BUAD 331 Exam 2 Questions With Verified Answers

Sourcing is the inputs (or things we buy), including materials, sub-assembled components, equipment, and services, that are required to create value. A. True B. False - Answer B. False Which of the following is NOT an area in which successful supply managers need expertise? A. Technologies B. Customers C. Suppliers D. Processes E. Resources - Answer B. Customers When purchasing and supply management works well within an organization, the company acquires the best resources from around the world, which allows its to compete on cost, quality, and innovation. A. True B. False - Answer A. True The following items for an automobile manufacturer would fit in the Supply Commodity category titled "Indirect Materials Office Supply Product category". (images of a pen, whiteout, stapler, water bottle, and pencil) A. True B. False - Answer A. True Which of the following is the most important right of purchasing? A. Delivery to the RIGHT place B. The RIGHT price C. The RIGHT supplier D. The RIGHT time E. The RIGHT material - Answer C. The RIGHT supplier One of the most challenging aspects of purchasing is to ensure an uninterrupted flow of supply. Which of the following might "interrupt" that flow? A. Natural disasters B. Supplier quality issues C. Logistics interruptions D. Financial issues E. All of the above - Answer E. All of the above A dollar saved in material costs goes directly to an increase in revenue for the organization. A. True B. False - Answer B. False You are working as a Procurement Manager for a Fortune 500 company and are in charge of buying a new make and model of work computers for the entire company headquarters. You know it will be an expensive purchase, but have many options to choose from so you can make the computer manufacturers bid against each other to get the best price. Which type of commodity are these computers? A. Noncritical Commodity B. Strategic Commodity C. Leverage Commodity D. Bottleneck Commodity - Answer C. Leverage Commodity Purchasing has become a strategic contributor to organizational value by contributing to both the top and bottom line of the business. A. True B. False - Answer A. True The choice of suppliers is important to ensure an uninterrupted flow of supply and avoid some of the problems inherent in complex supply chains. A. True B. False - Answer A. True Supplier portfolio analysis was introduced by Michael Porter. A. True B. False - Answer B. False An item with high market complexity and low importance to the organization should be classified as: A. Non-critical B. Leverage C. Strategic D. Bottleneck E. None of the above - Answer D. Bottleneck What supplier management tool is the standard to continuously track a supplier's performance and financial health and ensure that key goals are being met? A. Partnerships B. Six Sigma Projects C. Negotiations D. Scorecards E. Sourcing Projects - Answer D. Scorecards The key to effective procurement strategy is ______ of suppliers and ___________ management. A. Comparison, aligned B. Segmentation, strategically appropriate C. Strengthening, customer-focused D. Disconnection, dishonest - Answer B. Segmentation, strategically appropriate Which of the Krajlic's Portfolio Matrix items is highly complex in the supply market and has a high importance of purchasing? A. Leverage Items B. Strategic Items C. Mosaic Items D. Pertinent Items E. Expendable Items - Answer B. Strategic Items How can purchasing add value to an organization? A. By ensuring an uninterrupted flow of materials or services B. By reducing the total cost of products C. By collaborating with other areas such as logistics on supplier location decisions. D. By increasing revenue through supplier innovation and new product launch E. All of the above (and MORE) are ways that purchasing can contribute to organizational success. - Answer E. All of the above (and MORE) are ways that purchasing can contribute to organizational success. On Kraljic's matrix the quadrant of "bottleneck" is the most challenging for purchasing managers to deal with? In fact it is recommended that you think of ways to shift these items to other quadrants of the matrix. What is one purchasing tactic that might allow you to do that? A. Reverse auction B. Use P-cards and on-line catalogs C. Set up a long term contract D. Buying consortium, group together multiple buyers E. Switch suppliers - Answer D. Buying consortium, group together multiple buyers When are supplier evaluation and selection decisions initiated? A. In response to requests from internal customers B. During the design and building of new facilities C. During new product development D. During routine market testing E. All of the above - Answer E. All of the above When thinking about price reductions what can purchasing do to achieve significant price or cost savings and maintain the appropriate supplier relationship when buying leverage items? A. Forward buying B. Supply base reduction C. Hard ball negotiations D. Buy the product from more suppliers E. All of the above are tactics to achieve price or cost savings - Answer B. Supply base reduction What is the best tactic purchasing can use in order to meet the material and support needs of its internal customers? A. Provide an uninterrupted flow of the appropriate quality materials and services. B. Buy from suppliers that are geographically close to the location of internal customers. C. Find the lowest possible price through low-cost country sourcing. D. Minimize the number of suppliers in the supplier pool. E. Automate the purchasing process with the suppliers. - Answer A. Provide an uninterrupted flow of the appropriate quality materials and services Both objective and subjective measures are used to measure the performance of suppliers. Which of the following is NOT true regarding objective and subjective measures? A. Objective (Hard) Measures are quantitative B. Subjective (Soft) Measures are based on preference or judgment C. An example of a subjective measure is supplier on-time delivery D. Subjective measures can be biased and dependent on the user. E. All of the above are true. - Answer C. An example of a subjective measure is supplier on-time delivery What term is best described as the process of combining purchasing requirements across operating units in order to capitalize on suppliers' fixed cost allocations and improvements in suppliers' productivity? A. Leveraging B. Specifying C. Spot Buying D. Strategizing E. Contracting - Answer A. Leveraging You are a supply manager at a large US bank and you are responsible for buying marketing and creative services (advertising, etc.). The marketing services category represents a substantial amount of procurement spend and the suppliers that compete in this industry tend to have very different capabilities. Consider the Kraljic matrix and classify this purchase. A. Leverage item. B. Bottleneck item. C. Strategic item. D. Non-critical item. E. None of these are the appropriate classification for this component. - Answer C. Strategic item.