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WorksheetsOutsourcing and Supply Management Quiz
Total questions: 50
Worksheet time: 25mins
Outsourcing decisions are based on cost-benefit analysis.
occurs primarily in large manufacturing firms in the private sector, but is rarely practiced in public purchasing.
may reduce operating costs, improve focus on core competencies, and gain access to world-class capabilities.
decisions are based on cost-benefit analysis.
usually results in increased hiring to attain expertise that the organization does not already possess.
is a low risk initiative because the firm can always revert back to performing the function in-house.
In an outsourcing decision, developing and negotiating the outsourcing contract is of less strategic importance than identifying opportunities for outsourcing.
is not an area where supply managers believe they can add value.
is the biggest area where supply managers can affect organizational strategy.
is less important than ensuring prompt payment to suppliers.
is of less strategic importance than identifying opportunities for outsourcing.
is best left to the function most directly affected by the outsourcing decision.
An organization may decide to continue to produce a good or service in-house rather than outsource to control the quality of customer service and to reduce risk.
to control the quality of customer service.
to reduce risk.
because of a lack of technical expertise in-house.
to control the quality of customer service and to reduce risk.
to control the quality of customer service, to reduce risk and because of a lack of technical expertise in-house.
Concerns about outsourcing include layoffs, exposure to supplier's risks, and loss of control.
supply's ability to provide the required inputs at the right quality and price.
layoffs, exposure to supplier's risks, and loss of control.
transitioning from supplier's operations to internal operations.
losing long-term buyer-supplier relationships and cost advantages.
loss of a lean enterprise as the supply base grows.
The type(s) of procurement outsourcing contracts include procure-to-pay (P2P), source-to-contract (S2C) and source-to-pay (S2P).
procure-to-pay (P2P).
source-to-contract (S2C).
source-to-pay (S2P).
procure-to-pay (P2P) and source-to-contract (S2C).
procure-to-pay (P2P), source-to-contract (S2C) and source-to-pay (S2P).
A procurement outsourcing contract that covers approval workflow, material acquisition, purchase order, expediting, material and invoice receipt, invoice payment, financial performance, compliance management, policies and procedures, and performance and results reporting is called source-to-pay (S2P).
procure-to-contract (P2P).
source-to-contract (S2C).
procure-to-pay (P2P).
source-to-pay (S2P).
third party logistics (3PL).
When a team has decided that a task or function currently performed by company employees is a core competency, the team will probably recommend continuing to make.
outsourcing.
insourcing.
offshoring.
continuing to make.
continuing to buy.
The growth in outsourcing in the logistics area is attributed to enhanced logistics technologies that provide real-time data.
increased transportation regulations.
enhanced logistics technologies that provide real-time data.
truck driver shortages.
increased transportation regulations and enhanced logistics technologies that provide real-time data.
increased transportation regulations, enhanced logistics technologies that provide real-time data and truck driver shortages.
The decision to make or buy a good or service is primarily an operational decision.
a one-time decision never to be reconsidered.
a decision of strategic importance that deserves careful evaluation.
primarily an operational decision.
the same as deciding to insource or outsource.
typically made by the chief supply officer and his or her executive team.
Insourcing should be considered when assurance of supply is a problem and there is an opportunity to reduce costs significantly.
assurance of supply is a problem.
the supplier has developed a unique process to produce the product or service.
there is an opportunity to reduce costs significantly.
assurance of supply is a problem and there is an opportunity to reduce costs significantly.
assurance of supply is a problem, the supplier has developed a unique process to produce the product or service and there is an opportunity to reduce costs significantly.
Purchasing by specification typically occurs when there are multiple sources for an identical requirement.
there are multiple sources for an identical requirement.
a high degree of supplier expertise is required and difficult to define.
the internal user's preferences are impossible to overcome.
the buyer wants the supplier to decide how to make the most suitable product.
a supplier holds a needed patent.
New technology frequently enables competitive advantage from product/service differentiation at lower cost.
seldom contributes to competitive advantage or operational efficiency.
frequently enables competitive advantage from product/service differentiation at lower cost.
seldom enables competitive advantage from product/service differentiation at lower cost.
frequently enables competitive advantage from product/service differentiation, but typically at higher cost.
frequently enables operational efficiencies, but seldom enables competitive advantage.
Traditional criteria for supply management are quality, quantity, delivery, price and service.
quality, quantity, delivery and cost.
quality, quantity, price and service.
quality, quantity, delivery, price and specification.
quality, quantity, delivery, price and service.
quality, quantity, delivery and cost and quality, quantity, price and service.
Supply chain risk can be classified as operational, financial and reputational.
operational.
financial.
reputational.
operational and financial.
operational, financial and reputational.
To assist in determining what represents acceptable value, a buyer is likely to identify the function of a good or service.
provide the mathematics for a suitable inspection program.
purchase a branded item.
disallow supplier substitutions for the specified item.
avoid involving engineering in need identification and specification.
identify the function of a good or service.
Early supply involvement means supply considerations are included during need identification and specification.
accounting staff are located in the purchasing/supply department.
supply considerations are included during need identification and specification.
supply managers lead new product development teams.
internal customers are encouraged to regularly interact with suppliers.
internal customers are empowered to evaluate and select suppliers.
A request for quotation that asks for a 'brand or equal' shifts responsibility for establishing equality or superiority to the bidder.
is one way internal users ensure that they will get the brand they prefer.
is the least risky and lowest cost approach to attaining 'best value.'
shifts responsibility for establishing equality or superiority to the bidder.
requires the buyer to assume the costs of developing detailed specifications.
shifts responsibility for establishing equality or superiority to the specifier.
When a specification is widely known, commonly recognized and readily available to every buyer, it is called a standard specification.
common specification.
standard specification.
individual specification.
universal specification.
market grade specification.
The disadvantages of buying with specifications include specifications can add costs and the potential for disqualifying or discouraging potential suppliers.
the seller will be responsible for performance.
specifications can add costs.
the potential for disqualifying or discouraging potential suppliers.
the seller will be responsible for performance and specifications can add costs.
specifications can add costs and the potential for disqualifying or discouraging potential suppliers.
An advantage of buying by performance or function over other specification methods is that it provides the opportunity for the potential supplier to establish how to make the most suitable product/service.
the opportunity for the potential supplier to establish how to make the most suitable product/service.
an opportunity to purchase identical requirements from a number of different sources of supply.
evidence that the buyer has carefully defined the need and how it may be satisfied.
a standard for measuring and checking materials as supplied.
the potential for equitable competition by ensuring that the suppliers are quoting for exactly the same material or service.
Capital assets are not bought and sold in the regular course of business.
have an expected use of less than one year.
have little or no effect on the organization's operations.
are generally expensed.
are acquired for fairly small sums of money.
are not bought and sold in the regular course of business.
Description by brand may be a necessity because the manufacturing process is secret.
is the least risky and lowest cost approach to attaining 'best value.'
may be a necessity because the manufacturing process is secret.
should always be discouraged by the buyer.
indicates a supplier has unduly influenced someone in the buyer's organization.
may be a preference of an internal user, but it is never a necessity.
Supply's growing involvement in the acquisition of services may be explained by high dollar value on services and the opportunities to reduce costs.
declining technical knowledge of internal users of services.
the growing respect for supply managers as equals in the organization.
the need for more of a personal relationship with the service supplier.
high dollar value on services and the opportunities to reduce costs.
the fact that price and service-delivery requirements are complex.
Examples of prevention costs include employee training and awareness costs, and costs of pre-certifying and qualifying suppliers.
employee training and awareness costs.
costs of pre-certifying and qualifying suppliers.
inspection and testing costs.
employee training and awareness costs, and costs of pre-certifying and qualifying suppliers.
employee training and awareness costs, costs of pre-certifying and qualifying suppliers, and inspection and testing costs.
The real costs of quality rise significantly as defects increase in the finished product.
tend to rise significantly with the cost of prevention.
rise significantly as defects increase in the finished product.
are incurred in the quality control department.
are easily identified by the accounting department.
are frequently overstated in an organization.
Some estimates place the total costs of quality to be:
insignificant to the cost of the final product.
10-20 percent of the final product cost.
20-30 percent of the final product cost.
30-40 percent of the final product cost.
40-50 percent of the final product cost.
Deming's 14 points stress the importance of:
setting numeric quotas.
using slogans and targets for the workforce as a means of improving quality.
annual rating or merit systems.
dual sourcing as a means of improving quality costs.
ceasing dependence on inspection.
A formal service quality evaluation process:
measures the gap between service expectations and performance perceptions.
is relatively simple and applicable for all types of services.
is performed exactly the same as it is for goods.
is impossible to quantify if the service is highly intangible.
is most easily done on the buyer's premises.
Lean is a management philosophy that focuses on:
prevention, appraisal and internal failure costs.
data to reduce variation and waste.
maximizing customer value while eliminating waste.
the voice of the customer.
statistical quality control (SQC) techniques.
A supplier certification program:
adds cost to the supplier, but provides few benefits to the supplier.
may improve quality, but at best will not raise costs.
always improves quality, but usually at a higher purchase price.
may enable the buyer and seller to lower costs and improve quality.
typically costs more to implement than the value of the quality improvement.
In statistical process control (SPC), special or assignable causes of variation:
are intrinsic to the process and will always be there unless the process is changed.
are outside, nonrandom problems such as breakdown of machinery, material variation, or human error.
have everything to do with the underlying process and can only be eliminated by changing the process.
are of secondary importance in quality control procedures used to detect and eliminate variation.
can be present in a process that is fully capable of meeting specifications consistently.
Quality function deployment:
seeks to understand what value represents to the customer.
is a system for deploying quality at supplier facilities.
provides direction on the appropriate level of product performance and which features should be included.
seeks to understand what value represents to the customer and is a system for deploying quality at supplier facilities.
seeks to understand what value represents to the customer, and provides direction on the appropriate level of product performance and which features should be included.
A six sigma (60) approach to quality:
means there are no more than 25 defects per million opportunities.
was developed by Japanese companies in the 1950s.
has no connection to the concept of zero defects.
focuses on preventing defects by using data to reduce variation and waste.
has soft goals such as happier customers and employees.
Determination of the 'best buy' is based on:
suitability for a given use.
a balance between price and quality.
technical considerations only.
the internal user or specifier's perceptions.
trade-offs among stakeholders (e.g., marketing, operations, and supply).
A sampling technique in which every element in the population has an equal chance of being selected is called:
additive sampling.
sequential sampling.
100 percent testing.
random sampling.
cumulative sampling.
Process variation that are intrinsic to the process are:
common, nonassignable causes of variation.
special or assignable causes of variation.
prevention costs.
internal failure costs.
external failure costs.
If a process is stable and predictable:
the process averages a varying number of standard deviations.
common causes have been eliminated through process change.
the probability of it meeting customer specifications can be predicted.
it produces the same exact result each time the activity is performed.
random causes have been detected and eliminated.
ISO 9001:2015 provides a tested framework for a systematic approach to consistently delivering product that satisfies customers' expectations by:
dictating how quality requirements should be met in every organization.
dictating scope and flexibility for quality system implementation.
assuming all national cultures will meet quality requirements the same way.
assuming all business sectors will meet quality requirements the same way.
providing a set of standardized requirements a quality system must meet.
Demand for buttons and zippers at a sportswear manufacturer is an example of:
buffer demand.
anticipated demand.
derived demand.
independent demand.
scheduled demand.
Which statement is most accurate when deciding how much and when to buy?
Balance price, volume, carrying cost, and the cost of stock-outs.
Use the forecast future demand, lead times, and prices to determine optimal order volume.
Determine the price premium to attain the desired order quantity.
Managers seldom make purchase decisions until they are absolutely sure of the volume required.
The costs of placing orders and holding inventory are so low they do not significantly affect the decision of how much to buy.
Independent demand items are:
derived demand.
determined directly by customer orders.
determined by the production schedule.
derived demand and determined directly by customer orders.
derived demand and determined by the production schedule.
The three main inputs of a material requirements planning (MRP) system are:
required human resources, machine resources, and available resources.
required manufacturing resources, human resources, and master production schedule.
inventory records, annual sales forecast, and a master production schedule.
Pareto analysis results, inventory records, and a master production schedule.
bill of material, a master production schedule, and the inventory record.
Cycle inventories are used to:
avoid an anticipated change in supply, demand, or price.
protect against disruptions due to unplanned events.
reduce the number of setups.
accommodate different rates or patterns of demand.
avoid an anticipated change in supply, demand, or price, and protect against disruptions due to unplanned events.
When a commercial janitorial service company predicts demand for its services using commercial building permits issued, office leasing and vacancy rates, this is an example of:
a repetitive pattern modeling tool.
a time series forecasting technique.
a deterministic model.
a causal model.
a qualitative forecasting technique.
Anticipation inventories are carried:
to stock the distribution pipelines.
to cover a well-defined future need.
to permit activities on either side of a major process.
to protect against machine breakdown.
to protect against uncertainties in supply and demand.
Decoupling inventories are used to:
avoid an anticipated change in supply, demand, or price.
protect against disruptions due to unplanned events.
reduce the number of setups.
accommodate different rates or patterns of demand.
avoid an anticipated change in supply, demand, or price, and to reduce the number of setups.
Managing the consumption of services organization-wide:
is easy because organization-wide services spend data is readily accessible.
is of little concern because annual spend for services is declining in most organizations.
is easy because forecasting aggregate demand for services is typically more reliable than forecasting demand for goods.
is easy because supply management has historically had responsibility for managing services spend.
is difficult because multiple contracts may exist at varying prices and terms with the same suppliers.
Strategies for managing 'C' items in ABC analysis are:
review inventory levels frequently.
carrying inventories.
concentrating requirements with one or a few suppliers.
review inventory levels frequently and carrying inventories.
carrying inventories and concentrating requirements with one or a few suppliers.
Strategies for managing 'A' items in ABC analysis are:
minimizing inventories.
using procurement cards.
review inventory levels frequently.
minimizing inventories and review inventory levels frequently.
using procurement cards and review inventory levels frequently.
When the carrying cost of inventory is expressed as a percentage:
the lower it is, the lower the economic order quantity.
it is usually the same as the borrowing cost of the organization.
it is multiplied by the unit variable manufacturing cost to calculate the per unit carrying cost.
it is multiplied by the total unit cost, including allocated fixed costs, to calculate the per unit carrying cost.
it is multiplied by the labor and material cost to calculate the per unit carrying cost.
