bozhan_tif_ch11.docxVIP

Chapter 11PurchasingTRUE/FALSESelecting suppliers and negotiating terms are part of Purchasing’s role in a business.Answer: TrueReference: IntroductionDifficulty: EasyKeywords: purchasing, negotiatingFor the average manufacturer, over 50 percent of the value of shipments comes from materials.Answer: TrueReference: Why Purchasing is CriticalDifficulty: EasyKeywords: material, valueCompany A spends $250 million purchasing materials and subassemblies that it processes and sells for a total of $350 million. The cost of goods sold by Company A is $350 million.Answer: FalseReference: Why Purchasing is CriticalDifficulty: EasyKeywords: CGS, cost of goods soldThe ratio of earnings to sales for a given time period is a firm’s profit margin.Answer: TrueReference: Why Purchasing is CriticalDifficulty: EasyKeywords: profit, profit marginThe first step of the purchasing process is to select the supplier.Answer: FalseReference: The Purchasing ProcessDifficulty: ModerateKeywords: needs identification, supplier selectionA typical reorder point system has a minimum inventory level and a prespecified order quantity.Answer: TrueReference: The Purchasing ProcessDifficulty: EasyKeywords: reorder, reorder point, inventory, quantityIn the description activity of the purchasing process, the product should be described only by brand or specification.Answer: FalseReference: The Purchasing ProcessDifficulty: EasyKeywords: description, brand, specificationMaverick spending is often promoted by top management as a way to improve the bottom line and break out of a purchasing cycle.Answer: FalseReference: The Purchasing ProcessDifficulty: ModerateKeywords: maverick spendingWhen a preferred supplier does not exist, competitive bidding and negotiation are two methods commonly used for final supplier selection.Answer: TrueReference: The Purchasing ProcessDifficulty: ModerateKeywords: preferred supplier, bidding, negotiationThe request for quotation is a formal request for suppliers to deliver a prod