Materials Management Practice Exam
Course Introduction
Materials Management explores the systematic control and flow of materials within an organization, from procurement and storage to distribution and utilization. The course covers key concepts such as forecasting, inventory control, supplier management, logistics, quality control, and the integration of new technologies in managing materials efficiently. Emphasis is placed on strategies that ensure the right materials are available in the right quantity, at the right place and time, and at optimal cost. Students will gain practical knowledge relevant to manufacturing, supply chain, and service industries, preparing them to address the challenges of resource allocation, cost optimization, and sustainability in materials handling.
Recommended Textbook
Purchasing and Supply Chain Management 5th Edition by Robert M. Monczka
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Chapter 1: Introduction to Purchasing and Supply Chain Management
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Sample Questions
Q1) According to Michael Porter,a firm's ____ is composed of primary and secondary support activities that can lead to competitive advantage when configured properly.
A) supply chain
B) process
C) value chain
D) marketing channel
E) core competency
Answer: C
Q2) The routine ordering and follow-up of basic operational supplies is a strategic responsibility.
A)True
B)False
Answer: False
Q3) In quality control,the emphasis has shifted from detecting defects at the time of receipt or use to prevention early in the materials-sourcing process.
A)True
B)False
Answer: True
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Chapter 2: The Purchasing Process
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Q1) ____ is used when a product or service is proprietary or when there is a perceived advantage to using a particular supplier's products or services.
A) Description by market grade
B) Description by industry standard
C) Description by specification
D) Description by performance characteristics
E) Description by brand
Answer: E
Q2) Organizations are constantly looking for people who have developed the skills necessary to deal with the narrow variety of tasks faced by purchasing.
A)True
B)False
Answer: False
Q3) Purchasing can only negatively affect the long-term growth,revenue,and operating outcomes and plans of internal customers.
A)True
B)False
Answer: False
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Chapter 3: Purchasing Policy and Procedures
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Sample Questions
Q1) Routine items available from many different sources are seldom purchased through competitive bidding.
A)True
B)False
Answer: False
Q2) The organization's policy on contacts and visits to suppliers should address not only purchasing personnel but also other departments or functions that visitor contact suppliers.
A)True
B)False
Answer: True
Q3) All of the following are examples of topics discussed in legal contract procedures except ____.
A) basic contract principles
B) execution and administration of agreements
C) compliance with contract terms and performance assessment
D) legal definitions
E) how to conduct a supplier evaluation
Answer: E
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Page 5
Chapter 4: Supply Management Integration for Competitive Advantage
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Sample Questions
Q1) The term ____ refers to the set of performance criteria and products and processes an organization intends to develop or manufacture.
A) concurrent engineering
B) early supplier involvement
C) process loss
D) technology roadmap
E) R&D plan
Q2) A team may pressure an individual to support or conform to a lower production norm than the individual's personal norm.
A)True
B)False
Q3) Supply management usually maintains significant data about individual activity costs that can increase total cost.
A)True
B)False
Q4) Integration does not require that people create a common understanding of the end goal or purpose.
A)True
B)False
Page 6
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Chapter 5: Purchasing and Supply Management Organization
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Sample Questions
Q1) Use of a ____ is most advantageous where geographic concentration exists within a company.
A) regional buying group
B) business unit leader
C) corporate purchasing council
D) corporate steering committee
E) None of these choices.
Q2) Which of the following is an example of an operational activity?
A) Manage relationships with critical suppliers.
B) Generate and forward material releases.
C) Develop electronic purchasing systems.
D) Negotiate companywide contracts.
E) Manage critical commodities.
Q3) The ability to respond quickly to user and customer requirements has always been a major justification for centralized purchasing authority.
A)True
B)False
Q4) Purchasing personnel cannot become experts in all categories of spend.
A)True
B)False
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Chapter 6: Supply Management and Commodity Strategy Development
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Q1) Organizations tend to evolve through four phases as they become mature and sophisticated in their supply management strategy development.
A)True
B)False
Q2) A/An ____ is a formal request for the suppliers to prepare bids,based on the terms and conditions set by the buyer.
A) RFQ
B) purchase order
C) RFI
D) supplier analysis
E) e-auction
Q3) As a strategic planning tool,a SWOT analysis can provide insight even with limited data.
A)True
B)False
Q4) Longer-term relationships are sought with suppliers that have exceptional performance or unique technological expertise.
A)True
B)False
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Chapter 7: Supplier Evaluation and Selection
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Q1) Before committing time to evaluate a supplier in depth,suppliers should satisfy certain entry qualifiers.
A)True
B)False
Q2) Due to supplier reluctance to release or share proprietary cost data,buyers will often develop reverse pricing models that provide estimates of the supplier's cost structure during the initial supplier evaluation.
A)True
B)False
Q3) Because of the volume and low quality of data,buyers seldom use the Internet to help locate potential sources that might qualify for further evaluation.
A)True
B)False
Q4) A major source of information on potential supply sources comes from current or existing suppliers.
A)True
B)False
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Chapter 8: Supplier Quality Management
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Q1) A buyer cannot realistically expect the highest levels of supplier performance when the supplier must respond to frequent or short lead time changes.
A)True
B)False
Q2) Deming's 14 points are an a la carte menu of quality improvement activities from which a company can pick and choose only those with which they agree.
A)True
B)False
Q3) Which of the following is one of the dimensions used in developing a clear understanding of the buyer's expectations and requirements?
A) The ability of the buying company to succinctly identify, clearly define, quantify, or specify its technical and sourcing requirements.
B) The seller's ability to effectively communicate its requirements.
C) How compatible the buyer's and supplier's respective corporate cultures are.
D) The ability of the selling company to succinctly identify, clearly define, quantify, or specify its technical and sourcing requirements.
E) None of these choices.
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Chapter 9: Supplier Management and Development:
Creating a World-Class Supply Base
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Q1) Which of the following is a disadvantage of a cost-based supplier evaluation system?
A) Least reliable.
B) Most complex so implementation costs are high.
C) Less frequent generation of evaluations.
D) Most subjective.
E) Usually manual.
Q2) The supplier performance index (SPI)equals (____ plus ____)divided by ____.
A) total purchases....nonperformance costs....total purchases
B) nonperformance costs....total purchases....nonperformance costs
C) total purchases....appraisal costs....external failure costs
D) external failure costs....internal failure costs....total purchases
E) failure costs....appraisal costs....prevention costs
Q3) In overcoming the barriers to supplier development,which of the following is not one of the approaches typically used?
A) Direct-involvement activities.
B) Multiple sourcing.
C) Incentives and rewards.
D) Warnings and penalties.
E) All of these choices are typical approaches.
Page 11
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Chapter 10: Worldwide Sourcing
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Q1) A common approach for coordinating work on global sourcing is to rely on audio conferencing with a scheduled time for conference calls,usually on a weekly basis.
A)True
B)False
Q2) All of the following are elements of total cost for worldwide sourcing except ____.
A) payment and currency fees
B) port terminal and handling fees
C) communication costs
D) base price
E) new product advertising
Q3) Regardless of the technique used to overcome worldwide sourcing barriers,the effort will fail unless top management supports worldwide sourcing.
A)True
B)False
Q4) Most offshore organizations like dealing with the U.S.legal system and long contracts.
A)True
B)False
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Page 12
Chapter 11: Strategic Cost Management
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Q1) With ____,a product's allowable cost is strictly a function of what a market segment is willing to pay less the profit goals for the product.
A) penetration pricing
B) target pricing
C) market-share pricing
D) competition pricing
E) revenue pricing
Q2) A cost-based approach to supplier pricing is feasible when the seller contributes high added value to an item through direct or indirect labor and specialized expertise.
A)True
B)False
Q3) The emphasis of the ____ is on obtaining sufficient current revenue to pay for operating cost rather than on profit.
A) price volume model
B) promotional pricing model
C) revenue pricing model
D) market skimming model
E) competition pricing model
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Chapter 12: Purchasing and Supply Chain Analysis: Tools and Techniques
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Q1) In a PERT network,a/an ____ is the latest time an activity can finish without delaying the entire project.
A) late start
B) late finish
C) on time finish.
D) early start.
E) late start,
Q2) In collaborative relationships,buyers and suppliers can work together to mutually share the benefits of learning curves and productivity improvements.
A)True
B)False
Q3) ____ is a tool that reduces processes to their component parts or activities and helps identify and then eliminate non-value-adding activities (waste)or delays within a process.
A) Process mapping
B) TCO
C) PERT/CPM
D) QDA
E) Productivity analysis
14
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Chapter 13: Negotiation and Conflict Management
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Q1) A/An ____ is an item or topic to be resolved during the negotiation.
A) BATNA
B) issue
C) interest
D) position
E) fact
Q2) ____ is a negotiation tactic in which the negotiator insists on negotiating in a location that is more favorable to him/her.
A) Boulwarism
B) Caucus
C) Venue
D) Low ball
E) High ball
Q3) Deciding where to negotiate is an unimportant part of the planning process.
A)True
B)False
Q4) Everyone negotiates something every day.
A)True
B)False
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Chapter 14: Contract Management
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Q1) Even when there is no contract,most transactions are covered by a "gap filler" known as the Uniform Commercial Code.
A)True
B)False
Q2) It is always a good idea to double-check all attachments to the contract because many of the technical details are included here.
A)True
B)False
Q3) The ____ section of a contract specifies method of manufacture and quality requirements and may include language specific to terms of quality.
A) liability
B) specifications, quality, and health, safety, environment
C) intellectual property
D) assignment and contracting
E) confidentiality
Q4) To be successful,a good contract needs to only consider the needs of the buyer.
A)True
B)False
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Chapter 15: Purchasing Law and Ethics
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Q1) ____ deals with the role of managers as individual representatives acting on behalf of their organizations.
A) Contract law
B) Civil law
C) Mediation
D) Agency law
E) None of these choices.
Q2) On ____,the freight bill is presented on the effective day of delivery.
A) prepaid shipments
B) FOB origin shipments
C) FOB destination shipments
D) collect shipments
E) all shipments, regardless of terms
Q3) ____ essentially determines the nature of agreements that are enforceable and create legal rights between the parties.
A) Agency law
B) Contract law
C) Civil law
D) Litigation
E) None of these choices.
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Chapter 16: Lean Supply Chain Management
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Q1) Continuous improvement involves small,daily improvements that ensure that the process in moving forward.
A)True
B)False
Q2) It is often difficult to quantify the total costs associated with ordering and carrying physical inventory.
A)True
B)False
Q3) ____ of inventory relates to the amount of inventory that a firm owns at any given time.
A) Volume
B) Velocity
C) Value
D) Mass
E) None of these choices.
Q4) A lower-than-anticipated finished-goods inventory level may mean that a decrease in customer demand is occurring.
A)True
B)False
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Chapter 17: Purchasing Services
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Sample Questions
Q1) Additional railcars can be added to a freight train with only a minimal increase in its total variable cost.
A)True
B)False
Q2) ____ can be defined as that amount of an organization's total procurement budget that is purchased from unauthorized sources.
A) Indirect spend
B) Direct spend
C) PBL
D) E-commerce
E) Maverick spend
Q3) A/An ____ is a key individual or unit that controls substantial indirect spending and that typically has a position of great authority within the organization.
A) purchasing consortium
B) maverick spender
C) 3PL
D) power spender
E) kanban
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Chapter 18: Supply Chain Information Systems and Electronic Sourcing
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Q1) In a regular reverse auction,prices are anonymous,and the identity of the competitors is provided to all sellers.
A)True
B)False
Q2) At the most basic level,information flows record and retrieve critical data,execute and control physical and monetary flows,and are referred to as ____.
A) Internet-based information technology
B) EDI
C) strategic decision making
D) DSSs
E) transaction processing
Q3) Data held in data warehouses are time-dependent,historical data; they may also be aggregated.
A)True
B)False
Q4) Price should be a very important element of the reverse auction process but not the only one.
A)True
B)False
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Chapter 19: Performance Measurement and Evaluation
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Q1) According to Kaplan and Norton,a balanced scorecard includes all of the following key performance measurement areas except ____.
A) customer satisfaction perspective
B) operational excellence perspective
C) innovation perspective
D) human resource perspective
E) financial perspective
Q2) ____ refers to the relationship between planned and actual sacrifices made to realize a previously agreed-upon goal.
A) Strategic benchmarking
B) Effectiveness
C) Efficiency
D) Operational benchmarking
E) None of these choices.
Q3) A sound measurement and evaluation system provides sporadic or as-needed reporting of performance results.
A)True
B)False
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Chapter 20: Purchasing and Supply Strategy Trends
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Q1) Contract management software will become less integrated with spend management,particularly in terms of compliance.
A)True
B)False
Q2) The purpose of [a] ____ is to maximize value by leveraging external resources and capabilities.
A) category strategy
B) just-in-time manufacturing
C) kanban
D) cost reduction
E) None of these choices.
Q3) Supplier collaboration easily fits in with the traditional view of supply management's role in many organizations.
A)True
B)False
Q4) Strong "soft-side" skills are no longer a key determinant of success in the global marketplace.
A)True
B)False
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