SCM EXAM 2
SCM EXAM 2 STUDY GUIDE QUESTIONS
AND ANSWERS GRADED A 2025-2026
5.2 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.
A. True
B. False - Correct Ans-False
Firms use the _____ strategy to reduce their own staffing levels.
a. procurement
b. outsourcing
c. measurement
d. management - Correct Ans-outsourcing
Leverage sourcing is a comprehensive approach for location and sourcing key suppliers
which often include the business process of analyzing the total-spend by material
category.
A. True
B. False - Correct Ans-False
Processing costs for small value purchases can be minimized through the use of _____.
a. corporate purchasing cards
b. blanket purchase orders
c. blank checks
d. all of the above - Correct Ans-all of the above
_____ refers to a company acquiring one or more of their sources of supply
a. backward vertical integration
b. leverage sourcing
c. global sourcing
d. further supplier integration - Correct Ans-backward vertical integration
One of the most sustainable sourcing strategies is to build _____.
a. high profits
b. intangible assets
c. new markets
d. none of the above - Correct Ans-intangible assets
Sustainability sourcing policies should include such things as reporting of supplier
compliance to stakeholders, and detailing ethical sourcing expectations to suppliers?
a. True
b. False - Correct Ans-False
Co-sourcing is the sharing of a process or function between two external providers
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,SCM EXAM 2
a. True
b. False - Correct Ans-False
A preferred supplier is a supplier who has the lowest price.
a. True
b. False - Correct Ans-False
Segmentation is NOT an advantage of the e-Procurement processes.
a. True
b. False - Correct Ans-True
To provide metrics that are easy to measure, understandable and focused on real-
value-added results is the goal of
a. a good supplier evaluation system
b. the purchasing department
c. the firm's new strategy
d. senior managers at the firm - Correct Ans-a good supplier evaluation system
Buying materials and components from suppliers instead of making them in-house, is
known as outsourcing.
a. True
b. False - Correct Ans-True
Which manufacturing process can be characterized as creating a custom product for
each customer?
a. six sigma
b. continuous flow
c. line flow
d. none of the above - Correct Ans-none of the above
5.3 Outsourcing allows a firm to concentrate on core capabilities and reduce staffing
levels
A. True
B. False - Correct Ans-True
5.4 A purchase order is legally binding once issued by the buyer.
A. True
B. False - Correct Ans-False
5.5 Duties, taxes, or customs imposed by the host country for imported or exported
goods, are known as Tariffs
A. True
B. False - Correct Ans-True
5.1 The Profit-Leverage Effect states that a decrease in purchasing expenditures will
directly decrease profit
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,SCM EXAM 2
A. True
B. False - Correct Ans-False
5.6 What is the term that is often used for the acquisition of services?
A. Purchasing
B. Contracting
C. Requisitioning
D. Ordering - Correct Ans-Contracting
5.7 Which of the following is NOT one of the primary goals of Purchasing?
A. Ensure the uninterrupted flow of materials and services at the lowest total cost
B. Improve the quality of the finished goods produced
C. Increase the supplier base
D. Optimize customer satisfaction. - Correct Ans-Increase the supplier base
5.8 Benefits derived from implementing an e-procurement system include all of the
following EXCEPT:
A. Time Savings
B. Real Time Access
C. Trackability
D. Decentralizing Purchasing - Correct Ans-Decentralizing Purchasing
5.9 Which of the following would be a good reason to outsource (buy) versus make an
item?
A. A firm lacks the technology or expertise to produce an item
B. To utilize existing capacity within a company's own firm
C. To have more direct control over the design and production of an end item
D. No competent supplier presently produces the needed item - Correct Ans-A firm
lacks the technology or expertise to produce an item
5.10 The sum of all costs associated with every activity in the supply stream of a
product, is referred to as?
A. Total Cost of Acquisition
B. Total Cost of Ownership
C. Purchase Requisition Cost
D. Total Procurement Cost - Correct Ans-Total Cost of Ownership
6.1 "Rationalizing the supplier base" would mean that the purchasing firm is attempting
to reduce the number of suppliers in its supplier network.
A. True
B. False - Correct Ans-True
6.2 While paperless transactions are now possible through e-procurement and Web-
based services, these would NOT be considered sustainable business practices.
A. True
B. False - Correct Ans-False
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, SCM EXAM 2
6.3 A Supplier Code of Conduct is intended to inform suppliers of ethical sourcing
expectations and is typically a condition for becoming an approved supplier.
A. True
B. False - Correct Ans-True
6.4 The concept of Distributive Negotiations refers to both sides work together to
maximize the outcome or create a win-win result.
A. True
B. False - Correct Ans-False
6.5 Pain and Gain Share contract provisions are associated with supplier rewards and
recognition programs.
A. True
B. False - Correct Ans-True
6.6 Managing a firm's external resources in ways that support the long-term goals of the
firm can be referred to as?
A. Ethical souring
B. Functional sourcing
C. Strategic sourcing
D. Hybrid Sourcing - Correct Ans-Strategic sourcing
6.7 The following term refers to an act that creates the greatest good for the greatest
number of people?
A. Rights and duties
B. Corporate responsibility
C. Utilitarianism
D. Social sustainability - Correct Ans-Utilitarianism
6.8 An outsourcing program can result in all of the following positive outcomes, except?
A. Reducing staffing levels
B. Decreased need for supplier management
C. Cost reduction
D. Gains in manufacturing flexibility - Correct Ans-Decreased need for supplier
management
6.9 Which of the following is TRUE?
A. VMI stands for Vertically Managed Inventory
B. 3PL stands for Third Party Leverage
C. VMI stands for Vendor-Managed Inventory
D. 3PL stands for Three Point Logistics - Correct Ans-VMI stands for Vendor-Managed
Inventory
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SCM EXAM 2 STUDY GUIDE QUESTIONS
AND ANSWERS GRADED A 2025-2026
5.2 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.
A. True
B. False - Correct Ans-False
Firms use the _____ strategy to reduce their own staffing levels.
a. procurement
b. outsourcing
c. measurement
d. management - Correct Ans-outsourcing
Leverage sourcing is a comprehensive approach for location and sourcing key suppliers
which often include the business process of analyzing the total-spend by material
category.
A. True
B. False - Correct Ans-False
Processing costs for small value purchases can be minimized through the use of _____.
a. corporate purchasing cards
b. blanket purchase orders
c. blank checks
d. all of the above - Correct Ans-all of the above
_____ refers to a company acquiring one or more of their sources of supply
a. backward vertical integration
b. leverage sourcing
c. global sourcing
d. further supplier integration - Correct Ans-backward vertical integration
One of the most sustainable sourcing strategies is to build _____.
a. high profits
b. intangible assets
c. new markets
d. none of the above - Correct Ans-intangible assets
Sustainability sourcing policies should include such things as reporting of supplier
compliance to stakeholders, and detailing ethical sourcing expectations to suppliers?
a. True
b. False - Correct Ans-False
Co-sourcing is the sharing of a process or function between two external providers
1|Page
,SCM EXAM 2
a. True
b. False - Correct Ans-False
A preferred supplier is a supplier who has the lowest price.
a. True
b. False - Correct Ans-False
Segmentation is NOT an advantage of the e-Procurement processes.
a. True
b. False - Correct Ans-True
To provide metrics that are easy to measure, understandable and focused on real-
value-added results is the goal of
a. a good supplier evaluation system
b. the purchasing department
c. the firm's new strategy
d. senior managers at the firm - Correct Ans-a good supplier evaluation system
Buying materials and components from suppliers instead of making them in-house, is
known as outsourcing.
a. True
b. False - Correct Ans-True
Which manufacturing process can be characterized as creating a custom product for
each customer?
a. six sigma
b. continuous flow
c. line flow
d. none of the above - Correct Ans-none of the above
5.3 Outsourcing allows a firm to concentrate on core capabilities and reduce staffing
levels
A. True
B. False - Correct Ans-True
5.4 A purchase order is legally binding once issued by the buyer.
A. True
B. False - Correct Ans-False
5.5 Duties, taxes, or customs imposed by the host country for imported or exported
goods, are known as Tariffs
A. True
B. False - Correct Ans-True
5.1 The Profit-Leverage Effect states that a decrease in purchasing expenditures will
directly decrease profit
2|Page
,SCM EXAM 2
A. True
B. False - Correct Ans-False
5.6 What is the term that is often used for the acquisition of services?
A. Purchasing
B. Contracting
C. Requisitioning
D. Ordering - Correct Ans-Contracting
5.7 Which of the following is NOT one of the primary goals of Purchasing?
A. Ensure the uninterrupted flow of materials and services at the lowest total cost
B. Improve the quality of the finished goods produced
C. Increase the supplier base
D. Optimize customer satisfaction. - Correct Ans-Increase the supplier base
5.8 Benefits derived from implementing an e-procurement system include all of the
following EXCEPT:
A. Time Savings
B. Real Time Access
C. Trackability
D. Decentralizing Purchasing - Correct Ans-Decentralizing Purchasing
5.9 Which of the following would be a good reason to outsource (buy) versus make an
item?
A. A firm lacks the technology or expertise to produce an item
B. To utilize existing capacity within a company's own firm
C. To have more direct control over the design and production of an end item
D. No competent supplier presently produces the needed item - Correct Ans-A firm
lacks the technology or expertise to produce an item
5.10 The sum of all costs associated with every activity in the supply stream of a
product, is referred to as?
A. Total Cost of Acquisition
B. Total Cost of Ownership
C. Purchase Requisition Cost
D. Total Procurement Cost - Correct Ans-Total Cost of Ownership
6.1 "Rationalizing the supplier base" would mean that the purchasing firm is attempting
to reduce the number of suppliers in its supplier network.
A. True
B. False - Correct Ans-True
6.2 While paperless transactions are now possible through e-procurement and Web-
based services, these would NOT be considered sustainable business practices.
A. True
B. False - Correct Ans-False
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, SCM EXAM 2
6.3 A Supplier Code of Conduct is intended to inform suppliers of ethical sourcing
expectations and is typically a condition for becoming an approved supplier.
A. True
B. False - Correct Ans-True
6.4 The concept of Distributive Negotiations refers to both sides work together to
maximize the outcome or create a win-win result.
A. True
B. False - Correct Ans-False
6.5 Pain and Gain Share contract provisions are associated with supplier rewards and
recognition programs.
A. True
B. False - Correct Ans-True
6.6 Managing a firm's external resources in ways that support the long-term goals of the
firm can be referred to as?
A. Ethical souring
B. Functional sourcing
C. Strategic sourcing
D. Hybrid Sourcing - Correct Ans-Strategic sourcing
6.7 The following term refers to an act that creates the greatest good for the greatest
number of people?
A. Rights and duties
B. Corporate responsibility
C. Utilitarianism
D. Social sustainability - Correct Ans-Utilitarianism
6.8 An outsourcing program can result in all of the following positive outcomes, except?
A. Reducing staffing levels
B. Decreased need for supplier management
C. Cost reduction
D. Gains in manufacturing flexibility - Correct Ans-Decreased need for supplier
management
6.9 Which of the following is TRUE?
A. VMI stands for Vertically Managed Inventory
B. 3PL stands for Third Party Leverage
C. VMI stands for Vendor-Managed Inventory
D. 3PL stands for Three Point Logistics - Correct Ans-VMI stands for Vendor-Managed
Inventory
4|Page
