Exam (elaborations)
MNP2601 EXAM PACK 2023
- Institution
- University Of South Africa
QUESTIONS AND ANSWERS
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lOMoARcPSD|24668432Test Bank MNP2601 - test bank
Purchase Management (University of South Africa)
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Question 1
If a company adopts the philosophy of lean manufacturing, they would typically say the following:
[1] <By keeping large inventories of raw materials, even if not used in manufacturing, we will be
prepared to respond to customers9 orders when they come in.=
[2] <If we have more work stations at the plant, we can employ more people in the manufacturing
process.=
[3] <By simplifying our work environment, we can reduce waste and keep our employees, equipment
and workspace responsive to current needs.=
[4] <We have invested large sums of capital in these advanced machines; therefore, we need to get
maximum return on our investment before meeting changing demands.=
Answer: Option 3 (Chapter 1 of the prescribed book)
This question shows that you should truly comprehend the concepts discussed in the prescribed book. If
you need more information than what is provided in the prescribed book to grasp a concept, you are
encouraged to find further explanations and examples from other sources. Lean manufacturing is about
having the most effective (thus economical) manufacturing processes. Options 1, 2 and 4 are typical
ways of being ineffective and slow to respond, and should be avoided if a philosophy of lean
manufacturing is adopted.
Question 2
During the control task, the activity of evaluating the performance of the purchasing and supply function
should be based on both the following critical dimensions:
[1] tactical and strategic objectives
[2] centralisation and decentralisation
[3] quantitative and qualitative bases
[4] cost reduction and income increase
Answer (Option 3, Chapter 2 of the prescribed book)
The performance evaluation of the purchasing and supply function should include BOTH
objective/quantitative and subjective/qualitative dimensions. Option 1 refers to the management task
of planning and coordination, while option 2 refers to the management task of organising. Option 4
refers both to quantitative aspects.
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Question 3
Assume that the purchasing manager at Amazon.com (an online retailer) is requested to submit a report
on suppliers in accordance with the policy guidelines of the organisation. In his report, he lists the
different types of suppliers and their dealings with Amazon.com. Which one of the following best
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describes a situation where the purchasing function of Amazon.com buys more than half of a supplier9s
production of video games?
[1] unreliable suppliers
[2] suppliers9 specialised knowledge
[3] captive suppliers
[4] reciprocal suppliers
Answer: Option 3 (Chapter 4 of the prescribed book)
A captive supplier implies that the purchasing function of Amazon.com buys more than half of a
supplier9s production of video games. This can result in the supplier being dependent on Amazon.com.
Option 1 (unreliable suppliers) is irrelevant in terms of the definition of captive suppliers and refers to a
non-cost factor that should be considered in the outsourcing decision. If Amazon.com is not satisfied
with the performance of a supplier of video games over a period of time, the chances are that the
supplier will never perform efficiently and no future orders will be placed with the supplier. Option 2
(suppliers9 specialised knowledge) is another non-cost factor in the decision to outsource. Amazon.com
seems to have the specialised knowledge and does constant research to produce and sell the Kindle Fire
and therefore keeps the activity internally. Option 4 (reciprocal suppliers) is not mentioned as such in
the prescribed book, but it should be mentioned that reciprocity could be where Amazon.com buys from
a supplier because that supplier buys from Amazon.com.
Question 4
The following principle should be kept in mind when evaluating purchasing and supply performance:
[1] It would be best to use the generic evaluation system that is available to evaluate purchasing and
supply performance.
[2] Quantitative measures give the best and most accurate indication of purchasing and supply
performance.
[3] As long as the benefits equal the costs, the evaluation system for evaluating purchasing and supply
performance is effective.
[4] A sound database with information on a wide spectrum of purchasing and supply activities is
necessary to evaluate performance.
Answer: Option 4 (Chapter 2 of the prescribed book)
Option 4 mentions the crucial element of having sufficient and relevant information available during
performance evaluation. Option 1 is incorrect, since there is no generic evaluation system that is
suitable for performance evaluation in all organisations. Option 2 should have included qualitative
measures in order to be correct. Option 3 is incorrect, since the benefits should outweigh the costs.
MNP2601/201/1/2018
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Question 5
When determining responsibilities in the purchasing and supply process, the & function has the primary
responsibility to contact the supplier base about faulty consignments.
[1] receiving
[2] inspection
[3] financial
[4] purchasing
Answer: Option 4 (Chapter 3 of the prescribed book)
Although all the above functions play a role in the purchasing process, the purchasing function has the
primary responsibility to communicate with suppliers (especially when incorrect orders are received).
Question 6
Expediting an order in the purchasing and supply context implies that the purchasing official firstly &
[1] obtains advanced technology to speed up the process.
[2] phones the supplier to save time to discuss future relationships.
[3] monitors the supplier9s progress with the order.
[4] suggests lean manufacturing as a stream-lined process.
Answer: Option 3 (Chapter 3 of the prescribed book)
In the purchasing and supply context, the concept of expediting does not imply focussing the effort on
speeding up the process but rather on evaluating the supplier9s progress with the order. If the supplier
falls behind, the purchasing official might suggest solutions to problems – which could include options 1
and 4. Option 2 is irrelevant since expediting relates to the current order; however, if the purchasing
official had phoned to ask about the progress of a specific order that has been placed (thus not about
future relationships), option 2 would have been correct.
Question 7
When buying specialised equipment, the purchasing procedures might require that requisitions
exceeding a predetermined amount be accompanied by two or three written quotations. In such cases,
the & has the prerogative of selecting the supplier.
[1] user
[2] purchasing official
[3] specialised equipment specialist
[4] financial function
Answer: Option 2 (Chapter 3 of the prescribed book)
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