Supply Chain Management Exam 2 Questions & Correct Answers | Latest Update |Already Graded A+

The Profit-Leverage Effect states that a decrease in purchasing expenditures will directly decrease profit : False. The Profit-Leverage Effect states that a decrease in purchasing expenditures directly increases profit before taxes (assuming no decrease in quality or purchasing total cost). The purchasing function is one of the most value-enhancing functions in any organization, and therefore, it is not necessary to periodically monitor the purchasing function's performance against a set of standards or industry benchmarks. : False. The purchasing function in an organization is frequently responsible for Supply Management and therefore plays a large part in the amount of inventory the company holds. Outsourcing allows a firm to concentrate on core capabilities and reduce staffing levels 2 | P a g e : True A purchase order is legally binding once issued by the buyer : False. It becomes a legally binding contract only when accepted by the supplier. Duties, taxes, or customs imposed by the host country for imported or exported goods, are known as Tariffs : True What is the term that is often used for the acquisition of services? : Contractin