Deck 6: Need Identification and Specification

Question 1

Purchasing by specification typically occurs when:

A) there are multiple sources for an identical requirement.
B) a high degree of supplier expertise is required and difficult to define.
C) the internal user's preferences are impossible to overcome.
D) the buyer wants the supplier to decide how to make the most suitable product.
E) a supplier holds a needed patent.

Answer 1

A

Question 2

Traditional criteria for supply management are:

A) quality, quantity, delivery and cost.
B) quality, quantity, price and service.
C) quality, quantity, delivery, price and specification.
D) quality, quantity, delivery, price and service.
E) quality, quantity, delivery and cost and quality, quantity, price and service.

Answer 2

D

Question 3

An advantage of buying by performance or function over other specification methods is that it provides:

A) the opportunity for the potential supplier to establish how to make the most suitable product/service.
B) an opportunity to purchase identical requirements from a number of different sources of supply.
C) evidence that the buyer has carefully defined the need and how it may be satisfied.
D) a standard for measuring and checking materials as supplied.
E) the potential for equitable competition by ensuring that the suppliers are quoting for exactly the same material or service.

Answer 3

A

Question 4

Description by brand:

A) is the least risky and lowest cost approach to attaining "best value."
B) may be a necessity because the manufacturing process is secret.
C) should always be discouraged by the buyer.
D) indicates a supplier has unduly influenced someone in the buyer's organization.
E) may be a preference of an internal user, but it is never a necessity.

Question 5

A specification is a loose description of a requirement that leaves room for supplier enhancements and contributions.

Question 6

Supply chain risk can be classified as:

A) operational.
B) financial.
C) reputational.
D) operational and financial.
E) operational, financial and reputational.

Question 7

Capital assets:

A) have an expected use of less than one year.
B) have little or no effect on the organization's operations.
C) are generally expensed.
D) are acquired for fairly small sums of money.
E) are not bought and sold in the regular course of business.

Question 8

New technology:

A) seldom contributes to competitive advantage or operational efficiency.
B) frequently enables competitive advantage from product/service differentiation at lower cost.
C) seldom enables competitive advantage from product/service differentiation at lower cost.
D) frequently enables competitive advantage from product/service differentiation, but typically at higher cost.
E) frequently enables operational efficiencies, but seldom enables competitive advantage.

Question 9

It is common practice to specify the procedure and results necessary to meet quality standards as part of the specification.

Question 10

A request for quotation that asks for a "brand or equal":

A) is one way internal users ensure that they will get the brand they prefer.
B) is the least risky and lowest cost approach to attaining "best value."
C) shifts responsibility for establishing equality or superiority to the bidder.
D) requires the buyer to assume the costs of developing detailed specifications.
E) shifts responsibility for establishing equality or superiority to the specifier.

Question 11

Standardization is a technical concept that means agreement on the definite sizes, design and quality of a product or service.

Question 12

Early supply involvement means:

A) accounting staff are located in the purchasing/supply department.
B) supply considerations are included during need identification and specification.
C) supply managers lead new product development teams.
D) internal customers are encouraged to regularly interact with suppliers.
E) internal customers are empowered to evaluate and select suppliers.

Question 13

Supply's growing involvement in the acquisition of services may be explained by:

A) declining technical knowledge of internal users of services.
B) the growing respect for supply managers as equals in the organization.
C) the need for more of a personal relationship with the service supplier.
D) high dollar value on services and the opportunities to reduce costs.
E) the fact that price and service-delivery requirements are complex.

Question 14

To assist in determining what represents acceptable value, a buyer is likely to:

A) provide the mathematics for a suitable inspection program.
B) purchase a branded item.
C) disallow supplier substitutions for the specified item.
D) avoid involving engineering in need identification and specification.
E) identify the function of a good or service.

Question 15

Packaging is an easy category to buy because it has few disposal, environmental, and transportation implications.

Question 16

A criterion in establishing whether a purchase is strategic can be:

A) determined by the chief executive officer (CEO).
B) determined by the customer.
C) determined by the supplier.
D) determined by performing Pareto analysis to determine if the purchase is an "A" item.
E) defined by specification.

Question 17

Simplification cannot be applied to purchases already standardized.

Question 18

When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:

A) common specification.
B) standard specification.
C) individual specification.
D) universal specification.
E) market grade specification.

Question 19

The disadvantages of buying with specifications include:

A) the seller will be responsible for performance.
B) specifications can add costs.
C) the potential for disqualifying or discouraging potential suppliers.
D) the seller will be responsible for performance and specifications can add costs.
E) specifications can add costs and the potential for disqualifying or discouraging potential suppliers.

Question 20

A corporate travel department determines that employees have been staying in 15 different hotel chains. The director of corporate travel mandates that travelers may only stay in four designated hotel chains. This action is an example of:

A) standardization.
B) buying by brand.
C) buying by brand or equal.
D) simplification.
E) specification by physical characteristics.

Question 21

For nonrepetitive requirements, a system or process of acquisition can be designed.

Question 22

Equipment, real estate, construction, and information technology are examples of capital acquisitions.

Question 23

Buying capital equipment differs from other types of purchases because determination of final cost includes estimates over the life of the equipment.

Question 24

Performance is a method of description by brand.

Question 25

Quality as a term covers functionality: "Does it do the job we want done?" but not conformance to specification: "Does it fit the specification agreed to?"

Question 26

Sustainability criteria include environmental and legal considerations.

Question 27

The inability to inventory services makes quality assurance less difficult.

Question 28

Most organizations have maintenance, repair and operations requirements.

Question 29

The price of a semiprocessed material-such as steel sheets instead of ingots, frozen pork bellies instead of hogs, cocoa butter instead of beans-tends to move in the opposite direction as the price of the basic raw material.

Question 30

Capital items are not bought in the regular course of business.