Buyers can minimize supply disruption risk from a single suppler by selecting a
supplier with multiple production facilities.
a. True
b. False
In organizations where new product development occurs at the divisional or business
unit level, a centralized purchasing structure can support new product development at
earlier stages.
a. True
b. False
Many suppliers are hesitant to challenge excessive specifications for fear of losing the
bid.
a. True
b. False
The supplier performance index (SPI) always provides a complete or accurate
assessment of supplier performance.
a. True
b. False
All of the following are examples of broad total cost of ownership categories except
_____.
a. purchase price
b. acquisition costs
c. sales, general, and administrative overhead costs
d. usage costs
e. end-of-life costs
A should-cost model can lead the procurement manager to better understand elements
of overhead, mark-ups on non-value-added costs, and other components that can
undermine price inflation.
a. True
b. False
Short-term purchase contracts that award small volumes of business to multiple
suppliers decrease production costs and provide incentive for individual supplier
investments in process improvement.
a. True
b. False
In _____, a purchaser may have to use internal engineering estimates about what it
costs to produce an item, rely on historical experience and judgment to estimate costs,
or review public financial documents to identify key cost data about the seller.
a. reverse price analysis
b. TCO analysis
c. penetration pricing
d. using the PPI
e. competition pricing
Most cost accounting systems are capable of identifying and assigning the true costs
related to maintaining physical inventory.
a. True
b. False
Which of the following is falseregarding the risks of unethical behavior by a purchaser?
a. The buyer pays too little for a purchased good or service.
b. Unethical behavior presents a personal risk to a buyers reputation.
c. buyer who performs an unethical act runs the risk that the act is also illegal.
d. Sellers quickly become aware of buyers who are open to offers on the side.
e. A buyer who makes purchase decisions based on factors other than legitimate
business criteria risks the reputation of the entire firm.
A/An _____ is nonbinding on either the buyer or the supplier and typically provides
discounts to corporate buyers based on total volume for the corporation as a whole, not
for any subunits individually.
a. annual contract
b. pricing agreement
c. corporate agreement
d. escape clause
e. national buying agreement