The process by which companies acquire raw materials, components, products, services, and other resources from suppliers to execute their operations is
A) procurement.
B) sourcing.
C) supplier scoring and assessment.
D) supplier selection
A
The entire set of business processes required to purchase goods and services is
A) procurement.
B) sourcing.
C) supplier scoring and assessment.
D) supplier selection
B
Using the output from supplier scoring and assessment to identify the appropriate supplier(s) is
A) procurement.
B) sourcing.
C) supplier scoring and assessment.
D) supplier selection
D
Cost of Goods Sold (COGS) represents
A) less than 20 percent of sales for most major manufacturers.
B) less than 50 percent of sales for most major manufacturers.
C) well over 50 percent of sales for most major manufacturers.
D) well over 80 percent of sales for most major manufacturers
C
Effective sourcing processes within a firm can
A) improve profits for the firm and total supply chain surplus.
B) reduce profits for the firm and total supply chain surplus.
C) reduce total supply chain surplus.
D) reduce profits for the firm
A
When designing a sourcing strategy, it is important for a firm to
A) develop a process that will procure materials at the lowest possible cost.
B) maintain a record of all contracts, receipts, issues and other transactions in the event of lawsuits.
C) maximize the profitability of the distributors within the supply chain.
D) be clear on the factors that have the greatest influence on performance and target improvement on those areas
D
Supplier performance must be rated on many different factors because
A) the factors impact the total supply chain cost.
B) the factors minimize the supply chain involvement.
C) the factors reduce the impact of price.
D) the factors maximize the supply chain price
A
Which of the following is a traditional logistics driver of sourcing?
A) Pricing
B) Inventory
C) Sourcing
D) Information
B
The decision to have a third party perform a supply chain function is called
A) insourcing.
B) outsourcing.
C) offshoring.
D) onshoring
B
The decision to move a production facility outside of domestic boundaries and still maintain ownership is called
A) insourcing.
B) outsourcing.
C) offshoring.
D) onshoring
C
A third party can increase the supply chain surplus by aggregating demand across multiple firms and gaining production economies of scale that no single firm can on its own. This is called
A) capacity aggregation.
B) inventory aggregation.
C) warehouse aggregation.
D) relationship aggregation
A
An intermediary can increase the supply chain surplus by aggregating inventories across large numbers of customers. This is called
A) capacity aggregation.
B) inventory aggregation.
C) warehouse aggregation.
D) relationship aggregation
B
An third party may increase the supply chain surplus by aggregating warehousing needs over several firms. This is called
A) capacity aggregation.
B) inventory aggregation.
C) warehouse aggregation.
D) relationship aggregation
C
An intermediary can increase the supply chain surplus by decreasing the number of relationships required between multiple buyers and sellers. This is called
A) capacity aggregation.
B) inventory aggregation.
C) warehouse aggregation.
D) relationship aggregation
D
An third party can increase the supply chain surplus if it has a lower collection cost than the firm. This is called
A) receivables aggregation.
B) procurement aggregation.
C) information aggregation.
D) relationship aggregation
A
A third party increases the supply chain surplus if it aggregates the sourcing for many small players and facilitates economies of scale in ordering, inbound transportation and production. This is called
A) capacity aggregation.
B) procurement aggregation.
C) information aggregation.
D) relationship aggregation
B
Craigslist and eBay are examples of
A) receivables aggregation.
B) inventory aggregation.
C) information aggregation.
D) relationship aggregation
C
W.W. Grainger and McMaster Carr stock products from more than a thousand manufacturers each to sell to hundreds of thousands of customers and are sterling examples of
A) transportation aggregation by transportation intermediaries.
B) inventory aggregation.
C) warehouse aggregation.
D) transportation aggregation by storage intermediaries
D
Using a third party requires a firm to share demand information and in some cases intellectual property. This risk would be described as
A) leakage of sensitive data and information.
B) underestimation of the cost of coordination.
C) reduced customer/supplier contact.
D) loss of internal capability
A
Scoring the performance of suppliers in terms of replenishment lead time thus allows the firm to evaluate the impact each supplier has on
A) the cost of holding cycle inventory.
B) the cost of holding replacement inventory.
C) the purchase price of material.
D) the cost of holding safety inventory
D
The selection of suppliers, design of supplier contracts, product design collaboration, procurement of material, and evaluation of supplier performance are a part of
A) procurement.
B) sourcing.
C) supplier scoring and assessment.
D) supplier selection
B
Price has traditionally been the only dimension that suppliers have been compared on during the process of
A) procurement.
B) sourcing.
C) supplier scoring and assessment.
D) supplier selection
C
The goal of procurement is
A) to analyze spending across various suppliers and component categories to identify opportunities for decreasing the total cost.
B) to analyze spending across various suppliers and component categories to identify opportunities for increasing the total cost.
C) to enable orders to be placed and delivered on schedule at the lowest possible overall cost.
D) to enable orders to be placed and delivered on schedule regardless of cost
C
The role of sourcing planning and analysis is
A) to analyze spending across various suppliers and component categories to identify opportunities for decreasing the total cost.
B) to analyze spending across various suppliers and component categories to identify opportunities for increasing the total cost.
C) to enable orders to be placed and delivered on schedule at the lowest possible overall cost.
D) to enable orders to be placed and delivered on schedule regardless of cost
A
Consider the factors influencing total cost and supplier performance. Which of the following is the LEAST quantifiable factor?
A) Supplier price
B) Supplier terms
C) Support
D) Warehousing cost
C
Sourcing a product overseas may have
A) higher product cost and will generally incur a higher inbound transportation cost.
B) higher product cost but will generally incur a lower inbound transportation cost.
C) lower product cost and will generally incur a lower inbound transportation cost.
D) lower product cost but will generally incur a higher inbound transportation cost
D
Quantity discounts lower the unit cost
A) but tend to increase the required batch size and as a result, reduce the cycle inventory.
B) but tend to increase the required batch size and as a result the cycle inventory.
C) and tend to reduce the required batch size and as a result the cycle inventory.
D) and tend to reduce the required batch size and as a result, increase the cycle inventory
B
Good design collaboration for manufacturability and supply chain can
A) reduce product cost.
B) increase required inventories.
C) increase transportation cost.
D) decrease manufacturability
A
The viability of suppliers is especially important for suppliers who
A) provide mission-critical products that would be easy to replace.
B) provide mission-critical products that would be difficult to replace.
C) provide non-critical products that would be difficult to replace.
D) provide non-critical products that would be easy to replace
B
Supplier performance should be compared based on
A) purchase price alone.
B) its impact on total cost.
C) the supplier’s quality of material.
D) the ability of the supplier to coordinate forecasting and planning
B
Single sourcing for a product is used to
A) guarantee the supplier sufficient business when the supplier has to make a significant buyer-specific investment.
B) ensure a degree of competition.
C) ensure the possibility of a backup should a source fail to deliver.
D) control all possible sources of supply in the market
A
To create a win-win negotiation, the two parties must
A) guarantee each other an agreed upon level of business.
B) identify more than one issue to negotiate.
C) identify an impartial mediator to oversee the negotiations.
D) possess an equivalent level of power
B
The difference between the values of the buyer and seller is referred to as the
A) value discrepancy.
B) spread.
C) bargaining surplus.
D) negotiation gap
C
A contract that allows a retailer to return unsold inventory up to a specified amount, at an agreed upon price is a
A) buyback or returns contract.
B) revenue-sharing contract.
C) quantity flexibility contract.
D) quantity discount contract
A
A contract where the buyer pays a minimal amount for each unit purchased from the supplier but shares a fraction of the revenue for each unit sold is a
A) buyback or returns contract.
B) revenue-sharing contract.
C) quantity flexibility contract.
D) quantity discount contract
B
A contract that allows the buyer to modify the order (within limits agreed to by the supplier) as demand visibility increases closer to the point of sale is a
A) buyback or returns contract.
B) revenue-sharing contract.
C) quantity flexibility contract.
D) quantity discount contract
C
A contract that decreases overall costs but leads to higher lot sizes and thus higher levels of inventory in the supply chain is a
A) buyback or returns contract.
B) revenue-sharing contract.
C) quantity flexibility contract.
D) quantity discount contract
D
A contract that is used to induce performance improvement from a supplier along dimensions, such as lead time, where the benefit of improvement accrues primarily to the buyer, whereas the effort for improvement comes primarily from the supplier is a
A) buyback or returns contract.
B) revenue-sharing contract.
C) quantity flexibility contract.
D) shared savings contract
D
A downside to which contract is that it leads to surplus inventory that must be salvaged or disposed?
A) Buyback or returns contract
B) Revenue-sharing contract
C) Quantity flexibility contract
D) Hybrid contract
A
Which type of contract is used when agents act on behalf of a principal and the dealer’s margin is set to be the same as the supply chain margin, and the dealer exerts the right amount of effort?
A) Buyback or returns contract
B) Revenue-sharing contract
C) Quantity flexibility contract
D) Two-part tariffs
D
Which contract increases the margin for the dealer as sales cross certain levels?
A) Buyback or returns contract
B) Revenue-sharing contract
C) Quantity flexibility contract
D) Threshold contract
D
Sales efforts and orders peak near the end of any month, quarter, or other evaluation period. This is commonly referred to as
A) the hockey stick phenomenon.
B) the student syndrome.
C) Murphy’s Law.
D) the Central Limit Theorem
A
Understanding the impact of incentives on the actions of a supply chain partner is especially important when
A) there are two or more members in the supply chain.
B) the third party’s actions are not fully observable.
C) more than two firms competing for the same pool of customers.
D) the supply chain uses outsourcing
B
The procurement process for direct materials should focus on
A) improving coordination and visibility with the supplier.
B) decreasing the transaction cost for each order.
C) consolidation of orders to take advantage of economies of scale and quantity discounts.
D) minimizing communication with the supplier
A
The procurement process for indirect materials should focus on
A) improving coordination and visibility with the supplier.
B) decreasing the transaction cost for each order.
C) consolidation of orders to take advantage of economies of scale and quantity discounts.
D) minimizing communication with the supplier
A
The procurement process for both direct and indirect materials should work on
A) improving coordination and visibility with the supplier.
B) decreasing the transaction cost for each order.
C) consolidation of orders to take advantage of economies of scale and quantity discounts.
D) minimizing communication with the supplier
C
