Synthesis; AACSB
Category 3: Analytical thinking]
29. When taking an activity-based costing approach, firms consider all the costs that can be
[LO 6.5: To establish issues associated with global procurement; Moderate; Concept; AACSB
Category 3: Analytical thinking]
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[LO 6.5: To establish issues associated with global procurement; Moderate; Concept; AACSB
Category 3: Analytical thinking]
31. Sustainable procurement refers to the integration of social and environmental considerations
[LO 6.6: To identify social and environmental aspects of sustainable procurement; Easy;
Concept; AACSB Category 3: Analytical thinking]
[LO 6.6: To identify social and environmental aspects of sustainable procurement; Easy;
Application; AACSB Category 3: Analytical thinking]
33. With respect to gift giving and gift receiving, bribes refer to money paid after an exchange.
Concept; AACSB Category 3: Analytical thinking]
34. The relevance, importance, and challenges associated with socially responsible procurement
[LO 6.6: To identify social and environmental aspects of sustainable procurement; Moderate;
Application; AACSB Category 3: Analytical thinking]
35. Investment recovery identifies opportunities to recover revenues or reduce costs associated
[LO 6.6: To identify social and environmental aspects of sustainable procurement; Easy;
Concept; AACSB Category 3: Analytical thinking]
[LO 6.6: To identify social and environmental aspects of sustainable procurement; Moderate;
Application; AACSB Category 3: Analytical thinking]
37. Excess materials refer to stock that exceeds the reasonable requirements of an organization.
Concept; AACSB Category 3: Analytical thinking]
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38. Scrap materials are no longer serviceable, have been discarded, or are a by-product of the
[LO 6.6: To identify social and environmental aspects of sustainable procurement; Easy;
Concept; AACSB Category 3: Analytical thinking]
[LO 6.6: To identify social and environmental aspects of sustainable procurement; Moderate;
Concept; AACSB Category 3: Analytical thinking]
40. Supply chain finance refers to a set of technology and finance-based processes that strive to
optimize cash flow by allowing businesses to extend their payment terms to their suppliers
[LO 6.6: To identify social and environmental aspects of sustainable procurement; Moderate;
Concept; AACSB Category 3: Analytical thinking]