Purchasing Management
Textbook Exam Questions
Course Introduction
Purchasing Management focuses on the strategies and processes involved in the acquisition of goods and services necessary for organizational operations. The course explores the principles of procurement, supplier selection and evaluation, contract negotiation, cost analysis, and inventory management. Students will gain insights into sourcing methods, ethical considerations in purchasing, and the integration of purchasing decisions with broader supply chain objectives. Emphasis is placed on developing analytical and decision-making skills to enhance supplier relationships, optimize purchasing costs, and ensure quality and compliance in procurement activities.
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) All of the following are typical processes involved in supply chain management except ____.
A) new product development
B) customer-order fulfillment
C) supplier evaluation and selection
D) demand and supply planning
E) cash flow management
Answer: E
Q2) Instead of adversarial relationships which characterize ____,____ features a long-term win-win relationship between a buying company and specially selected suppliers.
A) traditional purchasing....supply management
B) traditional purchasing....logistics management
C) supply management....traditional purchasing
D) strategic sourcing....supply management
E) supply chain management....strategic sourcing
Answer: A
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Chapter 2: The Purchasing Process
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Sample Questions
Q1) The responsibility for concealed damage is often simple and easy to detect.
A)True
B)False
Answer: False
Q2) ____ include anything that does not go directly into an organization's product.
A) MRO items
B) Raw materials
C) Production support items
D) Service
E) Components
Answer: A
Q3) ____ focuses attention on the outcomes the customer wants,not on the precise configuration of the product or service.
A) Description by industry standard
B) Description by brand
C) Description by specification
D) Description by performance characteristics
E) Description by market grade
Answer: D
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Chapter 3: Purchasing Policy and Procedures
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Sample Questions
Q1) A procedure is ineffective if it specifies too many steps to carry out or presents unnecessary detail.
A)True
B)False
Answer: True
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) Once written,policies do not have to be periodically reviewed for clarity and conformance.
A)True
B)False Answer: False
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Chapter 4: Supply Management Integration for Competitive Advantage
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Sample Questions
Q1) A shift to closer,more trusting buyer-supplier relationships is easy.
A)True
B)False
Q2) Which of the following is not a common obstacle to closer buyer-seller relationships?
A) Long-term contracts.
B) Confidentiality.
C) Limited interest by suppliers.
D) Legal barriers.
E) Resistance to change.
Q3) Perhaps the most important and challenging linkages exist between supply management and marketing/sales.
A)True
B)False
Q4) Supplier selection should never occur before a new part is actually designed or reaches production.
A)True
B)False
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Chapter 5: Purchasing and Supply Management Organization
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Sample Questions
Q1) A reason for decentralization is a reduction in duplication of effort.
A)True
B)False
Q2) ____ focus on the company and industry future by managing total cost,enhancing value,and minimizing risks whereas ____ focus more on the day-to-day challenges required to meet the organization's current needs.
A) Tactically-oriented buyers....strategically-oriented buyers
B) Strategically-oriented buyers....tactically-oriented buyers
C) Specialized buyers....general buyers
D) General buyers....specialized buyers
E) There is no difference between buyers.
Q3) [A/An] ____ is comprised of group of buyers who purchase similar items at various facilities.
A) decentralized purchasing structure
B) lead division buying
C) corporate purchasing council
D) corporate steering committee
E) There is no such group.
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Chapter 6: Supply Management and Commodity Strategy Development
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Sample Questions
Q1) All of the following are examples of Porter's power of buyers except ____.
A) buyer concentration
B) exit barriers
C) price sensitivity
D) brand identity
E) buyer volume
Q2) A ____ has unique requirements or niche suppliers,yet are significant to the business.
A) critical commodity
B) bottleneck commodity
C) matrix commodity
D) routine commodity
E) leverage commodity
Q3) Which of the following is not one of the examples of Porter's power of suppliers?
A) Prices of major inputs.
B) Ability to pass along price increases.
C) Supplier concentration.
D) Availability of skilled workers.
E) Threat of forward or backward integration.
Page 8
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Chapter 7: Supplier Evaluation and Selection
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Sample Questions
Q1) The popularity of JIT and quick replenishment systems favor using fewer local suppliers.
A)True
B)False
Q2) ____ are more responsive to the buying firm's changing needs and can economically make frequent smaller deliveries.
A) Local suppliers
B) International suppliers
C) Preferred suppliers
D) National suppliers
E) There is no relationship with the location of the supplier and customer responsiveness.
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.
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Chapter 8: Supplier Quality Management
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Sample Questions
Q1) In ____,there is an intense focus on identifying and eliminating the common causes of waste that add cost,time,and effort to the product or service while not adding value to the customer.
A) supplier evaluation and selection process
B) the MBNQA
C) SIO 14000:2004
D) the Honda BP process
E) None of these choices.
Q2) The MBNQA is a competition and implies that a winning organization excels not only in quality management but also in quality achievement.
A)True
B)False
Q3) According to Genichi Taguchi,any deviation from a target value carries with it some level of opportunity loss due to scrap,rework,and customer dissatisfaction.
A)True
B)False
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Chapter 9: Supplier Management and Development:
Creating a World-Class Supply Base
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Sample Questions
Q1) 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
Q2) In ____,a buyer selects or develops suppliers with multiple or redundant capabilities.
A) single sourcing
B) cross-sourcing
C) global sourcing
D) strategic sourcing
E) sole sourcing
Q3) Supply base rationalization and optimization should be a one-time activity.
A)True
B)False
Q4) In supplier development,the supplier must be convinced that it is in its own best interest to accept the buyer's direction and assistance.
A)True
B)False
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Chapter 10: Worldwide Sourcing
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Sample Questions
Q1) ____ agreements require the seller to purchase some agreed-upon percentage of goods from a country over a specified period but allow a company to fulfill its countertrade requirement with any company or industry in the country.
A) Offset
B) Compensation trading
C) Switch trading
D) Buy-back
E) Barter
Q2) ____ 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
Q3) The largest differences in communication styles across countries are message speed and level of content.
A)True
B)False
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Page 12
Chapter 11: Strategic Cost Management
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Sample Questions
Q1) The price paid for purchased products and services has no direct impact on the end customer's perception of value provided by the organization.
A)True
B)False
Q2) In the ____,the supplier simply takes its estimate of costs and adds a markup percentage to obtain the desired profit.
A) margin pricing model
B) cost markup pricing model
C) total cost analysis model
D) penetration pricing model
E) revenue pricing model
Q3) ____ = (Quality + Technology + Service + Cycle Time)¸ Price.
A) Cost
B) Efficiency
C) Value
D) Total cost
E) Target cost
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Chapter 12: Purchasing and Supply Chain Analysis: Tools and Techniques
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Sample Questions
Q1) In a PERT network,a/an ____ is the earliest point in time an activity can begin.
A) late start
B) on time start
C) early finish
D) early start
E) late finish
Q2) 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,
Q3) Many organizations are attempting to develop new products concurrently rather than sequentially,which not only saves time and money but also allows agreement on major issues early in the process.
A)True
B)False
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Chapter 13: Negotiation and Conflict Management
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Sample Questions
Q1) ____ means that two or more parties are competing over a fixed value with the winner taking the larger share.
A) Lose-lose negotiation
B) Win-lose negotiation
C) Winner-take-all negotiation
D) Integrative bargaining
E) None of these choices.
Q2) The area of overlapping positions among issues,when there is one,between the negotiators is termed the ____.
A) concurrent zone
B) agreement possibility
C) positive position
D) objective
E) bargaining zone
Q3) In win-win negotiation,if one party gains,it is only at the expense of the other party.
A)True
B)False
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Chapter 14: Contract Management
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Sample Questions
Q1) Which of the following is not an example of a contingency element of a long-term contract?
A) Initial price.
B) Price-adjustment mechanisms.
C) Delivery dates and times.
D) Supplier performance improvement.
E) Evergreen, penalty, and escape clauses.
Q2) Taking a dispute into the jurisprudence system should be an automatic first step in resolving the dispute as other methods are not as effective.
A)True
B)False
Q3) Cost-based contracts are generally applicable when the goods or services procured are expensive,complex,and important to the purchaser or when there is a high degree of uncertainty regarding labor and material costs.
A)True
B)False
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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Sample Questions
Q1) ____ is something of value in the formation of the contract that gives it legal validity.
A) Apparent authority
B) Actual authority
C) Implied authority
D) Acceptance
E) Consideration
Q2) A firm should never encourage suppliers to report instances of unethical behavior by anyone within the buying firm.
A)True
B)False
Q3) ____ is money the plaintiff lost because he or she was relying on the contract,depending on the defendant to live up to his/her obligations under the contract.
A) Expectancy
B) Restitution
C) Due diligence
D) Mutual assent
E) Reliance
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Chapter 16: Lean Supply Chain Management
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Sample Questions
Q1) The downside of poor forecasting includes all of the following except ____.
A) higher inventory volumes
B) poor customer service as inventory is misallocated across locations and products
C) higher inventory carrying charges
D) excessive safety stock levels
E) increased customer service
Q2) Very few organizations use distributors to provide at least some portion of their inventory requirements,particularly maintenance,repair,and operating supplies.
A)True
B)False
Q3) In a pull system,an upstream work center or operation will create output regardless whether a downstream center directly requests that output.
A)True
B)False
Q4) Buyers should not accept any of the blame for delivery uncertainty.
A)True
B)False
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Chapter 17: Purchasing Services
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Sample Questions
Q1) A/An ____ involves picking smaller amounts of materials from close-by suppliers to be used in a just-in-time environment.
A) common carrier
B) exempt carrier
C) milk run
D) private carrier
E) contract carrier.
Q2) Suppliers of multiple indirect items can often have multiple ship-to and bill-to addresses,resulting in multiple codes being assigned to the same supplier for the same item.
A)True
B)False
Q3) Inland water carriers typically transport finished or semifinished products because of the lengthy in-transit time.
A)True
B)False
Q4) One company's indirect spend may be considered direct spend for another.
A)True
B)False
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Chapter 18: Supply Chain Information Systems and Electronic Sourcing
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Sample Questions
Q1) ____ systems attempt to allocate fixed logistics capacity in the best possible way,given business requirements.
A) MRP
B) Network design
C) SRM
D) Transportation and warehouse planning
E) Execution
Q2) On the buying side,organizations are becoming much more focused on and sophisticated in making decisions involving investments in e-SCM systems.
A)True
B)False
Q3) ____ systems kick off and control the movement of materials among supply chain partners.
A) Network design
B) EDI
C) MRP
D) Execution
E) Transaction processing
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Chapter 19: Performance Measurement and Evaluation
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Sample Questions
Q1) Measurement seldom motivates and directs behavior toward desired end results.
A)True
B)False
Q2) On-time delivery or responsiveness measures indicate the degree to which suppliers are able to meet customer schedule requirements.
A)True
B)False
Q3) Measuring and evaluating performance historically has had certain problems and limitations.
A)True
B)False
Q4) Because firms are increasingly focusing on cost versus price,price performance measures are no long popular.
A)True
B)False
Q5) It is difficult to develop performance improvement plans without understanding the areas in which performance falls short.
A)True
B)False
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Chapter 20: Purchasing and Supply Strategy Trends
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Q1) 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
Q2) Supply chains that are seamless and driven solely by internal production needs will be required.
A)True
B)False
Q3) Category strategy time horizons will be expanded to three to five years.
A)True
B)False
Q4) Category strategies will become less complex,requiring only internal executive engagement.
A)True
B)False
Q5) The importance of strategic partners,both buyers and sellers,will likely increase. A)True
B)False
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