BUAD 331 Exam Practice Questions and Answers
Verified Solutions Latest Update
Question 1.
When thinking about price reductions what can purchasing do to achieve
significant price or cost savings
and maintain the appropriate supplier relationship when buying leverage items?
A. Forward buying
B. Supply base reduction
C. Hard ball negotiations
D. Buy the product from more suppliers
E. All of the above are tactics to achieve price or cost savings
Correct Answer: B. Supply base reduction
Question 2.
What is the best tactic purchasing can use in order to meet the material and
support needs of its internal
customers?
A. Provide an uninterrupted flow of the appropriate quality materials and services.
B. Buy from suppliers that are geographically close to the location of internal
customers.
C. Find the lowest possible price through low-cost country sourcing.
D. Minimize the number of suppliers in the supplier pool.
E. Automate the purchasing process with the suppliers.
Correct Answer: A. Provide an uninterrupted flow of the appropriate quality
materials and services
Question 3.
Both objective and subjective measures are used to measure the performance of
suppliers. Which of the
following is NOT true regarding objective and subjective measures?
A. Objective (Hard) Measures are quantitative
B. Subjective (Soft) Measures are based on preference or judgment
C. An example of a subjective measure is supplier on-time delivery
D. Subjective measures can be biased and dependent on the user.
E. All of the above are true.
Correct Answer: C. An example of a subjective measure is supplier on-time delivery
Question 4.
What term is best described as the process of combining purchasing requirements
across operating units
in order to capitalize on suppliers' fixed cost allocations and improvements in
suppliers' productivity?
A. Leveraging
B. Specifying
C. Spot Buying
,D. Strategizing
E. Contracting
Correct Answer: A. Leveraging
Question 5.
You are a supply manager at a large US bank and you are responsible for buying
marketing and creative
services (advertising, etc.). The marketing services category represents a
substantial amount of
procurement spend and the suppliers that compete in this industry tend to have
very different capabilities.
Consider the Kraljic matrix and classify this purchase.
A. Leverage item.
B. Bottleneck item.
C. Strategic item.
D. Non-critical item.
E. None of these are the appropriate classification for this component.
Correct Answer: C. Strategic item.
Question 6.
The purchasing function contributes to the type and bottom line of an organization.
A. True
B. False
Correct Answer: A. True
Question 7.
Which of the following is generally NOT true about supply management and the
bottom line (net profit
to the firm)?
A. Purchased items account for a large percentage of the cost of goods sold.
Hence, a reduction in cost of
purchased goods has a major impact on the bottom line
B. A Euro increase in sales is equivalent to a Euro decrease in materials cost in
impacting the bottom line
C. Outsourcing can allow firms to focus on their core competencies, possibly
reducing waste, which then
has the potential to improve the bottom line
D. A dollar saved in materials cost is usually considered a dollar increase in net
income, which directly
translates into bottom line savings
E. All of the above are true.
Correct Answer: B. A Euro increase in sales is equivalent to a Euro decrease in
materials cost in impacting the bottom line
, Question 8.
As a category specialist, you need to develop expertise on which of the following?
A. Price
B. Data retrieval
C. Puzzles
D. Availability
E. A and D only
Correct Answer: E. A and D only
Question 9.
Top line contributions by the purchasing function include which of the following?
A. Cost cutting
B. Supply base reduction
C. Leveraging
D. Involvement in new product development
E. All of the above
Correct Answer: D. Involvement in new product development
_________ is part of the supply chain involved in managing the forward and reverse
flow and storage of
goods, services, and related information between the point of origin and the point
of consumption to meet
customers' requirements.
A. Procurement
B. Logistics
C. Transportation
Question 10.
D. Negotiation
Correct Answer: B. Logistics
Question 11.
Which mode of transportation is best used to transport each of the products listed
below?
Heavy construction equipment:
Short distance consumer finished goods:
Long distance containerized goods:
High value good:
Petroleum or mineral slurry
Correct Answer: Heavy construction equipment: Rail
Short distance consumer finished goods: Motor
Long distance containerized goods: Water
High value good: Air
Petroleum or mineral slurry: Pipeline
Verified Solutions Latest Update
Question 1.
When thinking about price reductions what can purchasing do to achieve
significant price or cost savings
and maintain the appropriate supplier relationship when buying leverage items?
A. Forward buying
B. Supply base reduction
C. Hard ball negotiations
D. Buy the product from more suppliers
E. All of the above are tactics to achieve price or cost savings
Correct Answer: B. Supply base reduction
Question 2.
What is the best tactic purchasing can use in order to meet the material and
support needs of its internal
customers?
A. Provide an uninterrupted flow of the appropriate quality materials and services.
B. Buy from suppliers that are geographically close to the location of internal
customers.
C. Find the lowest possible price through low-cost country sourcing.
D. Minimize the number of suppliers in the supplier pool.
E. Automate the purchasing process with the suppliers.
Correct Answer: A. Provide an uninterrupted flow of the appropriate quality
materials and services
Question 3.
Both objective and subjective measures are used to measure the performance of
suppliers. Which of the
following is NOT true regarding objective and subjective measures?
A. Objective (Hard) Measures are quantitative
B. Subjective (Soft) Measures are based on preference or judgment
C. An example of a subjective measure is supplier on-time delivery
D. Subjective measures can be biased and dependent on the user.
E. All of the above are true.
Correct Answer: C. An example of a subjective measure is supplier on-time delivery
Question 4.
What term is best described as the process of combining purchasing requirements
across operating units
in order to capitalize on suppliers' fixed cost allocations and improvements in
suppliers' productivity?
A. Leveraging
B. Specifying
C. Spot Buying
,D. Strategizing
E. Contracting
Correct Answer: A. Leveraging
Question 5.
You are a supply manager at a large US bank and you are responsible for buying
marketing and creative
services (advertising, etc.). The marketing services category represents a
substantial amount of
procurement spend and the suppliers that compete in this industry tend to have
very different capabilities.
Consider the Kraljic matrix and classify this purchase.
A. Leverage item.
B. Bottleneck item.
C. Strategic item.
D. Non-critical item.
E. None of these are the appropriate classification for this component.
Correct Answer: C. Strategic item.
Question 6.
The purchasing function contributes to the type and bottom line of an organization.
A. True
B. False
Correct Answer: A. True
Question 7.
Which of the following is generally NOT true about supply management and the
bottom line (net profit
to the firm)?
A. Purchased items account for a large percentage of the cost of goods sold.
Hence, a reduction in cost of
purchased goods has a major impact on the bottom line
B. A Euro increase in sales is equivalent to a Euro decrease in materials cost in
impacting the bottom line
C. Outsourcing can allow firms to focus on their core competencies, possibly
reducing waste, which then
has the potential to improve the bottom line
D. A dollar saved in materials cost is usually considered a dollar increase in net
income, which directly
translates into bottom line savings
E. All of the above are true.
Correct Answer: B. A Euro increase in sales is equivalent to a Euro decrease in
materials cost in impacting the bottom line
, Question 8.
As a category specialist, you need to develop expertise on which of the following?
A. Price
B. Data retrieval
C. Puzzles
D. Availability
E. A and D only
Correct Answer: E. A and D only
Question 9.
Top line contributions by the purchasing function include which of the following?
A. Cost cutting
B. Supply base reduction
C. Leveraging
D. Involvement in new product development
E. All of the above
Correct Answer: D. Involvement in new product development
_________ is part of the supply chain involved in managing the forward and reverse
flow and storage of
goods, services, and related information between the point of origin and the point
of consumption to meet
customers' requirements.
A. Procurement
B. Logistics
C. Transportation
Question 10.
D. Negotiation
Correct Answer: B. Logistics
Question 11.
Which mode of transportation is best used to transport each of the products listed
below?
Heavy construction equipment:
Short distance consumer finished goods:
Long distance containerized goods:
High value good:
Petroleum or mineral slurry
Correct Answer: Heavy construction equipment: Rail
Short distance consumer finished goods: Motor
Long distance containerized goods: Water
High value good: Air
Petroleum or mineral slurry: Pipeline
