The _____ clause of a contract describes the course of events that occur if there are
unforeseen calamities such as earthquakes or hurricanes that prevent a supplier from
fulfilling its obligations to the buyer.
a. liability
b. force majeure (LO #1
c. confidentiality
d. third-party rights
e. governing law
Generally, honest mistakes by a single party to the contract will void the contract.
a. True
b. False
Considering the cost-based supplier evaluation system, the actual cost per
nonconformance event may be difficult to estimate or calculate, as many traditional cost
accounting systems are not designed to identify and capture such data.
a. True
b. False
With the increased amount of outsourcing occurring in every global company today, the
majority of the cost of goods sold is driven by suppliers, which are outside the four
walls of an organization.
a. True
b. False
Counterpurchase requires a company to fulfill its countertrade requirements by
purchasing products within a country unrelated to its primary business.
a. True
b. False
In should-cost modeling, _____ are any components not under the direct control of the
buying or supplying company but those that have a significant influence on the outcome
being modeled.
a. direct costs
b. assumption variables
c. overhead costs
d. transportation modes
e. decision variables
Policies to define the role of purchasing do all of the following except _____.
a. detail the authority of purchasing to delegate certain tasks or assignments to other
departments
b. describe the areas where purchasing authority does or does not exist
c. outline the overall authority of purchasing as granted by the executive committee
while describing the limits to that authority
d. exclude the purchasing function from any responsibility for purchasing such things as
real estate, medical insurance policies, or other areas where purchasing may not have
direct expertise
e. define the reporting mechanism for buyers or other employees to report irregular
business dealings
Price fixing, dividing territories among competitors, and agreements that limit the
supply of a commodity are violations of the Foreign Corrupt Practices Act.
a. True
b. False
A/An _____ consists of activities or steps that can be performed at the same time during
the main flow of work.a. intermittent process
b. continuous process
c. standardized process
d. concurrent process
e. None of the above.
_____ refers to the volatility of pricing conditions for major elements of the product,
such as raw materials, purchased components, and labor.
a. Suppliers ability to impact costs
b. Component market uncertainty
c. Process or technology uncertainty
d. Total dollar value of the purchase
e. None of the above.
_____ 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
The main risk in target and cost-based pricing concerns volume variability.
a. True
b. False
Purchasing is becoming more of a tactical function and less of a strategic function.
a. True
b. False
_____ refer to standard operating procedures along with any rules and regulations.
a. Union contracts
b. Rules of action
c. Government regulations
d. Policies
e. OSHA rules
Most purchasers fail to perform at least a cursory financial analysis of prospective
suppliers.
a. True
b. False
A/An _____ is similar to a/an _____ but allows the addition of items not originally
included in the order and may allow the original purchase order to be extended for a
longer term.
a. closed-end order¦.open-ended order
b. national contract¦.national buying agreement
c. open-ended order¦.blanket order
d. open-ended order¦.pricing agreement
e. blanket order¦.national buying agreement
A/An _____ is a manufacturer or distributor that controls and manages its own
transportation equipment, whether owned or leased.
a. common carrier
b. private carrier
c. contract carrier
d. intermodal carrier
e. exempt carrier
_____ is the idea that organizations and institutions have an obligation to society that
extends beyond compliance with regulations in considering the broader effects of their
actions.
a. Ethics
b. Influence
c. Corporate social responsibility
d. Mutual assent
e. Warranty of infringement
All of the following are benefits of electronically generating and transmitting
purchasing-related documents except _____.
a. a reduction in the need to ensure higher levels of quality from suppliers
b. a virtual elimination of paperwork and paperwork handling
c. improved communication both within the company and with suppliers
d. a reduction in errors
e. a reduction in the time spent in by purchasing personnel on processing purchase
orders and invoices and more time spent on strategic value-adding purchasing activities