SCM 371 MILNE EXAM 1 QUESTIONS WITH VERIFIED
ACCURATE ANSWERS
A purchasing professional's primary job is managing what?
a. Upstream portion of your company's supply chain
b. Downstream portion of your company's supply chain
c. Whole supply chain from end-to-end
d. Internal functions of your company e. Company customer interface - Answers - A.
Upstream portion of your company's supply chain
Why is the most important purchasing right picking the right supplier?
a. Customers will judge you for choosing poorly
b. The right supplier will always have the lowest possible price
c. The choice of supplier affects all the other rights
d. The right supplier is the one with closest ties to your CEO
e. The right supplier is the only one with whom it is possible to do business - Answers -
C. The choice of supplier affects all the other rights
What can bargaining too aggressively on price result in?
a. Long-term cost increases
b. Angry and resentful suppliers
c. A supplier going out of business
d. Lower quality and innovation
e. All of the above - Answers - E. All of the above
For a purchasing professional , what does "Caveat Emperor" ("Let the Buyer Beware")
mean?
a. Avoid doing business with anyone but friends and relatives
b. Pay the highest price to always ensure the best item is delivered
c. Paying too much is just a fact of life
d. If the price is too low, it's possible you're buying a low-quality item
e. You can't trust your internal customers - Answers - D. If the price is too low, it's
possible you're buying a low quality item.
What is a Tier 1 supplier?
a. The biggest supplier you have
b. A supplier who sells to you
,c. A supplier who sells to your suppliers
d. A supplier who is also your customer
e. The supplier with the best quality rating - Answers - B. A supplier who sells to you
Which conflict first brought a significant change in how purchasing was perceived?
a. WWI
b. WWII
c. The Crimean War
d. Gulf War 1
e. The War of the Roses - Answers - B. WW2
Since WWII what has been true about purchasing?
a. Purchasing has been viewed as a top strategic function
b. Purchasing's strategic importance has been decreasing
c. Purchasing's strategic importance has been increasing
d. Purchasing's tactical importance has been increasing while its strategic importance
has
decreased
e. There has been little change in how purchasing is perceived - Answers - C.
Purchasings strategic importance has been increasing.
A customer sells your company a defective part. The part is put into your product,
rendering it defective. What will most likely happen?
a. Your customer will likely blame you for the defect, not the supplier
b. Your customer will likely blame the supplier
c. You aren't legally responsible for any problems the customer has with the product
d. Your only additional costs will be giving the customer a good product and taking the
old one back
e. The customer can call a federal agency, get the supplier name, and deal with them
directly - Answers - A. Your customer will likely blame you for the defect, not the
supplier
You need to give the most careful attention to the price and quality on which purchased
inputs?
a. Those that are made of metal
b. Those coming from larger suppliers
c. Those that are physically smaller
d. Those that directly affect the customer's experience
e. Those that you find the most interesting to buy - Answers - D. Those that directly
affect the customers experience
, What might flashlight and calculator manufacturers view smartphone manufacturers as?
a. Customers
b. Suppliers
c. Disruptors
d. Sources of employees
e. Partners - Answers - C. Disruptors
If costs are 85% of sales (and profit is 15%), what is the amount of extra sales needed
to equal $1,200 in profit from purchasing cost savings efforts?
a. $1,020
b. $1,412
c. $8,000
d. $9,412
e. $12,000 - Answers - C. $8,000
If operating profit is 16%, how many additional sales dollars are needed to have the
profit impact of a dollar in cost savings?
a. $6.25
b. $8.00
c. $10.75
d. $16.00
e. $20.50 - Answers - A. 6.25
The salesforce sold $30M in additional products; purchasing negotiated $10M in
material costs savings. If operating profit is 12%, how did their impacts on operating
profit compare?
a. Sales had almost three times the impact on operating profit
b. Sales had slightly more impact on operating profit
c. They had the same impact on operating profit
d. Purchasing had slightly more impact on operating profit
e. Purchasing had almost three times the impact on operating profit - Answers - C. They
had the same impact on operating profit.
Which of the following is true when comparing the profit impact of sales versus
purchasing efforts?
a. Purchasing efforts don't impact profits
b. A sales dollar is typically more impactful on profit than a dollar saved by purchasing
c. Sales have no impact on profit, only on revenue growth
ACCURATE ANSWERS
A purchasing professional's primary job is managing what?
a. Upstream portion of your company's supply chain
b. Downstream portion of your company's supply chain
c. Whole supply chain from end-to-end
d. Internal functions of your company e. Company customer interface - Answers - A.
Upstream portion of your company's supply chain
Why is the most important purchasing right picking the right supplier?
a. Customers will judge you for choosing poorly
b. The right supplier will always have the lowest possible price
c. The choice of supplier affects all the other rights
d. The right supplier is the one with closest ties to your CEO
e. The right supplier is the only one with whom it is possible to do business - Answers -
C. The choice of supplier affects all the other rights
What can bargaining too aggressively on price result in?
a. Long-term cost increases
b. Angry and resentful suppliers
c. A supplier going out of business
d. Lower quality and innovation
e. All of the above - Answers - E. All of the above
For a purchasing professional , what does "Caveat Emperor" ("Let the Buyer Beware")
mean?
a. Avoid doing business with anyone but friends and relatives
b. Pay the highest price to always ensure the best item is delivered
c. Paying too much is just a fact of life
d. If the price is too low, it's possible you're buying a low-quality item
e. You can't trust your internal customers - Answers - D. If the price is too low, it's
possible you're buying a low quality item.
What is a Tier 1 supplier?
a. The biggest supplier you have
b. A supplier who sells to you
,c. A supplier who sells to your suppliers
d. A supplier who is also your customer
e. The supplier with the best quality rating - Answers - B. A supplier who sells to you
Which conflict first brought a significant change in how purchasing was perceived?
a. WWI
b. WWII
c. The Crimean War
d. Gulf War 1
e. The War of the Roses - Answers - B. WW2
Since WWII what has been true about purchasing?
a. Purchasing has been viewed as a top strategic function
b. Purchasing's strategic importance has been decreasing
c. Purchasing's strategic importance has been increasing
d. Purchasing's tactical importance has been increasing while its strategic importance
has
decreased
e. There has been little change in how purchasing is perceived - Answers - C.
Purchasings strategic importance has been increasing.
A customer sells your company a defective part. The part is put into your product,
rendering it defective. What will most likely happen?
a. Your customer will likely blame you for the defect, not the supplier
b. Your customer will likely blame the supplier
c. You aren't legally responsible for any problems the customer has with the product
d. Your only additional costs will be giving the customer a good product and taking the
old one back
e. The customer can call a federal agency, get the supplier name, and deal with them
directly - Answers - A. Your customer will likely blame you for the defect, not the
supplier
You need to give the most careful attention to the price and quality on which purchased
inputs?
a. Those that are made of metal
b. Those coming from larger suppliers
c. Those that are physically smaller
d. Those that directly affect the customer's experience
e. Those that you find the most interesting to buy - Answers - D. Those that directly
affect the customers experience
, What might flashlight and calculator manufacturers view smartphone manufacturers as?
a. Customers
b. Suppliers
c. Disruptors
d. Sources of employees
e. Partners - Answers - C. Disruptors
If costs are 85% of sales (and profit is 15%), what is the amount of extra sales needed
to equal $1,200 in profit from purchasing cost savings efforts?
a. $1,020
b. $1,412
c. $8,000
d. $9,412
e. $12,000 - Answers - C. $8,000
If operating profit is 16%, how many additional sales dollars are needed to have the
profit impact of a dollar in cost savings?
a. $6.25
b. $8.00
c. $10.75
d. $16.00
e. $20.50 - Answers - A. 6.25
The salesforce sold $30M in additional products; purchasing negotiated $10M in
material costs savings. If operating profit is 12%, how did their impacts on operating
profit compare?
a. Sales had almost three times the impact on operating profit
b. Sales had slightly more impact on operating profit
c. They had the same impact on operating profit
d. Purchasing had slightly more impact on operating profit
e. Purchasing had almost three times the impact on operating profit - Answers - C. They
had the same impact on operating profit.
Which of the following is true when comparing the profit impact of sales versus
purchasing efforts?
a. Purchasing efforts don't impact profits
b. A sales dollar is typically more impactful on profit than a dollar saved by purchasing
c. Sales have no impact on profit, only on revenue growth
