BUS 230 Week 5 Quiz – Strayer
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Chapter 5 and 6
CHAPTER 5
Make or Buy, Insourcing and
Outsourcing
32. One
of the most fundamental and critical decisions in any organization is, should
we:
a. have a single source or multiple
sources for a specific purchase?
b. order small quantities to avoid
carrying costs or large quantities to get volume discounts?
c. switch suppliers because of a slight
price discount from a potential supplier?
d. make or buy the needed good or service?
e. enter into a long- or short-term
agreement with a supplier?
33. When
a team has decided that a task or function currently performed by company
employees is not a core competency, the team will probably recommend:
a. insourcing.
b. outsourcing.
c. continuing to make.
d. continuing to buy.
e. near-sourcing..
34.
Deciding what represents a core competency in an organization is:
a. a decision best left to the
organization’s Board of Directors.
b. a decision best left to the Chief
Executive Officer.
c. always the same for companies in the
same industry.
d. a fairly easy decision once
organizational goals and objectives are known.
e. often a fairly complex decision and a
function of many factors.
35.
Outsourcing of services is:
a. unrealistic because of the difficulty
in measuring and evaluating the performance of service providers.
b. realistic if the internal users and the
buyer can carefully define service requirements and quality expectations.
c. declining in popularity because of
buyers’ dissatisfaction with most third party service providers.
d. realistic because of the ease in
measuring and evaluating performance of service providers.
e. realistic because it is relatively easy
to define service requirements and measure the quality of a service provider.
36.
Currently, managements tend toward:
a. making rather than buying.
b. buying parts and assembling them
onsite.
c. insourcing entire operations.
d. outsourcing entire operations.
e. making anything that is low risk.
37.
Outsourcing:
a. is often chosen as a way for the
organization to reduce or control operating costs, improve company focus, and
gain access to world-class capabilities.
b. is a low risk venture because the firm
can always revert back to performing the function in-house at low cost.
c. occurs primarily in large manufacturing
firms in the private sector, but is rarely practiced in public purchasing.
d. usually results in increased hiring to
attain expertise that the organization does not already possess.
e. decisions are based on financial
factors that most organizations can easily access through their accounting
system.
38. In
the outsourcing decisions in many organizations, supply has had:
a. a leadership role.
b. extensive involvement.
c. relatively moderate involvement.
d. limited involvement
e. virtually no involvement.
39.
Supply managers believe they can add the most value to the outsourcing decision
by:
a. advising the outsourcing team on
relevant contractual terms and conditions.
b. reviewing the analysis conducted by the
outsourcing team.
c. providing a comprehensive, competitive
process.
d. being available if the internal users
want their assistance.
e. managing the contract once the decision
has been implemented.
40.
Supply management:
a. has been outsourced in many
organizations because it is not a core competency.
b. has been outsourced in many organizations
because of its tactical nature.
c. has not been outsourced because the
chief purchasing officer makes outsourcing decisions.
d. and logistics have not been outsourced
because both are considered core competencies in most organizations.
e. is seldom outsourced in its entirety,
but activities such as inventory
monitoring, order placement, and order receiving are outsourced.
41.
Subcontracting refers to the practice of:
a. a prime contractor bidding out part of
a job to another contractor.
b. an organization hiring a contractor to
perform a task it has been doing in house.
c. an organization hiring substitute labor
to cover for a supplier’s labor shortage.
d. a prime contractor bidding on another
contractor’s incomplete jobs.
e. a prime contractor hiring substitute
labor during a strike.
Loss of
control is:
a. seldom a concern when considering
outsourcing.
b. a concern of the supplier in an
outsourcing situation.
c. a concern within the buying
organization when considering outsourcing.
d. one of the advantages of outsourcing.
e. one reason few organizations outsource
services.
True and False
1.
Insourcing and outsourcing occur when a newly formed company first decides what
to make inhouse and what to buy from suppliers.
2. Some of
the concerns about outsourcing are centered around layoffs, exposure to
supplier’s risks, and unexpected fees.
3. Some
of the reasons an organization may decide to make rather than buy are: greater
supply assurance, stringent quality requirements, and very small quantity
requirements.
4. The
gray zone in make or buy provides the opportunity to test and learn without
fully committing to make or buy.
5. Some
of the reasons an organization may decide to buy rather than make are: greater
supply assurance, stringent quality requirements, and very small quantity
requirements.
6.
Supply managers typically recommend insourcing.
7.
Outsourcing is prevalent in both the private and public sectors.
8.
Growth in outsourcing in the logistics area can be attributed to growing
deregulation of transportation companies.
9.
Subcontracts are useful when the work is easy to define, has a short time
horizon, and is relatively inexpensive.
10. The
logistics function and tasks such as freight auditing, leasing, and maintenance
and repair are often outsourced because they typically do not represent core
competencies.
CHAPTER 6
Need Identification and
Specification
42. An
advantage of buying by performance or function over other specification methods
is that it provides:
a. evidence that the buyer has given
thought and careful study to the need and the ways in which it may be
satisfied.
b. the opportunity for the potential
supplier to establish how to make the most suitable product.
c. the potential for equitable competition
by ensuring that the suppliers are quoting for exactly the same material or
service.
d. a standard for measuring and checking
materials as supplied.
e. an opportunity to purchase identical
requirements from a number of different sources of supply.
2.
Supply’s growing involvement in the acquisition of services may be explained
by:
a. declining technical knowledge of
internal users of services.
b. the need for more of a personal
relationship with the service supplier.
c. the fact that price and
service-delivery requirements are complex.
d. the growing respect for supply managers
as equals in the organization.
e. the high dollars spent on services and
the opportunities to reduce costs.
3.
Capital assets are long-term assets that:
a. are bought and sold in the regular
course of business.
b. have an expected use of less than one
year.
c. have an ongoing effect on the
organization’s operations.
d. are generally expensed.
a. are acquired for fairly small sums of
money.
4. When
a specification is widely known, commonly recognized and readily available to
every buyer, it is called a:
1. standard specification.
2. performance specification.
3. individual specification.
4. market grade specification.
5. customized specification.
5. Early
supply involvement can be accomplished by:
a. staffing the engineering department
with supply professionals.
b. using cross-functional teams on new
product development.
c. encouraging internal customers to regularly
interact with suppliers.
d. empowering internal customers to
evaluate and select suppliers.
e. co-locating accounting staff in the
purchasing/supply department.
6.
Description by brand:
a. may be a preference of an internal
user, but it is never a necessity.
b. is the least risky and lowest cost
approach to attaining “best value.”
c. may be a necessity because the
manufacturing process is secret.
d. should always be discouraged by the
buyer.
e. indicates a supplier has unduly
influenced someone in the buyer’s organization.
7. The
purpose of identifying the function of an item to be required is:
a. to provide the mathematics for a
suitable inspection program.
b. to assist in the determination of what
represents acceptable value.
c. to avoid having to purchase a branded
item.
d. to avoid substitution.
e. to avoid engineering-purchasing
arguments.
8. A
buyer may be compelled to purchase by specification when:
a. a high degree of supplier expertise or
skill is required and difficult to define.
b. the internal user’s preferences are
impossible to overcome.
c. a supplier holds a needed patent.
d. an opportunity exists to purchase
identical requirements from several sources.
e. the buyer wants the supplier to decide
how to make the most suitable product.
9.
Standardization:
a. means agreement on definite sizes,
design, and quality.
b. is essentially a marketing and sales
concept.
c. is a reduction in the number of sizes
and designs.
d. is a selective and commercial problem.
e. is an attempt to concentrate production
on the most important sizes.
10.
Supply chain risks include:
a. interruptions to the flow of goods or
services.
b. actions that lower the company’s
attractiveness to the investment community.
c. lack of regulatory compliance.
d. a and c
e. a, b, and c
True and False
1.
Quality as a term covers both functionality: “Does it do the job we want
done?”
and conformance to specification: “Does it fit the specification agreed to?”
2. MRO
stands for Maintenance, Resale, and Operating Supplies.
3.
Capital items can be depreciated, are often bought under a separate budgetary
allocation, and may require special financing arrangements.
4.
Equipment, real estate, and construction are examples of capital acquisitions,
but information technology is not.
5.
Assets may be tangible or intangible.
6.
Packaging is an easy category to buy because it has few disposal,
environmental, and transportation implications.
7.
Buying capital equipment differs from other types of purchases because
determination of final cost includes estimates over the life of the equipment.
8. New
technology frequently permits an organization to gain competitive advantage on
the bases of different products and services at significantly lower cost.
9. For
non-repetitive requirements, a system or process of acquisition can be
designed.
10. The
price of a semiprocessed material—steel sheets instead of ingots, frozen pork
bellies instead of hogs, cocoa butter instead of beans—tends to move in the
opposite direction of the price of the basic raw material.
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