Question 1

Which of the following refers to the measurement of the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged?

Accepted Answer

The measurement of the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged is referred to as the Profit-Leverage Effect. It helps businesses understand how changes in their purchasing activity can impact their overall profitability. A higher profit-leverage effect indicates that small changes in spending can have a significant impact on profits.

Question 2

Which of the following illustrates Forward Vertical Integration?

Accepted Answer

The answer of Which of the following illustrates Forward Vertical...

Question 3

When a product is purchased which is complicated or highly technical a ______________may be issued instead of a request for quotation.

Accepted Answer

A request for proposal (RFP) is more appropriate than a request for quotation (RFQ) for complicated or highly technical products. An RFP provides more detailed specifications and requirements for the product or service, allowing suppliers to submit proposals that address the specific needs of the buyer. A purchase order, contract for sale, or sales order all come after the decision to buy has been made, and are not relevant to the stage of requesting information about a complicated or highly technical product.

Question 4

As firms seek to improve the products they offer to the market, companies are seeking help from their suppliers in new product design and development through:

Accepted Answer

Early supplier involvement refers to involving suppliers in the early stages of product design and development. This allows suppliers to have a better understanding of the product requirements and specifications, leading to better collaboration and ultimately, better products. Supplier certification programs and total cost of ownership initiatives may also be helpful in improving product quality, but they do not specifically target new product design and development. Manufacturer certification programs may not necessarily involve suppliers.

Question 5

Given the following make-buy information, what would be the break-even point?

Accepted Answer

The answer of Given the following make-buy information, what would...

Question 6

Blanket or open-end purchase orders are suitable for buying

Accepted Answer

Blanket or open-end purchase orders are ideal for buying items that are regularly used and require frequent restocking, such as office supplies. It allows the buyer to avoid the hassle of repeatedly creating and submitting purchase orders for the same items.

Question 7

When calculating Return on Investment, current assets include:

Accepted Answer

Current assets are assets that are expected to be converted to cash within one year. Cash, Accounts Receivable, and Inventory are all examples of current assets. Equipment, Buildings, and Real Estate are examples of long-term assets that are not expected to be converted to cash within one year. Therefore, option A is the best choice as it includes only current assets.

Question 8

Petty cash is being phased out in favor of:

Accepted Answer

Petty cash is being phased out in favor of P-cards or purchasing cards. These are credit or debit cards assigned to employees for specific purchasing needs, such as office supplies or travel expenses. P-cards allow for better tracking and control of expenses compared to petty cash, and also eliminate the need for employees to use their personal funds for business expenses.

Question 9

Which of the following is a reason small value purchases are handled differently?

Accepted Answer

Small value purchases are handled differently in order to control unnecessary administrative costs. Handling each small purchase with the same level of administrative effort as a larger purchase would result in excessive paperwork and overhead costs. Therefore, companies often streamline the process for purchasing low-value items to keep costs down.

Question 10

Given the following make-buy information, what would be the break-even point?

Accepted Answer

The answer of Given the following make-buy information, what would...

Question 11

A form of purchasing that is placed directly to the supplier and suitable when firms use the same components to make standard goods over a relatively long period of time is referred to as:

Accepted Answer

Planned order release is a purchasing method that involves placing orders directly with a supplier for the components needed to manufacture goods over an extended period of time. This method is best suited for companies that produce standard goods and have a stable production schedule, allowing them to plan their material requirements in advance. Material requisition, purchase requisition, and traveling requisition all refer to different forms of procurement that are not applicable to this scenario.

Question 12

While most public procurement is focused on goals like those of purchasing departments in the private sector, U.S.federal government purchases must comply with the:

Accepted Answer

U.S. federal government purchases must comply with the Federal Acquisition Regulation (FAR), which sets forth the policies and procedures for conducting government procurement. The other options listed (A, B, and C) are not actual regulations or acts that govern federal procurement.

Question 13

Which type of requisition is used for materials and standard parts that are requested on a recurring basis?

Accepted Answer

The answer of Which type of requisition is used for...

Question 14

The primary goals of purchasing include all EXCEPT:

Accepted Answer

The primary goals of purchasing focus on cost, customer satisfaction, and quality improvement, but not necessarily ensuring the highest quality raw materials, which may not always align with cost objectives.

Question 15

The total cost of ownership for Supplier A is $2,670,000.The total cost of ownership for Supplier B is $1,750,000.The total cost of ownership for Supplier C is $2,990,000.Using Total Cost Analysis, it will be more cost-effective to use

Accepted Answer

Supplier B has the lowest total cost of ownership among the given suppliers, at $1,750,000. Therefore, it is the most cost-effective choice.

Question 16

Total Cost of Ownership does NOT consider which of the following factors?

Accepted Answer

The answer of Total Cost of Ownership does NOT consider...

Question 17

Inventory Turnover can be calculated by:

Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory cost. This provides a measure of how efficiently a company is using its inventory to generate sales. A higher ratio indicates that the company is selling inventory quickly and efficiently, while a lower ratio suggests that the company may be holding onto inventory for too long or experiencing sales problems. Choice A is the correct calculation for inventory turnover.

Question 18

Firms can use total cost analysis to:

Accepted Answer

Total cost analysis helps firms evaluate the overall costs associated with different suppliers to select the most cost-effective option.

Question 19

Benefits derived from implementing e-procurement systems include all of the following EXCEPT:

Accepted Answer

The implementation of e-procurement systems does not create additional job opportunities in the purchasing department, as the aim of such systems is to streamline and automate the purchasing process, thereby reducing the need for manual intervention. Instead, e-procurement systems typically result in reduced paperwork, faster transaction processing, and greater transparency in procurement processes.

Question 20

Which of the following would be a good reason to outsource (buy) versus making?

Accepted Answer

Outsourcing can be a good decision when a firm lacks the technology or expertise required to produce an item. In such cases, it may be more cost-effective to buy the item from a supplier that specializes in producing it, rather than investing in expensive new technology or training employees with specialized skills.

Quiz 2: Purchasing Management

Which of the following refers to the measurement of the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged?

Which of the following illustrates Forward Vertical Integration?

When a product is purchased which is complicated or highly technical a ______________may be issued instead of a request for quotation.

As firms seek to improve the products they offer to the market, companies are seeking help from their suppliers in new product design and development through:

Given the following make-buy information, what would be the break-even point?

Blanket or open-end purchase orders are suitable for buying

When calculating Return on Investment, current assets include:

Petty cash is being phased out in favor of:

Which of the following is a reason small value purchases are handled differently?

Given the following make-buy information, what would be the break-even point?

A form of purchasing that is placed directly to the supplier and suitable when firms use the same components to make standard goods over a relatively long period of time is referred to as:

While most public procurement is focused on goals like those of purchasing departments in the private sector, U.S.federal government purchases must comply with the:

Which type of requisition is used for materials and standard parts that are requested on a recurring basis?

The primary goals of purchasing include all EXCEPT:

The total cost of ownership for Supplier A is $2,670,000.The total cost of ownership for Supplier B is $1,750,000.The total cost of ownership for Supplier C is $2,990,000.Using Total Cost Analysis, it will be more cost-effective to use

Total Cost of Ownership does NOT consider which of the following factors?

Inventory Turnover can be calculated by:

Firms can use total cost analysis to:

Benefits derived from implementing e-procurement systems include all of the following EXCEPT:

Which of the following would be a good reason to outsource (buy) versus making?