Question 1

Measurement is virtually free.

Accepted Answer

Measurement often involves costs related to acquiring measurement tools, training personnel, and maintaining accuracy over time, making it not virtually free.

Question 2

Cost avoidance figures almost always require manual calculation and are sometimes subject to exaggeration.

Accepted Answer

Cost avoidance figures often involve estimating the cost of a hypothetical scenario, which requires manual calculation and can be subject to manipulation or exaggeration.

Question 3

Salaries traditionally take the largest share of the purchasing administrative budget.

Accepted Answer

Salaries typically make up a significant portion of any company's budget and this is often the case with the purchasing administrative budget as well.

Question 4

A sound measurement and evaluation system provides sporadic reporting of performance results.

Accepted Answer

A sound measurement and evaluation system provides consistent and regular reporting of performance results, not sporadic reporting.

Question 5

Measurement fails to motivate and direct behavior toward desired end results.

Accepted Answer

Measurement, when done correctly, can effectively motivate and direct behavior toward desired end results by providing clear targets, feedback, and a basis for rewards and improvements.

Question 6

Customer defects per supplier is a measure of the number of defects from individual suppliers to indicate comparative quality performance among competing suppliers.

Accepted Answer

Customer defects per supplier is indeed a measure used to compare the quality performance of different suppliers. It calculates the number of defects per supplier, indicating which supplier is delivering higher quality products with fewer defects.

Question 7

The PPM measure indicates the incidence of failures of components, assemblies, and systems or services when actually incorporated into the final product or service and supplied to external customers.

Accepted Answer

The answer of The PPM measure indicates the incidence of...

Question 8

Well-defined measures use data that are available and accurate.

Accepted Answer

Well-defined measures rely on objective and reliable data sources to ensure accuracy and availability.

Question 9

Few measures drive behavior that is not what is intended or needed.

Accepted Answer

Many measures, especially in management and policy contexts, can drive behavior that is not what is intended or needed due to unintended consequences or poorly designed incentives.

Question 10

The problem with measuring behavior is that there is no guarantee the behavior will lead to desired results.

Accepted Answer

Measuring behavior only provides information about what is happening, it does not necessarily ensure that the desired outcomes will be achieved. Other factors such as external circumstances, individual differences and motivation can all affect the outcome.

Question 11

The original premise of the balanced scorecard was that a total reliance on financial measures was leading organizations to make poor decisions.

Accepted Answer

The original premise of the balanced scorecard was to provide a more comprehensive approach to performance measurement that goes beyond just financial measures. It was believed that organizations that solely relied on financial measures were not getting the full picture of their performance and making poor decisions as a result.

Question 12

All aspects of performance lend themselves to quantitative measurement.

Accepted Answer

Some aspects of performance, such as creativity, teamwork, and leadership, are qualitative and do not easily lend themselves to quantitative measurement.

Question 13

Purchasing and supply require measures that reflect its ability to support overall corporate and functional goals, which means a reduced emphasis on pure efficiency measures and greater emphasis on effectiveness measures.

Accepted Answer

Purchasing and supply should be aligned with overall corporate and functional goals, which may prioritize effectiveness over pure efficiency measures. Therefore, measures such as supplier relationship management, cost avoidance, and risk management should be included in purchasing and supply performance evaluation.

Question 14

Purchase price versus market index measures are least appropriate for market-based products where pricing is primarily a function of supply and demand.

Accepted Answer

The answer of Purchase price versus market index measures are...

Question 15

Joint participation means that the personnel responsible for each measure participate in developing the measure or establishing the measure's performance objective.

Accepted Answer

Joint participation involves the involvement of all personnel responsible for a measure in its development or performance objective establishment.

Question 16

It is uncommon to have additional measures that track different aspects of a firm's inventory investment.

Accepted Answer

It is common for firms to have additional measures, such as inventory turnover ratio, days inventory outstanding, and gross margin return on investment, to track different aspects of their inventory investment.

Question 17

Transportation costs can be measured only in total dollars and never as a percentage of cost of goods sold or sales revenue.

Accepted Answer

Transportation costs can be measured as a percentage of cost of goods sold or sales revenue as well as in total dollars. This is known as the transportation cost ratio, which helps to analyze the impact of transportation costs on a company's profitability.

Question 18

A serious problem in measurement is that the data that managers pay attention to are often the wrong data.

Accepted Answer

Managers may focus on easily measurable data or data that aligns with their preconceived notions, rather than the most relevant or accurate data. This can lead to poor decision-making and ineffective management strategies.

Question 19

Each location of an organization must use the same performance objectives or performance criteria.

Accepted Answer

Each location may have unique factors and circumstances that require different performance objectives or criteria. It is important to tailor performance objectives to each specific location in order to achieve optimal results.

Question 20

On-time delivery or responsiveness measures indicate the degree to which suppliers are able to meet customer schedule requirements.

Accepted Answer

On-time delivery and responsiveness both directly relate to a supplier's ability to meet customer schedule requirements.

Quiz 19: Performance Measurement and Evaluation