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Question 1
Free
Multiple Choice

Which of the following is a sourcing strategic decision?

Choose correct answer/s
A

Which products or services should be supplied from offshore?

B

How should suppliers be managed on an ongoing basis?

C

Which suppliers should be selected to provide the desired products or services?

D

All of the above.

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Question 2
Free
Multiple Choice

Purchasing activities include

Choose correct answer/s
A

choosing suppliers.

B

negotiating contracts.

C

managing buyer-supplier relationships.

D

all of the above.

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Question 3
Free
Multiple Choice

Which of the following is a purchasing decision?

Choose correct answer/s
A

Which products and services does the firm want to outsource?

B

What products or services should be supplied from offshore?

C

How will the firm maintain positive relationships with suppliers?

D

All of the above.

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Question 4
Free
Multiple Choice

When purchasing finds savings in the cost of goods sold,

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A

this is called the purchasing effect.

B

such savings fall directly to the bottom line.

C

both of the above are true.

D

neither of the above is true.

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Question 5
Free
Multiple Choice

Which of the following statements concerning sourcing is true?

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A

The trend in most industries is to increase vertical integration for improved flexibility.

B

The primary goal of sourcing is to find suppliers offering the lowest price per unit.

C

Evidence of a commitment to social responsibility is often required of suppliers.

D

All of the above.

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Question 6
Multiple Choice

The profit leverage effect (ratio)is calculated by

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A
dividing 1.0 by the profit margin.
B
dividing pretax earnings by the cost of goods sold.
C
dividing sales by the cost of goods sold.
D
none of the above.
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Question 7
Multiple Choice

A company has sales of $150 million,cost of goods sold of $100 million,and a before-tax profit of 8%.If purchasing was able to reduce the cost of goods sold by $5 million,how much additional sales would be required to achieve the same impact on profit?

Choose correct answer/s
A
$5 million.
B
$10 million.
C
$55 million.
D
$62.5 million.
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Question 8
Multiple Choice

A company has the following financial information (in millions of $): image What is the profit leverage effect for this firm?

Choose correct answer/s
A
26.31%
B
12.63%
C
7.92
D
8.54
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Question 9
Multiple Choice

A company has the following financial information (in millions of $): image
What is the percentage increase in earnings from a 5% savings in materials purchasing?

Choose correct answer/s
A
5.0%
B
14.3%
C
12.63%
D
19.0%
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Question 10
Multiple Choice

Common goals for sourcing include all of the following EXCEPT

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A
finding suppliers with the advanced technological abilities needed.
B
finding suppliers with the lowest price per unit.
C
finding suppliers with a certified process for quality control.
D
finding suppliers with strong ethical practices.
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Question 11
Multiple Choice

Concerning outsourcing,which of the following is considered a qualitative cost (that is,a cost that is difficult to quantify)?

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A
Costs of work stoppages and supply chain disruptions.
B
Costs of drafting and negotiating contracts with suppliers.
C
Inventory carrying costs.
D
All of the above.
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Question 12
Multiple Choice

Which of the following is NOT a disadvantage of outsourcing?

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A
The risk of a supplier underbidding and later charging more.
B
The possibility of forgetting how to do the work.
C
The possibility of a supplier able to deliver faster than needed.
D
The risk of a breakdown in the supplier's supply chain.
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Question 13
Multiple Choice

Offshoring refers to

Choose correct answer/s
A
a product or service provided by a supplier.
B
a product or service from a supplier located on a different continent.
C
a product or service made or delivered in a foreign country.
D
a product or service exported to a different country.
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Question 14
Multiple Choice

A manufacturer has decided to outsource and offshore a small electric motor that it currently manufactures itself.It has found an offshore supplier that charges $925,000 for a minimum order quantity of 5,000 motors.Shipping costs for this quantity are $15,000.The buyer expects to place four orders per year to meet its annual need for 20,000 motors.Annual carrying cost is 25% of unit price,and import tariffs are 12% of unit price.The company expects to spend $12,500 per year on contracting and relationship maintenance.What is the total cost of outsourcing and offshoring this motor?

Choose correct answer/s
A
$208.65 per unit.
B
$212.28 per unit.
C
$213.71 per unit.
D
None of the above.
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Question 15
Multiple Choice

The main reason for offshoring is

Choose correct answer/s
A
lower item price.
B
lower wages.
C
lower total cost.
D
higher productivity.
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Question 16
Multiple Choice

Which of the following indicates an item to be a good candidate for outsourcing?

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A
The item is important to the company's competitive advantage.
B
The item is a standard product also sold to many other companies.
C
The item technologically advanced and will require close control.
D
All of the above.
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Question 17
Multiple Choice

Which of the following is NOT a reason to reshore a purchased item?

Choose correct answer/s
A
Political instability in the foreign country.
B
Cost of oil increasing globally.
C
Congestion at shipping ports.
D
Foreign suppliers achieving economies of scale.
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Question 18
Multiple Choice

The first step in a supply base optimization effort is

Choose correct answer/s
A
determine the appropriate number of suppliers for the item(s).
B
analyze the company's buying patterns.
C
examine offshore decisions for reshoring opportunities.
D
establish a goal for total spend reduction.
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Question 19
Multiple Choice

Spend analysis includes

Choose correct answer/s
A
looking at what the company is buying, from whom, in what quantities, and at what price.
B
looking at spend data by division or facility to isolate spending patterns.
C
looking for opportunities to disperse purchasing activities to more areas within the organization.
D
all of the above.
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Question 20
Multiple Choice

A purchasing executive concerned about a perceived lack of control over purchasing activities should

Choose correct answer/s
A
determine the profit leverage level.
B
create a supplier scorecard.
C
conduct a spend analysis.
D
conduct a preferred supplier analysis.
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