CH 2 HW Questions

Which of the following Incoterms is widely used for sales of bulk commodities like grains and oil?

FOB (Free on Board)

One of the primary goals of purchasing is to:

Ensure uninterrupted flows of raw materials at the lowest total cost.

If a firm manages to lower its purchase spend on materials by $10,000 then

Profits before taxes increase by $10,000.

Petty cash is being phased out in favor of:

P-Cards

The purchasing and supply management function in the government and nonprofit sectors, such as educational institutions; hospitals; and federal, state, and local governments is called:

Public procurement

A(n) ____________ purchase order is negotiated for repeated supply over a fixed time period, such as quarterly or yearly.

a. blanket

b. automatic

c. blank checks

d. invitation for bid

blanket

Which of the following is an advantage to utilizing an e-procurement system?

time savings, cost savings, mobility

Given the following information, find the break-even quantity using Break-even Analysis.

Costs	Make Option	Buy Option
Fixed Cost	$20,000	$500
Variable Cost	$11	$15

4875 units

Supplier diversity programs in the private sector in the U.S.:

Include purchasing from minority-owned, women-owned, veteran-owned, disability-owned, and small-business enterprises.

Use the following information to determine which supplier is more cost-effective using total cost analysis.

Order lot size	500
Annual Requirements	6,000 units
Weight per steering wheel	20 pounds
Order processing cost	$125
Inventory carrying rate	20% per year
Cost of working capital	10% per year
Profit margin	20%
Price of finished golf cart	$5,000
Back order cost	$15 per unit

Unit Price	Supplier 1	Supplier 2
1 to 999 units/order	$50	$49.50
1000 to 2,999 units/order	$49	$48.50
Tooling cost	$1000	$1000
Terms	2/10 net 30	1/10, net 30
Distance	120 miles	100 miles
Supplier Quality Rating	2%	3%
Supplier Delivery Rating	1%	2%

Truckload (TL ≥ 40,000 lbs): $0.90 per ton-mile

Truckload Less-than-truckload (LTL): $1.10 per ton-mile

Note: per ton-mile = 2,000 lbs. per mile; number of days per year = 365

Using supplier 1 will save about $33,000

Which of the following is NOT used to calculate total transportation cost when using the Total Cost of Ownership concept?

gas prices

The total cost of ownership for Supplier 1 is $1,670,000. The total cost of ownership for Supplier 2 is $1,750,000. The total cost of ownership for Supplier 3 is $1,690,000. Using Total Cost Analysis, it will be more cost-effective to use:

Supplier 1

Which of the following is NOT a reason for favoring multiple sourcing?

less quality variability

Which of the following is a reason that single sourcing is considered risky/bad?

a. volume of order may be too small

b. it is easier to establish a mutually beneficial strategic alliance

c. firms cannot take advantage of transportation economies

d. Poor supplier performance could result in plant shutdowns

Poor supplier performance could result in plant shutdowns

Which of the following is an advantage of decentralized purchasing departments?

Better knowledge of unit requirements

Making all the purchasing decisions, including order quantity, pricing policy, contracting, negotiations, and supplier selection and evaluation are the key characteristics of:

Centralized Purchasing.

In 2019, the world's largest merchandise exporter was:

The european union

Which of the following is a potential challenge for global sourcing?

dealing with duties, political problems, currency exchange

A(n) _______________ performs transactions for a fee, and do not take title to the goods. Instead, title passes directly from the seller to the buyer.

import broker

Public procurement procedures are generally designed to:

maximize competition