Materials Management Study Guide
Questions
Materials Management focuses on the efficient planning, procurement, storage, and movement of materials within an organization to ensure uninterrupted production and optimal resource utilization. The course covers topics such as inventory control, purchasing strategies, supplier relationship management, just-in-time systems, warehouse operations, and materials requirement planning (MRP). Emphasis is placed on techniques to minimize costs, reduce waste, and improve the overall flow of materials in manufacturing and service contexts. Students gain insights into the role of materials management in supply chain integration and learn to apply analytical tools to real-world business challenges.
Recommended Textbook
Purchasing and Supply Chain Management 5th Edition by Robert M. Monczka Available Study Resources on
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Chapter 1: Introduction to Purchasing and Supply Chain Management
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Q1) Within the downstream portion of a supply chain,____ are responsible for the actual movement of materials between locations.
A) buyers
B) trucking firms
C) logistics managers
D) accountants
E) purchasing managers
Answer: C
Q2) Which of the following is an example of a purchased direct item for a manufacturing firm?
A) Parts and components.
B) Executive travel.
C) Office and janitorial supplies.
D) Advertising.
E) Personal computers.
Answer: A
Q3) Processes usually move across functional boundaries.
A)True
B)False
Answer: True
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Chapter 2: The Purchasing Process
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Q1) ____ involves a process of unbundling the price paid and other components of price over the life cycle of a product or service,to deliver a target cost and a unit rate to determine if it is priced competitively in the marketplace.
A) Cost management
B) Procure-to-pay
C) Supplier relationship management
D) Category management
E) Spend management
Answer: A
Q2) A/An ____ has demonstrated its performance capabilities through previous purchase contracts and receives preference during the supplier selection process.
A) internal supplier
B) new supplier
C) capable supplier
D) final supplier
E) preferred supplier
Answer: E
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Chapter 3: Purchasing Policy and Procedures
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Q1) Although policies are usually documented in writing,unwritten or informal policies can also exist.
A)True
B)False
Answer: True
Q2) Which of the following is not a best practice for inclusion in any minority supplier development initiative?
A) Ensure that all minority suppliers are located nearby the organization's facilities.
B) Mandate Tier-I suppliers to have a Tier-II diversity spend goal and incorporate the terms in the contracts.
C) Include minority suppliers in all RFQs without exception.
D) Tie the goals and objectives of the supplier diversity program to supply chain management strategies and supply chain job functions.
E) Incorporate all corporate functions in which suppliers are selected and procurement commitments are made.
Answer: A
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Chapter 4: Supply Management Integration for Competitive Advantage
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Q1) Cross-functional sourcing teams that incorporate supplier participation report fewer problems coordinating work activity between the team and key suppliers.
A)True
B)False
Q2) Early visibility to product requirements allows supply management to share critical information with suppliers that can help avoid delays.
A)True
B)False
Q3) The sharing of technology roadmaps often strongly influences the type of buyer-supplier relationship that results in the integration process.
A)True
B)False
Q4) Suppliers of critical nonstandard commodities are involved much later in the product development initiative.
A)True
B)False
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Chapter 5: Purchasing and Supply Management Organization
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Q1) All of the following are major areas of the scope of P/SM jobs in larger organizations except ____.
A) material handling
B) sourcing and negotiating
C) market analysis and research
D) operational support and order follow-up
E) administration
Q2) If purchases are very different across business units,an argument could be made for decentralization.
A)True
B)False
Q3) The preparation and transfer of material releases to suppliers is part of the operational support process.
A)True
B)False
Q4) Increasingly,purchasing is becoming more involved with expediting and inventory control.
A)True
B)False
Page 7
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Chapter 6: Supply Management and Commodity Strategy Development
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Q1) 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
Q2) The insourcing/outsourcing decision is seldom applied to virtually every process conducted within the traditional walls of an organization.
A)True
B)False
Q3) Which of the following is not one of the four categories found in a portfolio analysis matrix?
A) Critical.
B) Routine.
C) Leverage.
D) Substantial.
E) Bottleneck.
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Chapter 7: Supplier Evaluation and Selection
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Q1) A buying firm frequently wants the seller to become more dependent on its business in order to garner lower prices.
A)True
B)False
Q2) Maintaining a supplier database is particularly important in industries where technology changes rapidly.
A)True
B)False
Q3) Although ____ provides optimum leverage and power over the supplier,____ provides improved assurance of supply.
A) multiple sourcing....single sourcing
B) single sourcing....multiple sourcing
C) sole sourcing....single sourcing
D) multiple sourcing....sole sourcing
E) There is no difference in the number of suppliers for these benefits.
Q4) Most purchasing experts will agree that there is only one best way to evaluate and select suppliers.
A)True B)False
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Chapter 8: Supplier Quality Management
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Q1) In recent years,the concept of quality has changed radically from meeting customer requirements or expectations to exceeding them.
A)True
B)False
Q2) The ____ process capability index does not adequately account for situations where the process is not centered on the nominal specification target value.
A) C<sub>xy</sub>
B) optimization
C) Six Sigma
D) C<sub>pk</sub>
E) C<sub>p</sub>
Q3) Once a firm fully rationalizes and optimizes its supply base,improvement will occur primarily by developing the capabilities of existing suppliers rather than by switching suppliers on a large scale.
A)True
B)False
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Chapter 9: Supplier Management and Development:
Creating a World-Class Supply Base
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Q1) Supplier performance that is good enough today should suffice in the marketplace of tomorrow.
A)True
B)False
Q2) Maintaining small quantities of inventory has been the traditional methods of dealing with supply base risk.
A)True
B)False
Q3) Direct involvement in a supplier's operations by buyer personnel is the most challenging part of any supplier development process.
A)True
B)False
Q4) Regarding supply base risk,each sourcing decision is different and needs to be evaluated in its own right.
A)True
B)False
Q5) Buyers rarely rely on suppliers for cost-reduction assistance.
A)True B)False
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Chapter 10: Worldwide Sourcing
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Q1) A/An ____ can only be changed or canceled upon agreement of all parties.
A) compensation trade
B) revocable letter of credit
C) buy-back
D) optional commission
E) irrevocable letter of credit
Q2) Regardless of the technique used to overcome worldwide sourcing barriers,the effort will fail unless top management supports worldwide sourcing.
A)True
B)False
Q3) ____ is/are shared beliefs or group norms that are internalized and affect(s)the way people think.
A) Behavior
B) Culture
C) Values
D) Infrastructure
E) Jurisprudence
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Chapter 11: Strategic Cost Management
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Q1) The ____ strategy is based on determining the highest price that can be offered to the supply manager that will still be lower than the price offered by competitors.
A) penetration pricing model
B) market-share model
C) cash discount
D) revenue pricing model
E) competition pricing model
Q2) Target pricing is an innovative approach used in the final stages of the new-product development cycle to establish a market price between a buyer and a seller.
A)True
B)False
Q3) The cost of a new product is no longer an outcome of the product design process; rather,it is an input to the process.
A)True
B)False
Q4) The market-share model is also known as the penetration pricing model.
A)True
B)False
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Chapter 12: Purchasing and Supply Chain Analysis: Tools and Techniques
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Q1) Which of the following is false regarding when to use the learning curve?
A) Learning-curve analysis is appropriate when a supplier uses a new production process.
B) Learning-curve analysis is appropriate when a supplier produces any item for the first time.
C) The learning curve is appropriate when a supplier produces a technically complex item for the first time.
D) All processes and items can benefit from or exhibit improvement from learning.
E) The human factors present at the beginning of production must remain fairly constant over time to apply the learning curve.
Q2) Because a project usually has a defined scope with agreed-upon tasks,responsibilities,and deliverables,it is often more difficult to measure project success compared with other types of work.
A)True
B)False
Q3) Most processes do not cross functional boundaries.
A)True
B)False
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Chapter 13: Negotiation and Conflict Management
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Q1) A/An ____ is an aspiration or vision to work toward in the future.
A) need
B) objective
C) plan
D) BATNA
E) position
Q2) The basis of ____ is the job position an individual holds,rather than the individual himself or herself.
A) informational power
B) referent power
C) legitimate power
D) coercive power
E) expert power
Q3) Negotiation is a skill that applies to only a few purchasing and supply managers.
A)True
B)False
Q4) Deciding where to negotiate is an unimportant part of the planning process.
A)True
B)False
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Chapter 14: Contract Management
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Q1) [A/An] ____ is a form of presentation,involving an exchange of information between managers from each organization involved in the dispute.
A) mediation
B) arbitration
C) rent-a-judge
D) minitrial
E) dispute prevention
Q2) ____ are based on the notion that as purchase volume rise,cost structures change.
A) Short-term contracts
B) Firm fixed price contracts
C) Long-term contracts
D) Time and materials contracts
E) Blanket orders
Q3) Even when there is no contract,most transactions are covered by a "gap filler" known as the Uniform Commercial Code.
A)True
B)False
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Chapter 15: Purchasing Law and Ethics
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Q1) A firm should never encourage suppliers to report instances of unethical behavior by anyone within the buying firm.
A)True
B)False
Q2) A/An ____ is a proposal or expression by one person that he or she is willing to do something for certain terms.
A) consideration
B) habeas corpus
C) acceptance
D) clause
E) offer
Q3) A/An ____ provision stipulates the mechanism to be used in determining any costs and damages to the injured party in the event of a breach of contract.
A) mutual assent
B) restitution
C) liquidated damages
D) reliance
E) expectancy
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Chapter 16: Lean Supply Chain Management
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Q1) Production inventory consumes a minor portion of inventory investment.
A)True
B)False
Q2) A ____ system is a production control approach that uses containers,cards,or visual cues to control the production and movement of goods through the supply chain.
A) MRP
B) DRP
C) lean supply
D) JIT kanban system
E) lean transportation
Q3) The true cost of MRO inventory often goes unnoticed because firms fail to track these items with the same intensity as production inventory.
A)True
B)False
Q4) Even in an era of just-in-time production,almost all firms hold some level of preproduction inventory.
A)True
B)False
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Chapter 17: Purchasing Services
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Sample Questions
Q1) Traditional cost accounting systems are designed to systematically track and consolidate indirect spend across an organization.
A)True
B)False
Q2) Which of the following is not an advantage of using a 3PL?
A) Economies of scale and increased flexibility.
B) Improve service performance levels.
C) Changeover costs.
D) Release capital from sale of assets.
E) Concentrate on core business activities.
Q3) The importance of effectively managing an organization's indirect spend is decreasing.
A)True
B)False
Q4) Which of the following is not one of the common examples of indirect spend?
A) Professional and consulting services.
B) Employee benefits.
C) Travel.
D) Maintenance, repair, and operating supplies.
E) Production components.
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Chapter 18: Supply Chain Information Systems and Electronic Sourcing
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Q1) Participants in blog sites are free to post their reactions,and individuals can respond to other participants' responses.
A)True
B)False
Q2) ____ within the supply chain is the process of sharing critical data required to manage the flow of products,services,and information in real time between suppliers and customers.
A) Information visibility
B) Tweeting
C) EDI
D) SRM
E) CRM
Q3) B2B marketers are using Facebook and other social networking providers such as LinkedIn to facilitate the sales process.
A)True
B)False
Q4) EDI is a highly interactive communications medium.
A)True
B)False
Page 20
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Chapter 19: Performance Measurement and Evaluation
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Q1) ____ 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.
Q2) A single,overall productivity measure representing purchasing and supply chain performance is feasible.
A)True
B)False
Q3) ____ involves a comparison of one firm's market strategies against those of another.
A) Functional benchmarking
B) Strategic benchmarking
C) Operational benchmarking
D) Support-activity benchmarking
E) None of these choices.
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Chapter 20: Purchasing and Supply Strategy Trends
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Q1) Purchasing will play a lesser role in time-based competition because of its inability to affect time-related processes and activities.
A)True
B)False
Q2) Companies are seeking suppliers with discrete capabilities that can add new types of value,and they are leveraging untapped competencies and knowledge already in the supply base for an existing category.
A)True
B)False
Q3) Category strategies will become less complex,requiring only internal executive engagement.
A)True
B)False
Q4) Companies will decreasingly use value-based sourcing approaches to evaluate how a supplier or group of suppliers may be utilized to gain competitive advantage for categories with high business impact.
A)True
B)False
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