Question 1

Which of the following is NOT a key objective of the supply management function?

Accepted Answer

To source products and services at the lowest possible price, regardless of quality or timing

Question 2

A company wants to minimize the risk of supply disruption for a critical component. Which element of the purchasing process is most directly related to this goal?

Accepted Answer

Identify suppliers to meet stakeholder needs

Question 3

Which of the following best describes the difference between tactical and strategic purchasing roles?

Accepted Answer

Strategic roles involve category management and supplier relationship management, while tactical roles involve requisitioning and implementing P2P processes.

Question 4

Which of the following is a benefit of e-procurement?

Accepted Answer

Reduction in procurement overhead costs

Question 5

A company is considering whether to establish a relationship with a new supplier, Supplier Z, for a product whose demand is expected to increase. Suppliers X and Y have already invested in increased capacity. What is the best course of action?

Accepted Answer

Do not establish a relationship with Supplier Z, as it would place them in direct competition with X and Y, who have already invested in capacity

Question 6

Which of the following is NOT typically included in a purchase requisition or statement of work?

Accepted Answer

Supplier's bank account number

Question 7

A company uses a reorder point system to manage inventory. If the average daily demand is $d$, the lead time is $L$ days, and the safety stock is $SS$, what is the formula for the reorder point $R$?

Accepted Answer

$R = d 	imes L + SS$

Question 8

Which of the following is a primary reason for conducting a spend analysis?

Accepted Answer

To drive strategies for demand management, commodity management, and risk management

Question 9

A receiving department staff member notices a shipment without a purchase order reference. What is the correct action?

Accepted Answer

Acknowledge receipt and report the missing PO to the supervisor

Question 10

Which of the following is NOT a typical responsibility of contract management in purchasing?

Accepted Answer

Setting product prices for the supplier

Question 11

Which of the following best describes a blanket purchase order?

Accepted Answer

A purchase order open for repeated purchases of an item or family of items, usually for one year

Question 12

Which of the following is a key benefit of using cross-functional sourcing teams?

Accepted Answer

Better supplier evaluation and selection process

Question 13

A company is deciding between competitive bidding and negotiation for a new contract. Which situation best justifies the use of negotiation?

Accepted Answer

There is a wide range of required performance factors and the supplier requires substantial lead time to develop the item

Question 14

Which of the following is NOT a type of purchase typically made by organizations?

Accepted Answer

Personal gifts for employees

Question 15

Which of the following is a critical insight gained from cost management in purchasing?

Accepted Answer

The total cost of ownership over the life cycle of the product

Question 16

A company wants to ensure that only suppliers who comply with risk and compliance requirements are considered. Which purchasing activity addresses this goal?

Accepted Answer

Establishing a fixed set of standards for supplier compliance

Question 17

Which of the following is a correct statement about supplier performance management?

Accepted Answer

It involves developing closer relationships with key suppliers and improving existing suppliers

Question 18

Which of the following is a primary advantage of using a material purchase release under a blanket purchase order?

Accepted Answer

It allows for the release of shipments as needed without issuing a new purchase order each time

Question 19

A company is conducting a stock check and finds that the physical on-hand (POH) inventory does not match the record on-hand (ROH) inventory. What is the appropriate next step?

Accepted Answer

Make adjustments to inventory records with verified mismatches

Question 20

Which of the following is a key characteristic of a mature, well-developed supply management strategy?

Accepted Answer

Repeatable and well-defined process

Purchasing & Supply Chain Management: The Purchasing Process (Chapter 2) - Structured Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards