_​ ____ 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
1
  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
  B. ​Material control
  C. ​Warehousing
2
  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
  B. ​Inbound
transportation
3
  C. ​Customer service
  D. ​Scheduling
  E.  ​Inventory control

The _____ activity involves physically getting a product ready for distribution to the customer.​
  A. ​customer service
  B. ​material control
  C. ​materials
4 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
 ​ /An _____ has demonstrated its performance capabilities through previous purchase contracts and
A
therefore receives preference during the supplier selection process.
  A. ​internal supplier
  B. ​new supplier
  C. ​capable supplier
6
  D. ​final supplier
  E.  ​preferred
supplier

​ ll of the following are conditions under which competitive bidding is effective except _____.
A
  A. ​the buyer has a preferred supplier for the item
  B. ​volume is high enough to justify this method
  C. ​the marketplace is competitive
7   D. ​the specifications or requirements are clear to the seller
  E.  ​adequate time is available for suppliers to evaluate the
RFQs

​ he _____, which the supplier provides, details the contents of a shipment and contains the
T
description and quantity of the items in a shipment.
  A. ​material packing slip
  B.  ​purchase requisition
  C.  ​bill of lading
8
  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
  C. ​selecting the team leader and members
9   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?
10   B. ​Does the supplier have sufficient marketing funds for promoting its new products?
  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 value of the buyer’s inventory.​
  A. True
11   B. Fals
e

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
  C. ​monitoring technological innovations that impact its primary materials or make
12
substitute materials economically attractive
  D. ​evaluating not only its existing suppliers but also other potential suppliers
  E.  ​providing timely visibility to new-product requirements

_____ 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
13
  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
    ​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
  B. ​technology
15 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 
  B. ​financial strength
  C. ​proven manufacturing or service
16
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.
  A. True
17   B. Fals
e

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.
  B. ​Inspect for quality at the end of the production line.
18   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.
  B.  ​Define quality in terms of customers and their
requirements.
19   C.  ​Focus on output rather than process.
  D.  ​Make quality everyone’s responsibility.
  E.  ​Stress objective rather than subjective analysis.

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
20
  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. Fals
e
 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 of cost.
  A. True
22   B. Fals
e

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?
  C. ​How many employees does the seller’s plant employ?
23
  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
  B. ​market-share model
  C. ​open market model
24
  D. ​target pricing model
  E.  ​market skimming
model

I​ n 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
  B. ​promotional pricing
model
25
  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
  B. ​Mediation
26
  C. ​Contingency
contracting
  D. ​Preventive contracting
  E.  ​None of the above.
 Organizations should not use process mapping to redesign or reengineer processes.​
  A. True
27   B. Fals
e

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
28   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
  B. ​supply and delivery
29   C. ​scope of agreement
  D. ​liability
  E.  ​key performance indicators and
compensation

​ he _____ clause of a contract outlines the relationship between the Agreement and any other purchase
T
orders issued by the company to the supplier.
  A. ​specifications, quality, and health, safety, environment
  B. ​most favored customer
30   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.
  A. True
31   B. Fals
e

The _____ clause of a contract states whether the buyer can expect to receive preferential status
over the supplier’s other customers.
  A. ​most favored
32 customer
  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
  B. ​notices
  C. ​most favored
33
customer
  D. ​confidentiality
  E.  ​third-party rights

​ he _____ clause in a contract describes how an issue will be addressed if a portion of the
T
agreement is void or unenforceable, and which court of law will resolve the difference.
  A. ​force majeure
  B. ​severability
  C. ​notices
34
  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
  B. ​severability
  C. ​most favored customer
35
  D. ​assignment and
contracting
  E.  ​third-party rights

All aspects of performance lend themselves to quantitative measurement.

  A. True
36   B. Fals
e

_​ ____ 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
  B. ​Standardization measures
37   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
  C. ​returned orders
38
  D. ​warranty claims
  E.  ​inventory turns

A/An _____ is one that personnel cannot inappropriately influence the results of.
  A. ​efficient measure
  B. ​qualitative measure
  C. ​quantitative measure
39   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.
  B. ​Determines internal customer needs and wants. 
40   C. ​Breaks down a reluctance to change.
  D. ​Serves as a source of market intelligence.
  E.  ​Uncovers a previously unrecognized technological breakthrough.

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
41   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
  B. ​force majeure
42   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.
43   A. ​effective date and
termination
   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
  B. ​confidentiality
44   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
  B. ​assignment and contracting
45
  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
  B. ​liability
46
  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
  B. ​notices
47   C. ​most favored
customer
  D. ​confidentiality
  E.  ​third-party rights

The _____ clause in a contract provides specific details on how the supplier’s performance 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
48 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
  B. ​severability
49   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 
  B. ​Distributive bargaining
50   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

_____________ are those items provided by suppliers and used directly during production on service
delivery.
6 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
​ he _____ is used to identify user requirements, evaluate the user needs effectively and efficiently, identify
T
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
9 process
  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
11   B. ​category management
  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
  B. ​Program management
14   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
  B. ​Program
15 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
  B. ​Ability to act ethically.
16   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.
  A. True
17
  B. False

Which of the following is not a commonly accepted source of information regarding potential supply
sources?
  A. C ​ urrent suppliers.
  B.  ​Sales representatives.
18   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.​
  B.  ​Supplier’s future technology roadmap.
19   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. J​ ust-in-time
  B.  ​Supplier managed
inventory 
20   C.  ​Self-managed inventory
  D. ​Countertrade
  E.  ​Preferred supplier inventory

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.
21   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.
  A. True
27
  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
  B. ​Make-buy
29 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
  B. ​Cost analysis
30   C. ​Cost analysis
  D. ​Total cost analysis
  E.  ​Make-buy
analysis

The price paid for purchased products and services has no direct impact on the end customer’s perception of
value provided by the organization.
31
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 dispute this right.
35   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, which might include detailed
blueprints, samples, or technical drawings.
36   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
37 process
  B. ​backdoor buying process
  C. ​materials budgeting process
  D. ​forecasting process
  E.  ​purchasing process

​ ne of the most important objectives of the purchasing function is the selection, development, and
O
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

 ​_____ 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
39   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
  B. ​Contract management
40   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.
41   A. ​Cost management
  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

I​ t 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
  B. ​acknowledgement
44   C. ​traveling purchase
requisition
  D. ​statement of work
  E.  ​sales forecast

I​ n 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
45 system
  C. ​customer service system
  D. ​forecasting system
  E.  ​just-in-time system

A _____ involves the physical checking of inventory to verify that system records match actual on-hand
inventory levels.
  A. ​reorder point
system
46   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
  B. ​new supplier
47   C. ​capable supplier
  D. ​final supplier
  E.  ​preferred
supplier

48 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.

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
49   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
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
2
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
  B. ​Purchasing
3
  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
  C. ​supply management….traditional purchasing
4
  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
  B. ​Demand management
5   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
  B. ​Cost management
6   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
  B. ​Bidding
7   C. ​Maverick buying and
selling
  D. ​Negotiating
  E.  ​Outsourcing

_​ ____ 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
8   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
  B. ​Hiring English majors into supply management to correct document
9 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
  B. ​a win-win approach to reward sharing
11
  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.
  C. ​Limited interest by
12
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.​
  A. True
13
  B. Fals
e

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.
 _____ are more responsive to the buying firm’s changing needs and can economically make frequent smaller
deliveries.​
  A. ​Local suppliers 
  B. ​International suppliers
15   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
  B. ​sole source supplier
16
  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 orientation.
  A. True
17
  B. Fals
e

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 supplier’s quality management
capability.
18   A. True
  B. Fals
e

ISO 14000:2004 does not build on existing governmental regulations, establish emissions and pollution
levels, or detail any specific testing methods.
  A. True
19
  B. Fals
e

​ he MBNQA is a competition and implies that a winning organization excels not only in quality
T
management but also in quality achievement.
  A. True
20
  B. Fals
e

Price analysis focuses simply on a seller’s price with little or no consideration given to the actual cost of
production.
  A. True
21
  B. Fals
e
 When supply exceeds demand, a buyer’s market exists, and prices generally move downward.
  A. True
22   B. Fals
e

_​ ____ 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
  B. ​unique products
24   C. ​custom-made
products
  D. ​generics
  E.  ​commodities

The popularity of JIT and quick replenishment systems favor using fewer local suppliers.
  a. True
25
  b. False

Before committing time to evaluate a supplier in depth, suppliers should satisfy certain entry qualifiers.​
  a. True
26
  b. False

Which of the following information is not generally maintained in a supplier informational database?
  a.  ​Current products.​
  b. ​Supplier’s future technology roadmap.
27   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.  J​ ust-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.  S
​ ize of the purchase.
  b. ​Manufacturer’s policies regarding direct sales.
29   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.  L
​ ocal suppliers 
  b. ​International suppliers
30   c.  ​Global suppliers
  d. ​National suppliers
  e.  ​There is no relationship with the location of the supplier and customer
responsiveness.

​ irm fixed price contracts are generally applicable when the goods or services procured are expensive,
F
complex, and important to the purchasing party or when there is a high degree of uncertainty regarding labor
and material costs.
31   A. True
  B. Fals
e

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

​ he _____ clause of a contract specifies the method of manufacture and quality requirements and may
T
include language specific to terms of quality.
  A. ​liability
  B. ​specifications, quality, and health, safety, environment
33
  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
  B. ​key performance indicators and compensation
35
  C. ​definitions
  D. ​free trade areas
  E.  ​liability

​ he _____ clause of a contract stipulates whether the supplier can assign its rights described in the
T
agreement to another party, and whether subcontracting is permissible.
  A. ​key performance indicators and compensation
  B. ​assignment and contracting
36
  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.
  A. True
37   B. Fals
e

_____ 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
  B. ​Cost reduction
38   C. ​Target price
  D. ​Cost avoidance
  E.  ​None of the
above.

A _____ is one that consistently satisfies the performance and service standards defined by the buyer and
responds to unexpected changes.
  A. c​ ertified supplier
  B.  ​sole source supplier
39   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. S ​ upplier selection
  B.  ​Supplier evaluation
40
  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. O​ perational risk
management
  B.  ​Sole sourcing
41
  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. O
​ perational risk
management 
  B.  ​Global sourcing
42
  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. c​ ore competency
  B.  ​technology
44 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. d ​ isclosure of any environmental infractions
  B.  ​attainment of ISO 9000 certification 
  C.  ​formal hazardous and toxic waste reduction programs exist
45
  D. ​programs to control or eliminate ozone-depleting
substances
  E.  ​attainment of ISO 14000 certification

Which of the following key financial ratios is calculated as Current assets/Current liabilities?
  A. ​Inventory turnover.
46   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. t​ hird party
  B.  ​general buyer
47   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. a​ ppropriate sales and marketing activities 
  B.  ​financial strength
48   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. m ​ ultiple sourcing….single sourcing
  B.  ​single sourcing….multiple sourcing 
49   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 system
1   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
  B. ​Indirect materials
2   C. ​Indirect services
  D. ​Internal materials
  E.  ​Vendor managed inventories
 Which of the following is an example of a purchased direct item for a manufacturing firm?
  A. ​Parts and components.
  B. ​Travel.
3   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
  C. ​inventory adjustments
4
  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
  B. ​Acknowledgement
8   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?

9   A. ​Reduced time to complete a task.
   B. ​Increased innovation.
  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. c​ ertified supplier
  B.  ​disqualified supplier
13   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. d ​ isqualified supplier
  B.  ​sole source supplier
  C.  ​preferred supplier
14
  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
15
for future business until its problems are corrected.
   A. ​preferred supplier
  B.  ​disqualified supplier
  C.  ​certified supplier
  D. ​single source
supplier
  E.  ​sole source 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. S ​ upplier selection
  B.  ​Supplier evaluation
16
  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. K ​ aizen
  B.  ​Supplier quality
18   C.  ​Strategic sourcing
  D. ​Process capability
  E.  ​Supply base
rationalization

​ hich of the following is not one of the expectations that suppliers have in a typical supply chain
W
relationship?
  A. M ​ inimizing 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
  B. ​total cost analysis
20   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.
  A. True
21
  B. False

​ major benefit of multiple sourcing is a lower price that results from the higher volumes offered to a
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
  B. ​total cost analysis
23   C. ​cost analysis
  D. ​make-buy analysis
  E.  ​target price analysis

I​ n 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
24   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
  b. ​market-share model
27   c. ​open market model
  d. ​target pricing model
  e. ​market skimming
model

28 All of the following are examples of broad total cost of ownership categories except _____.
   A. ​purchase price
  B. ​acquisition costs
  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 

​ he _____ clause of a contract outlines the relationship between the Agreement and any other purchase
T
orders issued by the company to the supplier.
  A. ​specifications, quality, and health, safety, environment
  B. ​most favored customer
31   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

​ he _____ clause of a contract specifies whether the buyer, if he or she becomes aware of any technology or
T
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
  C. ​firm fixed price
35
  D. ​cost-sharing
  E.  ​fixed price with
redetermination

​Purchasing and supply chain managers often use the historical approach with effectiveness-related measures.
  A. True
36
  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
  B. ​firm fixed price
37   C. ​cost sharing
  D. ​cost-based
  E.  ​fixed-price with
redetermination

All of the following are examples of e-transaction measures except _____.​

  A. ​days/weeks/months of supply of inventory 
  B. ​absolute number of suppliers
38   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
  B. ​Support-activity benchmarking
39   C. ​Process capability
  D. ​Operational benchmarking 
  E.  ​Outsourcing

is a process that the purchasing function follows when it performs benchmarking comparisons._____.​
40   A. ​planning
  B. analysis
   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
  B. ​Competitive bargaining
41   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 considered.
43   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
  B. ​Total cost of ownership
44   C. ​Make-buy analysis
  D. ​Revenue pricing
  E.  ​Competition pricing

A/An _____ is defined as the cost of the next best alternative.

  A. ​operating cost
  B. ​purchase price
  C. ​net present
45
value
  D. ​usage cost
  E.  ​opportunity cost

Once a contract has been negotiated and signed, the real work is over.
  A. True
46
  B. False

It is often easy to go back and negotiate what contractual terms actually mean once the contract has been
47
signed and a period of time has passed.
   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, market prices, or other
environmental changes.
49   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