SCM 371 MILNE EXAM 1 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026

SCM 371 MILNE EXAM 1 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026 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 - AnswersA. 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 - AnswersC. 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 - AnswersE. 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 - AnswersD. 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 - AnswersB. 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 - AnswersB. 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 - AnswersC. 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 - AnswersA. 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 - AnswersD. 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 - AnswersC. 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 - AnswersC. $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 - AnswersA. 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 - AnswersC. 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 d. Sales dollars hit the top line (revenues), purchasing savings go straight to operating profit e. They have the same impact - AnswersD. Sales dollars hit the top line (revenues), purchasing savings go straight to operating profit 26. The Strategic Profit Model ends with what financial ratio? a. Net profit b. Inventory turns c. Return on assets (ROA) d. Asset turnover e. Times interest earned - AnswersC. ROA On the asset portion of the strategic profit model, which of the following does purchasing generally affect? a. Inventory b. Accounts receivable c. Cash d. Sales revenue - AnswersA. Inventory Which category is low-importance, but high market complexity? a. Critical b. Routine c. Leverage d. Bottleneck e. Exploitable - AnswersC. Leverage Which category is high-importance, and high market complexity? a. Critical b. Routine c. Leverage d. Bottleneck e. Exploitable - AnswersA. Critical Which of the following is probably a high importance buy for Starbucks Coffee? a. Aprons for the baristas b. Holiday jazz CDs c. Coffee beans d. In-store pumpkin spice advertisements e. Toilet paper - AnswersC. Coffee beans You've been buying a small amount of standard material from a local supplier for 20 years. The supplier factory suddenly burns down, forcing you to buy the item from a supplier halfway around the world, with whom you have never done business. What just happened? a. Your delivery pipeline just got shorter b. You've just encountered a major technological shift c. You now have less risk in your supply market d. Quality will definitely decrease e. Your routine item has probably become a bottleneck - AnswersE. Your routine item has probably become a bottle neck Why is a leverage item called a leverage item? a. This item is typically purchased through debt financing b. The supply market is incredibly complex c. Suppliers can basically force you to accept their terms d. Your purchasing power and multiple supplier options means you can demand (and get) the best deals from suppliers e. You spend very little money on it - AnswersD. Your purchasing power and mult supplier options means you can get the best What is your biggest fear with a bottleneck item? a. The price will never change b. A supply disruption c. Too many potential suppliers d. Your customers will hate it e. The technology is too standardized - AnswersB. Supply disruption What are the materials that do not go directly into the product, but rather facilitate its creation? a. Direct materials b. Indirect materials c. Critical materials d. Routine materials e. Unnecessary materials - AnswersB. Indirect materials What are capital goods? a. Not used in factories b. Low-dollar, multiple purchases c. High-dollar, infrequent purchases d. Short-lived e. Items which go directly into the final product - AnswersC. High-dollar, infrequent Which of the following is true about services? a. Are always direct spend b. Are very easy to assess from a quality standpoint c. Are never associated with a good d. Require almost no advance planning to buy e. Are characterized by intangibility - Answerse. Are characterized by intangibility Which of the following is an indirect material buy? a. Lumber for framing a house b. Whole grains for the cereal factory c. Safety goggles for the car factory d. Rubber for the sneaker factory e. Chemicals for the shampoo factory - Answersc. Safety goggles for the car factory Which of the following is true about direct material purchases? a. Are typically the largest spend category b. Are intangible c. Go into the income statement as SG&A expenses d. Do not go into the final product e. Are frequent, small-dollar buys scattered over a geographically dispersed area - AnswersA. Are typically the largest spend category Which of the following is an MRO purchase? a. Copier paper for the marketing department b. Paper cups for a coffee shop c. An injection-molding machine to make bottle caps for bottled water d. Lubricating oil for a machine on the assembly line e. Steel for a factory making dishwashers - AnswersD. Lubricating oil for a machine on the assembly line What's a possible disadvantage of forward-buying inventory in bulk? a. Prices will be better when buying in bulk b. There will be plenty of stock when needed c. You'll be ready for an unexpected upsurge in customer demand d. There are no disadvantages to forward buying e. Inventory costs will rise - AnswersE. Inventory costs will rise What is a potential conflict between purchasing and R&D? a. Purchasing encourages suppliers to participate in the new product development process, angering R&D scientists b. R&D specifications may limit the supplier pool to one supplier, limiting purchasing's ability to negotiate the best deal c. Purchasing replaces the R&D department with a supplier of its own choosing d. Purchasing managers cross-train for lab work, replacing engineers and scientists in this function e. There are no conflicts; personnel in these functions rarely interact, except socially - AnswersB. R&D specifications may limit the supplier pool to one supplier, limiting purchasings ability to negotiate the best deal What will be affected if purchasing pushes a just-in-time approach with suppliers? a. Operations and inventory management b. Sales and marketing c. R&D d. R&D and Sales e. Human Resources - AnswersA. Operations and inventory management Why are price, quality, and delivery the first supplier selection criteria you should assess? a. Federal law requires that these be assessed first to ensure non-discrimination b. If a supplier cannot meet your needs on these, it's not worth evaluating them further c. They are the least important criteria; start here and build up d. Because they are the only criteria you should assess e. They are the best way to separate domestic versus international suppliers - AnswersB. If a supplier cannot meet your needs on these, it's not worth evaluating them f further. Which of the following is true about the supplier selection process? a. Should be executed the exact same way for every buy b. Needs to be circumvented a lot - it's just too restricting to follow a formal process c. Should be tailored to the type of buy: routine buys should be kept simple, strategic buys should involve careful planning d. Is only relevant for large companies e. Is an out-of-date holdover from the pre-WWII "clerical" era of purchasing - AnswersC. Should be tailored to the type of buy: routine buys should be kept simple, strategic buys should involve careful planning Which of the following is true about a PO? a. PO and requisition mean the same thing b. It becomes a legal contract once accepted by the supplier c. Everyone is authorized to create a PO d. A supplier will refuse to accept a PO if it isn't signed by the buying firm's purchasing manager e. A PO has no legal significance, it is only used for auditing firm records - AnswersB. It becomes a legal contract once accepted by supplier What is the best way to know how the internal customers for purchasing services perceive purchasing's performance? a. Tell them b. Wait for feedback c. Ask them d. Set up interviews e. All of the above - AnswersC. Ask them Once you know who the _______ are, what _______ them, and where you _______, you can develop a strategy to improve supply management's position of respect and influence. a. approvers, incentivizes, work b. decision makers, moves, stay c. influencers, motivates, stand d. approvers, motivates, stand - AnswersC. Influencers, motivates, stand To help your firm compete, you must organize supply management to leverage _______ without losing _______. a. profits, capital b. resources, agility c. resources, flexibility d. capital, profits e. relationships, trust - Answers*b. Resources, agility* What pressures are so intense that most companies tend to lean more towards a centralized sourcing structure? a. Cost b. Management c. Supplier d. Customer e. Stockholder - AnswersA. Cost