_____ schedules the firm’s output; while _____ is the process of taking demand data

and developing a supply, production, and logistics network capable of satisfying

demand requirements.
  A. Inventory control….quality control
1   B. Quality control….supply planning
  C. Order processing….material control
  D. Demand planning….customer service
  E.  Demand planning….supply planning
_____ involves generating the materials release, contacting a supplier directly
concerning changes, and monitoring the status of inbound shipments.
  A. Order processing
2   B. Material control
  C. Warehousing
  D. Customer service
  E.  Quality control
_____ helps ensure that customers receive material when and where they require it
and represents the key link between the producer and the external customer.
  A. Order processing
3   B. Inbound transportation
  C. Customer service
  D. Scheduling
  E.  Inventory control
The _____ activity involves physically getting a product ready for distribution to the
customer.
  A. customer service
4   B. material control
  C. materials handling
  D. quality control
  E.  Shipping
_____ can cover such characteristics as the materials used, the manufacturing or
service steps required, and even the physical dimensions of the product.
  A. Description by market grade
5   B. Description by specification
  C. Description by brand
  D. Description by industry standard
  E.  Description by performance characteristics
A/An _____ has demonstrated its performance capabilities through previous purchase
contracts and therefore receives preference during the supplier selection process.
  A. internal supplier
6   B. new supplier
  C. capable supplier
  D. final supplier
  E.  preferred supplier
7 All of the following are conditions under which competitive bidding is effective
except _____.
   A. the buyer has a preferred supplier for the item
  B. volume is high enough to justify this method
  C. the marketplace is competitive
  D. the specifications or requirements are clear to the seller
  E.  adequate time is available for suppliers to evaluate the RFQs
The _____, which the supplier provides, details the contents of a shipment and
contains the description and quantity of the items in a shipment.
  A. material packing slip
8   B. purchase requisition
  C. bill of lading
  D. electronic funds transfer
  E.  request for quotation
Management can exert subtle control over a team’s tasks through all of the following
except _____.
  A. authorizing the creation of the sourcing team
  B. selecting the team’s task
9
  C. selecting the team leader and members
  D. conducting performance reviews and holding teams accountable for performance
outcomes
  E.  sitting in on all team meetings
All of the following questions are important in considering new or existing suppliers
for integration except _____.
  A. Is the supplier capable of hitting affordable targets regarding cost, quality, conductivity,
weight, and other performance criteria?
  B. Does the supplier have sufficient marketing funds for promoting its new products?
10
  C. Will the supplier be able to meet product introduction deadlines?
  D. Will the supplier be able to increase capacity and production fast enough to meet our
market share requirements?
  E.  Do the supplier’s personnel have the required training to start up required processes and
debug them?
Whenever a supplier ships FOB destination, the buyer often loses the ability to track
or control its inbound transportation expenses which also artificially increases the
11 value of the buyer’s inventory.
  A. True
  B. False
All of the following are examples of how supply management should monitor and
anticipate activity in its supply market except _____.
  A. ensuring that cost accounting keeps track of historical prices paid
  B. forecasting long-term supply and prices for its basic commodities
12
  C. monitoring technological innovations that impact its primary materials or make
substitute materials economically attractive
  D. evaluating not only its existing suppliers but also other potential suppliers
  E.  providing timely visibility to new-product requirements
13 _____ is defined as the continual monitoring of the strength of suppliers’ financial
condition to ensure their ability to meet the purchaser’s performance requirements for
products or services.
   A. Operational risk management
  B. Sole sourcing
  C. Financial risk management
  D. Multiple sourcing
  E.  None of the above.
A/An _____ involves sending a preliminary survey to suppliers.
  A. request for quotation
  B. request for information
14
  C. purchase order
  D. order release
  E.  All of the above.
A/An _____ is a basic component that suppliers must possess before they proceed to
the next phase of the evaluation and selection process.
  A. core competency
15   B. technology roadmap
  C. Internet website
  D. entry qualifier
  E.  triple bottom line
All of the following are examples of entry qualifiers that suppliers must possess
before they proceed to the next phase of the evaluation and selection process except
_____.
  A. appropriate sales and marketing activities 
16   B. financial strength
  C. proven manufacturing or service capability
  D. capable and supportive management
  E.  adequate facilities
Suppliers that earn ISO 9000:2008 registration typically demonstrate lower levels of
quality than those suppliers that are not registered.
17   A. True
  B. False
Which of the following is not one of the eight key principles of total quality
management?
  A. Define quality in terms of customers and their requirements.
18   B. Inspect for quality at the end of the production line.
  C. Stress objective rather than subjective analysis.
  D. Strive for zero defects.
  E.  Make quality everyone’s responsibility.
Which of the following is not one of the eight key principles of total quality
management?
  A. Strive for zero defects.
19   B. Define quality in terms of customers and their requirements.
  C. Focus on output rather than process.
  D. Make quality everyone’s responsibility.
  E.  Stress objective rather than subjective analysis.
20 An apparently low-cost carrier may actually end up costing far more than a seemingly
 higher-cost carrier when the total associated costs are calculated.
  A. True
  B. False
The major benefits from cost-reduction efforts occur when supply management is not
involved in the new-product/service development cycle.
21   A. True
  B. False
The market-share model is also known as the penetration pricing model and is an
aggressive pricing approach for efficient producers because price is a direct function
22 of cost.
  A. True
  B. False
Which of the following is not one of the questions that should be asked when
analyzing a seller’s pricing strategy?
  A. Does the seller have a long-term pricing strategy, or is it short-term in nature?
  B. Is the seller a price leader or a price follower?
23
  C. How many employees does the seller’s plant employ?
  D. Is the seller attempting to establish entry barriers to other competitors by establishing a
low price initially, then preparing to raise prices later in the future?
  E.  Is the seller using a cost-based pricing approach or a market-based pricing approach?
. In the _____, pricing is based on the assumption that long-run profitability depends
on the market share obtained by the supplier.
  A. price volume model
24   B. market-share model
  C. open market model
  D. target pricing model
  E.  market skimming model
In the _____, the seller is willing to take a lower price because of the potential mass
market appeal of the product, resulting in substantially higher sales volumes.
  A. revenue pricing model
25   B. promotional pricing model
  C. revenue pricing model
  D. cash discount model
  E.  market-share model
_____ involves spending more time in the initial contracting stages to fully understand
stakeholder requirements, expectations, and repeated communication of expectations, to gain
a full understanding of elements.
  A. Arbitration
26   B. Mediation
  C. Contingency contracting
  D. Preventive contracting
  E.  None of the above.
Organizations should not use process mapping to redesign or reengineer processes.
27   A. True
  B. False
28 The _____ clause of a contract defines all of the important terms contained within the contract
and is important so everyone understands exactly what each term means.
   A. supply and delivery
  B. specifications, quality, and health, safety,
environment
  C. scope of agreement
  D. force majeure
  E  definitions
The ____ clause of a contract defines what is in and out of scope, which might include the
geographical limitations, the validity or invalidity of prior contracts, preferential treatment by
the supplier, or other elements.
  A. force majeure
29   B. supply and delivery
  C. scope of agreement
  D. liability
  E.  key performance indicators and compensation
The _____ clause of a contract outlines the relationship between the Agreement and any other
purchase orders issued by the company to the supplier.
  A. specifications, quality, and health, safety,
environment
30   B. most favored customer
  C. statistics
  D. effective date and termination
  E.  purchase orders
Perhaps the simplest method of resolving a contractual disagreement involves
straightforward, face-to-face negotiation between the two parties involved.
31   A. True
  B. False
The _____ clause of a contract states whether the buyer can expect to receive
preferential status over the supplier’s other customers.
  A. most favored customer
32   B. confidentiality
  C. notices
  D. liability
  E.  scope of agreement
The _____ clause in a contract provides guidelines regarding what type of reporting
statistics and measures the supplier must provide to the buyer on a regular basis,
defined clearly.
  A. statistics
33   B. notices
  C. most favored customer
  D. confidentiality
  E.  third-party rights
34 The _____ clause in a contract describes how an issue will be addressed if a portion of
the agreement is void or unenforceable, and which court of law will resolve the
difference.
  A. force majeure
  B. severability
  C. notices
   D. intellectual property
  E.  supply and delivery
The _____ clause in a contract stipulates that any benefits attributed to a third party
(other than the buyer or supplier) identified in the contract must be enforced.
  A. governing law
35   B. severability
  C. most favored customer
  D. assignment and contracting
  E.  third-party rights
All aspects of performance lend themselves to quantitative measurement.
36   A. True
  B. False
_____ focus on achieving standardization of components, systems, and services and
application of currently used purchased items or the use of industry-standard versus
unique items.
  A. First insight measures
37   B. Standardization measures
  C. Responsiveness measures
  D. Cycle time reduction measures
  E.  Flexibility measures.
All of the following are examples of customer order measures except _____.
  A. percentage of on-time delivery
  B. total time from customer order to customer delivery
38
  C. returned orders
  D. warranty claims
  E.  inventory turns
A/An _____ is one that personnel cannot inappropriately influence the results of.
  A. efficient measure
  B. qualitative measure
39
  C. quantitative measure
  D. non-manipulable measure
  E.  None of the above.
Which of the following is not one of the benefits of benchmarking?
  A. Helps identify the best business or functional practices to include in a firm’s business
plans.
40   B. Determines internal customer needs and wants. 
  C. Breaks down a reluctance to change.
  D. Serves as a source of market intelligence.
  E.  Uncovers a previously unrecognized technological breakthrough.
41 The _____ clause of a contract specifies the terms for supply and delivery of the product or
service.
  A. specifications, quality, and health, safety,
environment
  B. scope of agreement
  C. payment
   D. confidentiality
  E.  None of the above.
The _____ clause of a contract describes the course of events that occur if there are
unforeseen calamities such as earthquakes or hurricanes that prevent a supplier from fulfilling
its obligations to the buyer.
  A. liability
42   B. force majeure
  C. confidentiality
  D. third-party rights
  E.  governing law
The _____ clause of a contract stipulates whether either party has the ability to terminate the
contract at any time, and how much advance notice must be given.
  A. effective date and termination
43   B. payment
  C. third-party rights
  D. most favored customer
  E.  force majeure
The _____ clause of a contract specifies conditions regarding who own any IP rights that
comes out of the agreement, and who owns what IP going into the agreement.
  A. liability
44   B. confidentiality
  C. intellectual property
  D. technology improvements
  E.  assignment and contracting
The _____ clause of a contract stipulates whether the supplier can assign its rights described
in the agreement to another party, and whether subcontracting is permissible.
  A. key performance indicators and compensation
45   B. assignment and contracting
  C. supply and delivery
  D. scope of agreement
  E.  None of the above.
The _____ clause in a contract ensures that all information, technology, and so on shared
between the parties remains confidential and is not shared with other customers or suppliers.
  A. assignment and contracting
46   B. liability
  C. third-party rights
  D. confidentiality
  E.  intellectual property
The _____ clause in a contract provides guidelines regarding what type of reporting statistics
and measures the supplier must provide to the buyer on a regular basis, defined clearly.
  A. statistics
47   B. notices
  C. most favored customer
  D. confidentiality
  E.  third-party rights
The _____ clause in a contract provides specific details on how the supplier’s performance
48
will be measured and if any compensation will be awarded by the supplier to the buyer if
these certain defined levels of performance are not maintained.
  A. key performance indicators and compensation
   B. liability
  C. notices
  D. third-party rights
  E.  assignment and contracting
The _____ clause in a contract stipulates that any benefits attributed to a third party (other
than the buyer or supplier) identified in the contract must be enforced.
  A. governing law
49   B. severability
  C. most favored customer
  D. assignment and contracting
  E.  third-party rights
 _____ seeks to expand the value or resources of outcomes available to all parties through
cooperative negotiation.
  A. Win-win negotiation 
50   B. Distributive bargaining
  C. Competitive bargaining
  D. Lose-lose negotiation
  E.  Open-table bargaining

Supply management is a broader concept than purchasing.

1 A. False
B. True

Within the downstream portion of a supply chain, _______________ are responsible for the
actual movement of materials between locations.
A. logistics managers
2
B. sales managers
C. owners
D. inventory keepers
__________ involves generating the materials release, contacting a supplier directly
concerning changes, and monitoring the status of inbound shipments.
A. Supply Chain
3
B. Material control
C. Logistics
D. Forwarder
Today's emphasis on supplier quality has shifted from detecting defects at the time of receipt
or use to prevention early in the materials-sourcing process.
4
A. True
B. False
Purchasing is becoming less responsible for sourcing, indirect goods and services required by
internal groups.
5 A. True
B. False

6 _____________ are those items provided by suppliers and used directly during production on
service delivery.
A. Indirect materials
B. Inventories
C. Direct materials
 D. Supply Chain
According to the Institute for Supply Management, ___________ is the identification,
acquisition, access, positioning, and management of resources and related capabilities an
organization needs or potentially needs in the attainment of its strategic objectives.
7 A. supply chain
B. value chain
C. inventory
D. supply management
Cost management is no longer an integral part of purchasing and supply chain management.
8 A. True
B. False
The _____ is used to identify user requirements, evaluate the user needs effectively and
efficiently, identify suppliers who can meet that need, develop agreements with those
suppliers, develop the ordering mechanism, ensure payment occurs promptly, ascertain that
the need was effectively met, and drive continuous improvement.
  A.  demand management process
9   B. backdoor buying process
  C. materials budgeting process
  D. forecasting process
  E.  purchasing process

All of the following are objectives of a world-class purchasing organization except _____.
  A.  ensure that all hard copies of purchase orders and other paper documents are filed correctly in a
secure area
  B. develop integrated supply strategies that support business goals and objectives
10
  C. manage the sourcing process efficiently and effectively
  D. supplier performance management
  E.  supply assurance

One of the most important objectives of the purchasing function is the selection, development,
and maintenance of suppliers, a process that is sometimes described as _____.
  A.  supplier performance management
  B.  category management
11
  C. customer service
  D. procure-to-pay
  E.  maverick buying

_____ is the process of collecting historical data by commodity, relative to demand from the
lines of business, with the exception of personnel expenses, occupancy, and corporate spend.
  A.  Demand management
  B. Supply analysis
12
  C. Category management
  D. Contract management
  E.  Spend analysis

Cross-functional sourcing teams are a less-than-ideal way to promote cross-organizational

cooperation.
13   A. True
  B. False
 _____ involves professionally managing suppliers and developing close working relationships
with different internal groups.
  A. Purposeful cooperation
14   B. Program management
  C. Credible commitment
  D. Supply integration
  E.  Relationship management
_____ is the process of incorporating or bringing together different groups, functions, or
organizations, either formally or informally, physically or by information technology, to work
jointly and often concurrently on a common business-related assignment or purpose.
  A. Cooptation
15   B. Program management
  C. Collaboration
  D. Collusion
  E.  Integration
Which of the following are not considered relationship management skills?
  A. Ability to conduct detailed price and cost
analyses
16   B. Ability to act ethically.
  C. Ability to listen effectively.
  D. Ability to communicate.
  E.  Ability to use creative problem-solving.
Using third-party information can be a timely and effective way to gain insight into potential
suppliers.
17   A. True
  B. False
Which of the following is not a commonly accepted source of information regarding potential
supply sources?
  A. Current suppliers.
18   B.  Sales representatives.
  C.  Television advertising.
  D. Organizational knowledge.
  E.  Second-party or indirect information.
Which of the following information is not generally maintained in a supplier informational
database?
  A. Current products.
19   B.  Supplier’s future technology roadmap.
  C.  Process capability ratios.
  D. Advertising campaign information.
  E.  Past performance.
_____ is a program that distributors market to manage their customers’ inventory for them.
  A. Just-in-time
  B.  Supplier managed inventory 
20   C.  Self-managed inventory
  D. Countertrade
  E.  Preferred supplier inventory
21 Within its supply chains, supply management does not merely buy parts or services from
suppliers – it buys (and sometimes must help manage and improve) current and anticipated
 supplier capabilities that will result in quality products and services.
  A. True
  B. False
The TQM-focused organization must look at increasing process variation and seeking
innovation in both product and process.
22   A. True
  B. False
Slogans, signs, and posters are highly effective in changing worker behavior because they
assume that most, if not all, quality problems are due to human behavior.
23   A. True
  B. False
The objective of supplier certification is to ensure that nonconforming items are not created or
do not leave a supplier’s facility.
24   A. True
  B. False
An ISO certification is a global indicator of the importance of_________:
A. A total quality management
25 B. International quality standards
C. International environmental standards
D. Company
The price paid for purchased products and services has no direct impact on the end customer’s
perception of value provided by the organization.
26   A. True
  B. False
When demand exceeds supply, a buyer’s market exists, and prices generally decrease.
27   A. True
  B. False
_____ = (Quality + Technology + Service + Cycle Time) ÷ Price.
  A. Cost
  B. Efficiency
28
  C. Value
  D. Total cost
  E.  Target cost
_____ refers to the process of comparing supplier prices against external price benchmarks,
without direct knowledge of the supplier’s costs.
  A. Cost analysis
29   B. Make-buy analysis
  C. Target costing
  D. Price analysis
  E.  Total cost analysis
_____ is the process of analyzing each individual cost element (i.e., material, labor hours and
rates, overhead, general and administrative costs, and profit) that together add up to the final
price.
  A. Price analysis
30   B. Cost analysis
  C. Cost analysis
  D. Total cost analysis
  E.  Make-buy analysis
31 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
Break-even analysis includes both cost and revenue data for an item to identify the point
where revenue equals costs, and the expected profit or loss at different production volumes.
32
A. True
B. False
_____ refers to the process of assessing and selecting the structure and formal system of
communication, division of labor, coordination, control, authority, and responsibility required
to achieve organizational goals and objectives, including supply management objectives.
  A. Cross-functional teaming
33   B. Reciprocity
  C. Organizational design
  D. Purchasing authority
  E.  Supply chain integration
If purchasing authority for the majority of purchase expenditures is at the divisional, business
unit, or site level, then a firm has a more _____ structure.
  A. center-led
  B. centralized
34
  C. globalized
  D. decentralized 
  E.  Organizational structure has no relationship with the location of purchasing
authority.
The authority to review and challenge specifications (for products or for services) is within
purchasing’s span of control in managing demand, although internal stakeholders sometimes
35 dispute this right.
  A. True
  B. False
If the requested item is complex or requires an untested or new production process,
purchasing can include additional information or attachments on its RFQ to assist the supplier,
36 which might include detailed blueprints, samples, or technical drawings.
  A. True
  B. False
The _____ is used to identify user requirements, evaluate the user needs effectively and
efficiently, identify suppliers who can meet that need, develop agreements with those
suppliers, develop the ordering mechanism, ensure payment occurs promptly, ascertain that
the need was effectively met, and drive continuous improvement.
  A. demand management process
37
  B. backdoor buying process
  C. materials budgeting process
  D. forecasting process
  E.  purchasing process
One of the most important objectives of the purchasing function is the selection, development,
and maintenance of suppliers, a process that is sometimes described as _____.
  A. supplier performance management
38   B. category management
  C. customer service
  D. procure-to-pay
  E.  maverick buying
39  _____ is the process of collecting historical data by commodity, relative to demand from the
lines of business, with the exception of personnel expenses, occupancy, and corporate spend.
   A. Demand management
  B. Supply analysis
  C. Category management
  D. Contract management
  E.  Spend analysis
_____ is a process associated with defining the contract, defining roles and responsibilities of
both parties, and advising when to modify and ensure appropriate escalation.
  A. Spend analysis
40   B. Contract management
  C. Cost management
  D. Supplier selection
  E.  Category management
_____ involves unbundling the price paid and understanding the total cost of ownership 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
41   B.  Procure-to-pay
  C. Supplier relationship management
  D. Category management
  E.  Spend management
In drafting a purchase order, purchasing must include a large number of details regarding
policies because it is a legally binding document.
42   A. True
  B. False
It is a common and preferred current practice for suppliers to arrange shipment to a purchaser
and simply include the transportation cost as part of the purchase cost.
43   A. True
  B. False
When marketing wants to purchase an advertising media campaign, the _____ should specify
the work that is to be completed, when it is needed, and what type of service provider is
required.
  A. reorder point
44   B. acknowledgement
  C. traveling purchase
requisition
  D. statement of work
  E.  sales forecast
In a _____, when inventory is depleted to a given level, the system notifies the materials
control department (or the buyer in some organizations) to issue a request to a supplier for
inventory replenishment.
  A. reorder point system
45   B. traveling purchase requisition
system
  C. customer service system
  D. forecasting system
  E.  just-in-time system
46 A _____ involves the physical checking of inventory to verify that system records match
actual on-hand inventory levels.
  A. reorder point system
   B. stock check
  C. just-in-time system
  D. forecasting system
  E.  p-card system
A/An _____ has demonstrated its performance capabilities through previous purchase
contracts and therefore receives preference during the supplier selection process.
  A. internal supplier
47   B. new supplier
  C. capable supplier
  D. final supplier
  E.  preferred supplier
Which of the following is not one of the conditions under which negotiation is effective?
  A. When the purchase requires agreement about a wide range of performance factors, such as price,
quality, delivery, risk sharing, and product support.
48   B. When the buyer requires early supplier involvement.
  C. When the specifications or requirements are clear to the seller.
  D. When the supplier cannot determine risks and costs.
  E.  When the supplier requires a long period of time to develop and produce the items purchased.
A/An _____ is an open order, usually effective for one year, covering repeated purchases of
an item or family of items.
  A. outstanding order
49   B. pending order
  C. blanket purchase order
  D. completed order
  E.  order acceptance
In a _____, the price stated in the agreement does not change, regardless of fluctuations in
general overall economic conditions, industry competition, levels of supply, market prices, or
other environmental changes.
A. blanket purchase order
B. RFQ
50
C. cost-based contract
D. material purchase release
E.  fixed-price contract

Distribution management involves the management of packaging, storing, and handling of

materials at receiving docks, warehouses, and retail outlets.
1
A. True
B. False

2 Which of the following is not one of the factors driving an emphasis on supply chain
management?
A. An increasing emphasis on domestic sourcing due to the longer lead times and higher levels
of pipeline inventories associated with global sourcing.
B. The cost and availability of information resources among entities in the supply chain that
allow easy linkages that eliminate time delays in the network.
C. The level of competition in both domestic and international markets requires organizations to
be fast, agile, and flexible.
D. Customer expectations and requirements that are becoming much more demanding.
 E.  The ability of an organization’s supply chain to identify and mitigate risk minimizes
disruptions in both supply and downstream product or services to mitigate the impact on lost
sales.
_____ is a functional group (i.e., a formal entity on the organizational chart as well as a
functional activity (i.e., buying goods and services).
  A. Engineering
3   B. Purchasing
  C. Quality assurance
  D. Logistics
  E.  Treasury operations
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
4   C. supply management….traditional purchasing
  D. strategic sourcing….supply management
  E.  supply chain management….strategic sourcing

_____ is the process of using unit and rate consumption levels to forecast and estimate future
consumption in an internal functional customer and providing guidance and input on how to
optimize usage and educating the user on the tradeoffs.
  A. Specification management
5   B. Demand management
  C. Category management
  D. Supply market intelligence
  E.  Cost management
_____ is the process of developing insights into stakeholder requirements, comparing these to
external industry intelligence, supply base capabilities and operational risks, and developing a
strategy to align internal requirements with external supply market conditions.
  A. Spend analysis
6   B. Cost management
  C. Contract management
  D. Category management
  E.  Procure-to-pay
_____ is a situation that occurs when sellers seek to “go around” purchasing and instead
directly contact and attempt to sell directly to end users (stakeholders).
  A. Insourcing
7   B. Bidding
  C. Maverick buying and selling
  D. Negotiating
  E.  Outsourcing
8 _____ is a process associated with defining the contract, defining roles and responsibilities of
both parties, and advising when to modify and ensure appropriate escalation.
  A. Spend analysis
  B. Contract management
  C. Cost management
   D. Supplier selection
  E.  Category management
All of the following are examples of the different methods that supply management will apply
to achieve integration except _____.
  A. Cross-functional or cross-organizational committees and teams
9   B. Hiring English majors into supply management to correct document language
  C. Information systems such as videoconferencing and webmail
  D. Process-focused organizations that are dedicated to certain processes
  E.  Colocation of suppliers and customers
_____ is defined as the process by which two or more parties adopt a high level of purposeful
cooperation to maintain a trading relationship over time to achieve specific goals.
  A. Supply base management
10   B. Collaboration
  C. KPI
  D. Supply integration
  E.  SRM
All of the following are characteristics that define a collaborative buyer-supplier relationship
except _____.
  A. one or a limited number of suppliers for each purchased item or family of items
11   B. a win-win approach to reward sharing
  C. open exchange of information
  D. a credible commitment to work together during difficult times
  E.  the buyer unilaterally resolving disputes
Which of the following is not a common obstacle to closer buyer-seller relationships?
  A. Long-term contracts.
  B. Confidentiality.
12
  C. Limited interest by suppliers.
  D. Legal barriers.
  E.  Resistance to change.
A well-defined supplier evaluation scoring systems takes criteria that may be highly
subjective and develops a quantitative scale for measurement.
13   A. True
  B. False
Which of the following is not one of the criteria used to determine whether to buy direct vs.
using a distributor?
  A. Size of the purchase.
14   B. Manufacturer’s policies regarding direct sales.
  C. Storage space available at the purchaser’s facility.
  D. Distance between the manufacturer and the distributor.
  E.  Extent of services required.
15 _____ are more responsive to the buying firm’s changing needs and can economically make
frequent smaller deliveries.
  A. Local suppliers 
  B. International suppliers
  C. Global suppliers
  D. National suppliers
   E.  There is no relationship with the location of the supplier and customer responsiveness.
A _____ is one that consistently satisfies the performance and service standards defined by
the buyer and responds to unexpected changes.
  A. certified supplier
16   B. sole source supplier
  C. partnered supplier
  D. preferred supplier
  E.  disqualified supplier.
Perhaps the most dramatic difference between traditional quality control methods and total
quality management thinking involves a shift from a process orientation to a product
17 orientation.
  A. True
  B. False
Companies that are unable to commit the necessary resources to assess or certify supplier
quality on their own will never accept ISO 9000:2008 registration as proxy evidence of a
18 supplier’s quality management capability.
  A. True
  B. False
ISO 14000:2004 does not build on existing governmental regulations, establish emissions and
pollution levels, or detail any specific testing methods.
19   A. True
  B. False
The MBNQA is a competition and implies that a winning organization excels not only in
quality management but also in quality achievement.
20   A. True
  B. False
Price analysis focuses simply on a seller’s price with little or no consideration given to the
actual cost of production.
21   A. True
  B. False
When supply exceeds demand, a buyer’s market exists, and prices generally move downward.
22   A. True
  B. False
_____ applies the price/cost equation across multiple processes that span two or more
organizations across a supply chain.
  A. Make-buy analysis
23   B. Price analysis
  C. Cost analysis
  D. Target costing
  E.  Total cost analysis
In the framework for strategic cost management, _____ are high-value products or services
and can be sourced through traditional bidding approaches that require price analysis using
market forces to do the work and identify what is a competitive price.
  A. critical products
24   B. unique products
  C. custom-made products
  D. generics
  E.  commodities
 The popularity of JIT and quick replenishment systems favor using fewer local suppliers.
25   a. True
  b. False
Before committing time to evaluate a supplier in depth, suppliers should satisfy certain entry
qualifiers.
26   a. True
  b. False
Which of the following information is not generally maintained in a supplier informational
database?
  a.  Current products.
27   b. Supplier’s future technology roadmap.
  c.  Process capability ratios.
  d. Advertising campaign information.
  e.  Past performance.
_____ is a program that distributors market to manage their customers’ inventory for them.
  a.  Just-in-time
  b. Supplier managed inventory 
28   c.  Self-managed inventory
  d. Countertrade
  e.  Preferred supplier inventory
Which of the following is not one of the criteria used to determine whether to buy direct vs.
using a distributor?
  a.  Size of the purchase.
29   b. Manufacturer’s policies regarding direct sales.
  c.  Storage space available at the purchaser’s facility.
  d. Distance between the manufacturer and the distributor.
  e.  Extent of services required.
_____ are more responsive to the buying firm’s changing needs and can economically make
frequent smaller deliveries.
  a.  Local suppliers 
30   b. International suppliers
  c.  Global suppliers
  d. National suppliers
  e.  There is no relationship with the location of the supplier and customer responsiveness.
Firm fixed price contracts are generally applicable when the goods or services procured are
expensive, complex, and important to the purchasing party or when there is a high degree of
31 uncertainty regarding labor and material costs.
  A. True
  B. False
The ____ clause of a contract defines what is in and out of scope, which might include the
geographical limitations, the validity or invalidity of prior contracts, preferential treatment by
the supplier, or other elements.
  A. force majeure
32   B. supply and delivery
  C. scope of agreement
  D. liability
  E.  key performance indicators and compensation
 The _____ clause of a contract specifies method of manufacture and quality requirements and
may include language specific to terms of quality.
  A. liability
33   B. specifications, quality, and health, safety, environment
  C. intellectual property
  D. assignment and contracting
  E.  confidentiality
The _____ clause of a contract specifies terms such as “current price,” “prior price,” and other
criteria that determine how or if prices will be adjusted over the course of the contract.
  A. force majeure
34   B. most favored customer
  C. key performance indicators and compensation
  D. payment
  E.  intellectual property
The _____ clause of a contract generally specifies who is responsible if there are injuries or
damage, over the course of the contract, and any damages to be paid.
  A. supply and delivery
35   B. key performance indicators and compensation
  C. definitions
  D. free trade areas
  E.  liability
The _____ clause of a contract stipulates whether the supplier can assign its rights described
in the agreement to another party, and whether subcontracting is permissible.
  A. key performance indicators and compensation
36   B. assignment and contracting
  C. supply and delivery
  D. scope of agreement
  E.  None of the above.
A single, overall productivity measure representing purchasing and supply chain performance
is feasible.
37   A. True
  B. False
_____ represents the difference between a price paid and a potentially higher price (which
might have occurred if purchasing had not obtained the lower price through a specific effort or
action).
  A. Target cost
38   B. Cost reduction
  C. Target price
  D. Cost avoidance
  E.  None of the above.
39 A _____ is one that consistently satisfies the performance and service standards defined by
the buyer and responds to unexpected changes.
  A. certified supplier
  B.  sole source supplier
  C.  partnered supplier
  D. preferred supplier
   E.  disqualified supplier.
_____ is the process of identifying potential negative events, assessing the likelihood of their
occurrence, heading off these events before they occur or reducing the probability that they
will occur, and making contingency plans to mitigate the consequences if they do occur.
  A. Supplier selection
40   B.  Supplier evaluation
  C.  Supplier categorization
  D. Global sourcing
  E.  Risk management
_____ is defined as the continual monitoring of the strength of suppliers’ financial condition
to ensure their ability to meet the purchaser’s performance requirements for products or
services.
  A. Operational risk management
41   B.  Sole sourcing
  C.  Financial risk management
  D. Multiple sourcing
  E.  None of the above.
_____ focuses on the continued ability of the supplier’s human, intellectual, and physical
capital to meet the buying firm’s requirements with respect to quality and delivery.
  A. Operational risk management 
42   B.  Global sourcing
  C.  Logistics risk management
  D. Total quality management
  E.  Financial risk management
A/An _____ involves sending a preliminary survey to suppliers.
  A. request for quotation
  B.  request for information
43   C.  purchase order
  D. order release
  E.  All of the above.
A/An _____ is a basic component that suppliers must possess before they proceed to the next
phase of the evaluation and selection process.
  A. core competency
44   B.  technology roadmap
  C.  Internet website
  D. entry qualifier
  E.  triple bottom line
All of the following are examples of commonly used environmental performance criteria
except _____.
  A. disclosure of any environmental infractions
45   B.  attainment of ISO 9000 certification 
  C.  formal hazardous and toxic waste reduction programs exist
  D. programs to control or eliminate ozone-depleting substances
  E.  attainment of ISO 14000 certification
46 Which of the following key financial ratios is calculated as Current assets/Current liabilities?
  A. Inventory turnover.
   B.  Debt to equity.
  C.  Current ratio.
  D. Total asset turnover.
  E.  Quick ratio.
A _____ is responsible for understanding in depth entire families or groups of purchased
goods and services.
  A. third party
47   B.  general buyer
  C.  preferred supplier
  D. long-term buyer-supplier relationship
  E.  commodity team 
All of the following are examples of entry qualifiers that suppliers must possess before they
proceed to the next phase of the evaluation and selection process except _____.
  A. appropriate sales and marketing activities 
48   B.  financial strength
  C.  proven manufacturing or service capability
  D. capable and supportive management
  E.  adequate facilities
Although _____ provides optimum leverage and power over the supplier, _____ provides
improved assurance of supply.
  A. multiple sourcing….single sourcing
49   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.
The supplier’s selection of a production process does little to define its required technology,
human resource skills, and capital equipment requirements.
50   A. True
  B. False
A _____ is a set of three or more organizations linked directly by one or more of the upstream
or downstream flows of products, services, finances, and information from a source to a
customer.
  A. Process
  B. manufacturing
1 system
  C. value chain
  D. social media chain
  E.  supply chain

_____ are those items provided by suppliers and used directly during production or service
delivery.
  A. Direct materials
2   B. Indirect materials
  C. Indirect services
  D. Internal materials
  E.  Vendor managed inventories
3 Which of the following is an example of a purchased direct item for a manufacturing firm?
   A. Parts and components.
  B. Travel.
  C. Office and janitorial
supplies.
  D. Advertising and media.
  E.  Personal computers.
All of the following are examples of demand planning activities except _____.
  A. forecasts of anticipated demand
  B. accounts payable
4
  C. inventory adjustments
  D. orders taken but not filled
  E.  spare parts and aftermarket requirements
The purchasing cycle begins with the _____.
  A. selection of an appropriate supplier
  B. issuance of a purchase order
5   C. receipt of a supplier’s acknowledgement
  D. identification of a need (a requirement)
  E.  determination of who can authorize the
purchase
_____ applies the price/cost equation across multiple processes that span two or more
organizations across a supply chain.
  A. Make-buy analysis
6   B. Price analysis
  C. Cost analysis
  D. Target costing
  E.  Total cost analysis
All of the following are required elements in a purchase requisition except _____.
  A. quantity and date required
  B. estimated unit cost
7
  C. operating account to be charged
  D. authorized signature
  E.  identification and approval of a supplier by the end user
When marketing wants to purchase an advertising media campaign, the _____ should specify
the work that is to be completed, when it is needed, and what type of service provider is
required.
  A. reorder point
8   B. Acknowledgement
  C. traveling purchase
requisition
  D. statement of work
  E.  sales forecast
Which of the following is not a benefit of using a cross-functional sourcing team?
  A. Reduced time to complete a task.
  B. Increased innovation.
9   C. Joint ownership of decisions.
  D. Enhanced communication among functions or
organizations.
  E.  Groupthink.
 Which of the following is not an example of an appropriate use of a cross-functional team?
  A. New product development.
  B. Preparing a RFQ for a routine commodity product.
10
  C. Locating a new production facility.
  D. Developing a commodity or purchase family strategy.
  E.  Establishing a new business unit.
A _____ is one that requires members to use a variety of higher-level skills, supports giving
members regular feedback about performance, results in an outcome with a significant effect
on the organization and others outside the team, and provides members autonomy for deciding
how they will do the work.
  A. gray box design
11   B. statement of work
  C. technology roadmap
  D. meaningful task
  E.  traditional buyer-supplier
relationship
Which of the following is not a requirement of being an effective team member?
  A. Understands the team’s task – the member has task-relevant knowledge.
  B. Has the time to commit to the team.
12
  C. Has the right corporate political connections.
  D. Has the ability to work with others in a group.
  E.  Can assume an organizational rather than strict functional perspective.
A _____ has had its quality systems extensively audited by the buying firm and are capable of
consistently meeting or exceeding the buyer’s quality needs.
  A. certified supplier
13   B.  disqualified supplier
  C.  single source supplier
  D. partnered supplier
  E.  None of the above.
A _____ is limited to a select group of suppliers who provide critical high value items to the
firm.
  A. disqualified supplier
14   B.  sole source supplier
  C.  preferred supplier
  D. single source supplier
  E.  partnered supplier 
A _____ is a supplier who no longer meets the buying organization’s standards and will not
be considered for future business until its problems are corrected.
  A. preferred supplier
15   B.  disqualified supplier
  C.  certified supplier
  D. single source supplier
  E.  sole source supplier
16 _____ is the process of identifying potential negative events, assessing the likelihood of their
occurrence, heading off these events before they occur or reducing the probability that they
will occur, and making contingency plans to mitigate the consequences if they do occur.
  A. Supplier selection
  B.  Supplier evaluation
   C.  Supplier categorization
  D. Global sourcing
  E.  Risk management
It can take only a few months for a company to adequately develop a quality management
system that is competitive for the MBNQA.
17   A. True
  B. False
_____ represents the ability to meet or exceed current and future customer (i.e., buyer and
eventually end customer) expectations or requirements within critical performance areas on a
consistent basis.
  A. Kaizen
18   B.  Supplier quality
  C.  Strategic sourcing
  D. Process capability
  E.  Supply base rationalization
Which of the following is not one of the expectations that suppliers have in a typical supply
chain relationship?
  A. Minimizing product design changes once production begins.
  B.  Providing visibility to future purchase volume requirements.
19   C.  Sharing early access and visibility to new-product requirements.
  D. Valuing accurate and timely payment of invoices.
  E.  Having the buyer co-locate its buying, engineering, and quality staffs into a supplier’s
facility.
A _____ is an analytical tool that identifies the primary external forces that are causing prices
to either increase or decrease.
  A. market analysis
20   B. total cost analysis
  C. cost analysis
  D. make-buy analysis
  E.  target price analysis
Strategic cost management approaches do not vary according to the stage of the product life
cycle.
21   A. True
  B. False
A major benefit of multiple sourcing is a lower price that results from the higher volumes
offered to a supplier.
22   A. True
  B. False
A _____ is an analytical tool that identifies the primary external forces that are causing prices
to either increase or decrease.
  A. market analysis
23   B. total cost analysis
  C. cost analysis
  D. make-buy analysis
  E.  target price analysis
24 In a/an _____ market structure, there exist identical products with minimal barriers for new
suppliers to enter the market, and price is solely a function of the forces of supply and
demand.
   A. monopolistic
  B. oligopolistic
  C. communistic
  D. perfect competition
  E.  Price is never solely a function of supply and demand, regardless of market
structure.
In collaborative relationships, buyers and suppliers can work together to mutually share the
benefits of learning curves and productivity improvements.
25   A. True
  B. False
Which of the following is not one of the questions that should be asked when analyzing a
seller’s pricing strategy?
  A. Does the seller have a long-term pricing strategy, or is it short-term in nature?
  B. Is the seller a price leader or a price follower?
26
  C. How many employees does the seller’s plant employ?
  D. Is the seller attempting to establish entry barriers to other competitors by establishing a low price
initially, then preparing to raise prices later in the future?
  E.  Is the seller using a cost-based pricing approach or a market-based pricing approach?
In the _____, pricing is based on the assumption that long-run profitability depends on the
market share obtained by the supplier.
  a. price volume model
27   b. market-share model
  c. open market model
  d. target pricing model
  e. market skimming model
All of the following are examples of broad total cost of ownership categories except _____.
  A. purchase price
  B. acquisition costs
28   C. sales, general, and administrative overhead
costs
  D. usage costs
  E.  end-of-life costs
_____ establishes the rate of improvement because of learning as producers realize direct-
labor cost improvements as production volumes increase.
  A. leverage
  B. learning curve 
29
  C. knowledge curve
  D. product life cycle
  E.  short-term
contract
_____ is a way to achieve continuous performance improvement in an item, product, or
service, but it is not a technique for cheapening a product or service by lowering quality or
other performance attributes below what customers expect.
  A. Make-buy analysis
30   B. Total cost analysis
  C. Price analysis
  D. Cost analysis
  E.  Value analysis 
31 The _____ clause of a contract outlines the relationship between the Agreement and any other
 purchase orders issued by the company to the supplier.
  A. specifications, quality, and health, safety,
environment
  B. most favored customer
  C. statistics
  D. effective date and termination
  E.  purchase orders
The _____ clause of a contract stipulates whether either party has the ability to terminate the
contract at any time, and how much advance notice must be given.
  A. effective date and termination
32   B. payment
  C. third-party rights
  D. most favored customer
  E.  force majeure
The _____ clause of a contract specifies whether the buyer, if he or she becomes aware of any
technology or cost improvements of other products in the market, he or she can share this
information with the supplier, and how the supplier should act on this information.
  A. confidentiality
33   B. intellectual property
  C. liability
  D. technology improvements
  E.  governing law
The _____ clause of a contract states whether the buyer can expect to receive preferential
status over the supplier’s other customers.
  A. most favored customer
34   B. confidentiality
  C. notices
  D. liability
  E.  scope of agreement
The most basic contractual pricing mechanism is called a/an _____ contract.
  A. fixed price with escalation
  B. cost plus incentive fee
35   C. firm fixed price
  D. cost-sharing
  E.  fixed price with
redetermination
Purchasing and supply chain managers often use the historical approach with effectiveness-
related measures.
36   A. True
  B. False
A _____ contract should be used in cases where the parties cannot accurately predict labor or
materials costs and quantities to be used prior to the execution of the purchase agreement.
  A. fixed-price with escalation
37   B. firm fixed price
  C. cost sharing
  D. cost-based
  E.  fixed-price with redetermination
38 All of the following are examples of e-transaction measures except _____.
  A. days/weeks/months of supply of inventory 
   B. absolute number of suppliers
  C. percentage of suppliers
  D. percentage of advanced shipping notices
  E.  electronic funds transfer
_____ is a process that the purchasing function follows when it performs benchmarking
comparisons.
  A. Strategic benchmarking
39   B. Support-activity benchmarking
  C. Process capability
  D. Operational benchmarking 
  E.  Outsourcing
All of the following are phases in the benchmarking process except _____.
  A. planning
  B. analysis
40
  C. integration
  D. maturity
  E.  total cost analysis 
_____ occurs as a result of negotiators being immersed in a place in which their established
norms have been confronted and may no longer be applicable.
  A. Win-win negotiation
41   B. Competitive bargaining
  C. Reciprocation
  D. Consistency
  E.  Culture shock 
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
42
  C. cash discount
  D. revenue pricing model
  E.  competition pricing
model
Which of the following is not one of the common assumptions typically used in break-even
analysis?
  A. Fixed costs are never considered.
  B. Fixed costs remain constant over the period and volumes
43 considered.
  C. Variable costs fluctuate in a linear fashion.
  D. Revenues vary directly with volume.
  E.  Break-even analysis considers total costs rather than average costs.
_____ is defined as the present value of all costs associated with a product, service, or capital
equipment that are incurred over its expected life.
  A. Cash flow analysis
44   B. Total cost of ownership
  C. Make-buy analysis
  D. Revenue pricing
  E.  Competition pricing
45 A/An _____ is defined as the cost of the next best alternative.
   A. operating cost
  B. purchase price
  C. net present value
  D. usage cost
  E.  opportunity cost
Once a contract has been negotiated and signed, the real work is over.
46   A. True
  B. False
It is often easy to go back and negotiate what contractual terms actually mean once the
contract has been signed and a period of time has passed.
47   A. True
  B. False
The least appropriate method of drafting a new contract is to start with a general form (or
forms) and samples of past contracts for similar situations.
48   A. True
  B. False
In the firm fixed price contract, the price stated in the agreement does not change, regardless
of fluctuations in general overall economic conditions, industry competition, levels of supply,
49 market prices, or other environmental changes.
  A. True
  B. False
Cost-based contracts are inappropriate for situations in which there is a risk that a large
contingency fee might be included.
50   A. True
  B. False

20. Formal organizational charts portray the entirety of the workings of an organization.

  a. True
  b. False

21. There is a definitive and prescriptive set of supply chain measures that result in one best way to
measure supply chain performance.
  a. True
  b. False

23. Which of the following is not one of the features of the new model of progressive purchasing?
  a. Developing closer relationships with important suppliers.
  b. Performing due diligence on suppliers before awarding longer-term contracts.
  c. Focusing primarily on price analysis and short term contracts.
  d. Conducting worldwide Internet searches for the best sources of supply.
  e. Inviting key suppliers to participate in product and process development.

25.  _____ is a functional group (i.e., a formal entity on the organizational chart as well as a functional
activity (i.e., buying goods and services).
  a. Engineering
  b. Purchasing
  c. Quality assurance
  d. Logistics
  e. Treasury operations

26. The _____ is a change index, and generally a rating over 50 indicates that the economy is
expanding.
  a. Consumer Price Index
  b. Producer Price Index
  c. ISM Report on Business
  d. rate of inflation
  e. None of the above.

27. According to the Institute for Supply Management, _____ is the identification, acquisition, access,
positioning, and management of resources and related capabilities an organization needs or potentially
needs in the attainment of its strategic objectives.
  a. supply chain management
  b. procurement
  c. logistics
  d. supply management
  e. distribution
28. 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

29. A _____ is a set of three or more organizations linked directly by one or more of the upstream or
downstream flows of products, services, finances, and information from a source to a customer.
  a. process
  b. manufacturing system
  c. value chain
  d. social media chain
  e. supply chain

30. 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

31. 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
32. The _____ states that success is a function of effectively managing a linked group of firms past
first-level suppliers or customers.
  a. supply chain orientation
  b. value chain concept
  c. traditional purchasing perspective
  d. extended enterprise concept
  e. process orientation

33. _____ are those items provided by suppliers and used directly during production or service
delivery.
  a. Direct materials
  b. Indirect materials
  c. Indirect services
  d. Internal materials
  e. Vendor managed inventories

34. Which of the following is an example of a purchased direct item for a manufacturing firm?
  a. Parts and components.
  b. Travel.
  c. Office and janitorial
supplies.
  d. Advertising and media.
  e. Personal computers.

35. 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

36. Which of the following is not an example of a typical resource shared between a buyer and
supplier?
  a. Dedicated capacity.
  b. Specific information.
  c. Technological capabilities.
  d. Direct financial support.
  e. Advertising and media.

37. All of the following are examples of demand planning activities except _____.
  a. forecasts of anticipated demand
  b. accounts payable
  c. inventory adjustments
  d. orders taken but not filled
  e. spare parts and aftermarket requirements

39. _____ involves generating the materials release, contacting a supplier directly concerning
changes, and monitoring the status of inbound shipments.
  a. Order processing
  b. Material control
  c. Warehousing
  d. Customer service
  e. Quality control

40. _____ helps ensure that customers receive material when and where they require it and represents
the key link between the producer and the external customer.
  a. Order processing
  b. Inbound transportation
  c. Customer service
  d. Scheduling
  e. Inventory control

41. The _____ activity involves physically getting a product ready for distribution to the customer.
  a. customer service
  b. material control
  c. materials handling
  d. quality control
  e. shipping

42. Which of the following is not one of the four enablers of purchasing and supply chain
management?
  a. Sufficient cash flow and large on-hand cash deposits.
  b. Capable human resources.
  c. Proper organizational design.
  d. Real-time collaborative technology capabilities.
  e. Right measures and measurement systems.

43. Recent research indicates that all of the following are top knowledge areas for purchasers except
_____.
  a. supplier relationship management
  b. total cost analysis
  c. supplier analysis
  d. consumer behavior
  e. competitive market analysis
44. _____ refers to the process of assessing and selecting the structure and formal system of
communication, division of labor, coordination, control, authority, and responsibility required to
achieve organizational goals and objectives, including supply chain objectives.
  a. Supply chain orientation
  b. Human resource management
  c. Demand planning
  d. Organizational design
  e. Extended value chain

45. _____ seeks to improve forecast accuracy, optimize production scheduling, reduce working
capital costs, shorten cycle times, cut transportation costs, and improve customer service; while _____
helps obtain materials and manage physical flows from suppliers through downstream distribution to
ensure that customers receive the right products at the right location, time, and cost.
  a. RFID….GPS
  b. Execution software….planning software
  c. Customer service….inbound transportation
  d. The process approach….cost management
  e. Planning software….execution software

46. All of the following are roadblocks between measurement and improved performance except
_____.
  a. up-to-date information technology
  b. too many metrics
  c. debate over the correct metrics
  d. constantly changing metrics
  e. old data

23. Which of the following is not one of the features of the new model of progressive
purchasing?
  a. Developing closer relationships with important suppliers.
  b. Performing due diligence on suppliers before awarding longer-term contracts.
  c. Focusing primarily on price analysis and short term contracts.
  d. Conducting worldwide Internet searches for the best sources of supply.
  e. Inviting key suppliers to participate in product and process development.
24. Which of the following is not one of the factors driving an emphasis on supply chain
management?
  a. An increasing emphasis on domestic sourcing due to the longer lead times and higher
levels of pipeline inventories associated with global sourcing.
  b. The cost and availability of information resources among entities in the supply chain that
allow easy linkages that eliminate time delays in the network.
  c. The level of competition in both domestic and international markets requires organizations
to be fast, agile, and flexible.
  d. Customer expectations and requirements that are becoming much more demanding.
  e. The ability of an organization’s supply chain to identify and mitigate risk minimizes
disruptions in both supply and downstream product or services to mitigate the impact on
lost sales.
25.  _____ is a functional group (i.e., a formal entity on the organizational chart as well as a functional
activity (i.e., buying goods and services).
  a. Engineering
  b. Purchasing
  c. Quality assurance
  d. Logistics
  e. Treasury operations
26. The _____ is a change index, and generally a rating over 50 indicates that the economy is
expanding.
  a. Consumer Price Index
  b. Producer Price Index
  c. ISM Report on Business
  d. rate of inflation
  e. None of the above.
28. 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
29. A _____ is a set of three or more organizations linked directly by one or more of the upstream or
downstream flows of products, services, finances, and information from a source to a customer.
  a. process
  b. manufacturing system
  c. value chain
  d. social media chain
  e. supply chain
30. 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
31. 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
32. The _____ states that success is a function of effectively managing a linked group of firms past
first-level suppliers or customers.
  a. supply chain orientation
  b. value chain concept
  c. traditional purchasing perspective
  d. extended enterprise concept
  e. process orientation
33. _____ are those items provided by suppliers and used directly during production or service
delivery.
  a. Direct materials
  b. Indirect materials
  c. Indirect services
  d. Internal materials
  e. Vendor managed inventories
34. Which of the following is an example of a purchased direct item for a manufacturing firm?
  a. Parts and components.
  b. Travel.
  c. Office and janitorial
supplies.
  d. Advertising and media.
  e. Personal computers.
35. 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
36. Which of the following is not an example of a typical resource shared between a buyer and
supplier?
  a. Dedicated capacity.
  b. Specific information.
  c. Technological capabilities.
  d. Direct financial support.
  e. Advertising and media.
37. All of the following are examples of demand planning activities except _____.
  a. forecasts of anticipated demand
  b. accounts payable
  c. inventory adjustments
  d. orders taken but not filled
  e. spare parts and aftermarket requirements
38. _____ schedules the firm’s output; while _____ is the process of taking demand data and
developing a supply, production, and logistics network capable of satisfying demand requirements.
  a. Inventory control….quality control
  b. Quality control….supply planning
  c. Order processing….material control
  d. Demand planning….customer service
  e. Demand planning….supply planning
39. _____ involves generating the materials release, contacting a supplier directly concerning
changes, and monitoring the status of inbound shipments.
  a. Order processing
  b. Material control
  c. Warehousing
  d. Customer service
  e. Quality control
40. _____ helps ensure that customers receive material when and where they require it and represents
the key link between the producer and the external customer.
  a. Order processing
  b. Inbound transportation
  c. Customer service
  d. Scheduling
  e. Inventory control
41. The _____ activity involves physically getting a product ready for distribution to the customer.
  a. customer service
  b. material control
  c. materials handling
  d. quality control
  e. shipping
42. Which of the following is not one of the four enablers of purchasing and supply chain
management?
  a. Sufficient cash flow and large on-hand cash deposits.
  b. Capable human resources.
  c. Proper organizational design.
  d. Real-time collaborative technology capabilities.
  e. Right measures and measurement systems.
43. Recent research indicates that all of the following are top knowledge areas for purchasers except
_____.
  a. supplier relationship management
  b. total cost analysis
  c. supplier analysis
  d. consumer behavior
  e. competitive market analysis
44. _____ refers to the process of assessing and selecting the structure and formal system of
communication, division of labor, coordination, control, authority, and responsibility required to
achieve organizational goals and objectives, including supply chain objectives.
  a. Supply chain orientation
  b. Human resource management
  c. Demand planning
  d. Organizational design
  e. Extended value chain
45. _____ seeks to improve forecast accuracy, optimize production scheduling, reduce working
capital costs, shorten cycle times, cut transportation costs, and improve customer service; while _____
helps obtain materials and manage physical flows from suppliers through downstream distribution to
ensure that customers receive the right products at the right location, time, and cost.
  a. RFID….GPS
  b. Execution software….planning software
  c. Customer service….inbound transportation
  d. The process approach….cost management
  e. Planning software….execution software
29. The _____ is used to identify user requirements, evaluate the user needs effectively and
efficiently, identify suppliers who can meet that need, develop agreements with those suppliers,
develop the ordering mechanism, ensure payment occurs promptly, ascertain that the need was
effectively met, and drive continuous improvement.
  a. demand management process
  b. backdoor buying process
  c. materials budgeting process
  d. forecasting process
  e. purchasing process

32. One of the most important objectives of the purchasing function is the selection, development, and
maintenance of suppliers, a process that is sometimes described as _____.
  a. supplier performance management
  b. category management
  c. customer service
  d. procure-to-pay
  e. maverick buying

33. Which of the following is not one of the objectives in supplier performance management?
  a. Selecting suppliers that are competitive.
  b. Identifying new suppliers that have the potential for excellent performance and developing
closer relationships with these suppliers.
  c. Improving existing suppliers.
  d. Developing new suppliers that are not competitive with current suppliers.
  e. Ensuring timely and accurate payment of supplier invoices.
34. Effective supply market intelligence involves all of the following except _____.
  a. updating supply markets and trends and translating their impacts on key business
outcomes
  b. ensuring that purchasing does not exceed its annual operating budget
  c. identifying emerging materials and service technologies to support company strategies in
key performance areas
  d. developing supply options and contingency plans to reduce risk
  e. supporting the organization’s requirements for a diverse and globally competitive supply
base
35. _____ is the process of collecting historical data by commodity, relative to demand from the lines
of business, with the exception of personnel expenses, occupancy, and corporate spend.
  a. Demand management
  b. Supply analysis
  c. Category management
  d. Contract management
  e. Spend analysis
36. _____ is the process of using unit and rate consumption levels to forecast and estimate future
consumption in an internal functional customer and providing guidance and input on how to optimize
usage and educating the user on the tradeoffs.
  a. Specification management
  b. Demand management
  c. Category management
  d. Supply market intelligence
  e. Cost management
37. _____ is the process of developing insights into stakeholder requirements, comparing these to
external industry intelligence, supply base capabilities and operational risks, and developing a strategy
to align internal requirements with external supply market conditions.
  a. Spend analysis
  b. Cost management
  c. Contract management
  d. Category management
  e. Procure-to-pay
38. _____ is a situation that occurs when sellers seek to “go around” purchasing and instead directly
contact and attempt to sell directly to end users (stakeholders).
  a. Insourcing
  b. Bidding
  c. Maverick buying and selling
  d. Negotiating
  e. Outsourcing
39. _____ is a process associated with defining the contract, defining roles and responsibilities of both
parties, and advising when to modify and ensure appropriate escalation.
  a. Spend analysis
  b. Contract management
  c. Cost management
  d. Supplier selection
  e. Category management
40. _____ involves unbundling the price paid and understanding the total cost of ownership 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
41. _____ is the end-to-end process of managing a supplier through the entire sourcing life cycle,
which includes first identifying the abilities of a particular company with regard to performing a
service for the internal customer, completing a sourcing event, negotiating a contract, executing an
order, and determining payment.
  a. P2P
  b. CRM
  c. Outsourcing
  d. Competitive
bidding
  e. SRM
44. The purchasing cycle begins with the _____.
  a. selection of an appropriate supplier
  b. issuance of a purchase order
  c. receipt of a supplier’s acknowledgement
  d. identification of a need (a requirement)
  e. determination of who can authorize the
purchase
45. When a situation arises when an internal customer has a need that comes up suddenly, which is
not planned for and for which there is no preexisting supplier identified to provide the product or
service required, purchasing should use a/an _____ approach.
  a. spot buy
  b. long term agreement
  c. P2P
  d. e-procurement
  e. None of the above.
46. Which of the following is not one of the common ways that internal customers should
communicate their needs to purchasing?
  a. Purchase requisitions from internal users.
  b. Chance meeting in the company cafeteria.
  c. Forecasts and customer orders.
  d. Material requirements identified during new-product development.
  e. Routine reordering systems.
47. All of the following are required elements in a purchase requisition except _____.
  a. quantity and date required
  b. estimated unit cost
  c. operating account to be charged
  d. authorized signature
  e. identification and approval of a supplier by the end user
49. In a _____, when inventory is depleted to a given level, the system notifies the materials control
department (or the buyer in some organizations) to issue a request to a supplier for inventory
replenishment.
  a. reorder point system
  b. traveling purchase requisition
system
  c. customer service system
  d. forecasting system
  e. just-in-time system
50. A _____ involves the physical checking of inventory to verify that system records match actual
on-hand inventory levels.
  a. reorder point system
  b. stock check
  c. just-in-time system
  d. forecasting system
  e. p-card system
51. _____ 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
52. _____ is might be the best choice for standard items, where the requirements are well understood
and there is common agreement between supply chain partners about what certain terms mean.
  a. Description by market grade
  b. Description by brand
  c. Description by performance characteristics
  d. Use of prototypes
  e. Description by specification
53. _____ can cover such characteristics as the materials used, the manufacturing or service steps
required, and even the physical dimensions of the product.
  a. Description by market grade
  b. Description by specification
  c. Description by brand
  d. Description by industry standard
  e. Description by performance characteristics
54. _____ 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
55. A/An _____ has demonstrated its performance capabilities through previous purchase contracts
and therefore receives preference during the supplier selection process.
  a. internal supplier
  b. new supplier
  c. capable supplier
  d. final supplier
  e. preferred
supplier
57. Which of the following is not one of the conditions under which negotiation is effective?
  a. When the purchase requires agreement about a wide range of performance factors, such as
price, quality, delivery, risk sharing, and product support.
  b. When the buyer requires early supplier involvement.
  c. When the specifications or requirements are clear to the seller.
  d. When the supplier cannot determine risks and costs.
  e. When the supplier requires a long period of time to develop and produce the items
purchased.
60. A/An _____ is an open order, usually effective for one year, covering repeated purchases of an
item or family of items.
  a. outstanding order
  b. pending order
  c. blanket purchase order
  d. completed order
  e. order acceptance

61. When using negotiating a/an _____, it is necessary to include a/an _____ that allows a buyer to
terminate the contract in the event of persistently poor quality, delivery problems, and so on.
  a. spot buy contract….evergreen clause
  b. RFP….RFQ
  c. purchase order….purchase agreement
  d. blanket purchase order….escape
clause
  e. online catalog….RFP
62. In a _____, the price stated in the agreement does not change, regardless of fluctuations in general
overall economic conditions, industry competition, levels of supply, market prices, or other
environmental changes.
  a. blanket purchase order
  b. RFQ
  c. cost-based contract
  d. material purchase release
  e. fixed-price contract
63. In a _____, the supplier is reimbursed all of their actual costs plus some agreed on operational
margin and overhead amount.
  a. RFP
  b. cost-based contract
  c. material purchase release
  d. fixed-price contract
  e. reverse auction