SCM 421 Exam 1 Chapters 1-6
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 -
ANS A
The SCOR model was created to provide a common vision of SCM for any company. - ANS
True
What are two trends that have combined to help make purchasing more strategic?
a. Auditing and consulting
b. Brand management and strategic market analysis
c. Drop-shipping and cross-docking
d. The growth of the Internet and smart phones
e. Outsourcing and lean management - ANS E.
For a purchasing professional, what does "Caveat Emptor" ("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 - ANS D
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 - ANS E
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 - ANS C
How might a purchasing manager influence his company's corporate social responsibility
reputation?
a. Negotiating with a supplier to lower the price of a purchased part
b. Selecting an international supplier who pays high wages and treats employees well
c. Making sure the supplier delivers to the factory on time
d. Obtaining competitive intelligence and conveying this to company engineers
e. Making sure to throw his water bottle in the recycle bin while visiting a supplier's facility -
ANS B
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 - ANS C
Which of the following are true for a typical service company?
a. Purchased inputs are about 80-95% of COGS
b. Purchased inputs are about 60-80% of COGS
c. Purchased inputs are about 30-40% of COGS
d. Purchased inputs are about 20-30% of COGS
e. Purchased inputs are about 10% of COGS - ANS B.
Purchased goods and services are typically a very small cost category - ANS False
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 - ANS B
In a complex or uncertain buying scenario, ___________ might be the best supplier selection
approach
a. coin-flipping
b. a reverse auction
c. competitive bidding
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 -
ANS A
The SCOR model was created to provide a common vision of SCM for any company. - ANS
True
What are two trends that have combined to help make purchasing more strategic?
a. Auditing and consulting
b. Brand management and strategic market analysis
c. Drop-shipping and cross-docking
d. The growth of the Internet and smart phones
e. Outsourcing and lean management - ANS E.
For a purchasing professional, what does "Caveat Emptor" ("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 - ANS D
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 - ANS E
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 - ANS C
How might a purchasing manager influence his company's corporate social responsibility
reputation?
a. Negotiating with a supplier to lower the price of a purchased part
b. Selecting an international supplier who pays high wages and treats employees well
c. Making sure the supplier delivers to the factory on time
d. Obtaining competitive intelligence and conveying this to company engineers
e. Making sure to throw his water bottle in the recycle bin while visiting a supplier's facility -
ANS B
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 - ANS C
Which of the following are true for a typical service company?
a. Purchased inputs are about 80-95% of COGS
b. Purchased inputs are about 60-80% of COGS
c. Purchased inputs are about 30-40% of COGS
d. Purchased inputs are about 20-30% of COGS
e. Purchased inputs are about 10% of COGS - ANS B.
Purchased goods and services are typically a very small cost category - ANS False
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 - ANS B
In a complex or uncertain buying scenario, ___________ might be the best supplier selection
approach
a. coin-flipping
b. a reverse auction
c. competitive bidding
