Marketing Research 8th Edition by Burns – Test Bank

Marketing Research 8th Edition by Burns – Test Bank

Chapter 10
Sourcing and Supply Management

Multiple Choice Questions

1. All of the following are supply management goals EXCEPT:

A. Ensure timely availability of resources.

B. Purchase at the lowest price.

C. Enhance quality.

D. Assess technology and innovation.

2. In its own country, a former supplier to your company recently began selling its own product that is identical to a product that was developed by your company. This is an example of:

A. Supply risk.

B. Sustainability.

C. Insourcing.

D. Strategic sourcing.

3. Zanda Corp. had outsourced its production to a company located in Asia. Recently it decided to continue to outsource but bring the production back to a company located in the United States. This decision was likely made after Zanda:

A. Conducted a spend analysis.

B. Conducted a make or buy analysis.

C. Examined total cost of ownership.

D. Developed supplier certification processes.

4. If you are evaluating whether a supplier’s workforce is receiving fair wages, you are most likely doing a(n):

A. Spend analysis.

B. Assessment of sustainability.

C. ISO 9000 assessment.

D. Total cost of ownership assessment.

5. Which of the following would NOT be a step in conducting a make/buy analysis?

A. Assessing quantitative costs of outsourcing

B. Evaluating new suppliers who could make the SKU

C. Assessing the relationship of the product to the firm’s core competencies

D. Conducting a detailed internal audit of purchasing practices

6. Outsourcing is often a good choice when:

A. There are only a few suppliers.

B. A product is in the mature phase of the life cycle.

C. Technology is new.

D. The product is critical to a firm’s competitiveness.

7. Qualitative factors that should be assessed when making an insourcing/outsourcing decision include all of the following EXCEPT:

A. Compatibility of the supplier’s organizational culture and values with your company

B. The importance assigned to the supplier’s location

C. The skills and knowledge of the supplier’s management team

D. The costs incurred at the start of the contract

8. Which of the following is NOT a benefit of outsourcing?

A. Greater flexibility to change product specifications

B. Better access to market information

C. Lower supply management costs

D. Less capital needed for investment

9. The process of understanding how a firm is spending its money and with which suppliers is called:

A. Strategic sourcing.

B. Make or buy analysis.

C. Market analysis.

D. Spend analysis.

10. Aspen Corporation has discovered that it uses 10 different suppliers for a particular type of item, has bought 20 different models of that item, and total expenditures last year for the item were $100,000. Aspen most likely is conducting:

A. Supplier audits.

B. Spend analysis.

C. Supplier certification.

D. Make or buy analysis.

11. Jones Company has identified an item for which the supply risk is high and the value of the purchase to the firm is low. A recommended sourcing strategy for Jones is to:

A. Multiple source.

B. Increase efficiencies.

C. Build partnerships.

D. Consolidate purchases.

12. Which approach is likely to be used for leverage purchases?

A. Purchasing cards

B. Vendor-managed inventory

C. Using executive champions

D. Standardizing purchases

13. Moderate- to high-risk purchases with low to moderate levels of spend are categorized as:

A. Noncritical.

B. Leverage.

C. Bottleneck.

D. Strategic.

14. Benefits of single sourcing include all of the following EXCEPT:

A. Quantity discounts.

B. More consistent quality.

C. Better supplier relationships.

D. Less supply risk.

15. Squeaky Klean, a small consumer products company, purchases custom-designed plastic bottles for its cleaning products that are made at a single plant in Cleveland, Ohio. To make these bottles, specialized tooling must be purchased at a high cost and installed at a supplier’s plant. Its sourcing strategy for bottles should be to:

A. Use three or more suppliers.

B. Dual source.

C. Single source.

D. Insource bottle production.

16. A primary reason for using global suppliers is to:

A. Improve sustainability.

B. Reduce transportation costs.

C. Take advantage of free trade agreements such as NAFTA.

D. Work with the same suppliers in many different regions of the world.

17. A global food products company makes soups that are specifically tailored to the tastes of consumers in individual countries. What sourcing strategy is the company likely to use for its fresh ingredients such as vegetables?

A. Local, close to its production plant when possible.

B. National, using suppliers within each country.

C. Global, using the same suppliers across the world.

D. Low-cost country sourcing.

18. Which of the following is (are) advantages of full partnerships with suppliers, as compared to traditional adversarial relationships?

I. They help reduce uncertainties for both buyer and supplier.
II. The full partnership is easier to establish and maintain than other relationships, so more suppliers can be dealt with.
III. The full partnership assures the lowest material price.

A. I only

B. II only

C. III only

D. I and II only

E. II and III only

19. Zanda Corp. is considering trying to develop a full partnership with a particular supplier. This suggests that the item Zanda buys from the supplier is:

A. A noncritical part.

B. A “bottleneck” item.

C. A strategically important part.

D. An item appropriate for a “leverage” strategy.

20. A relationship with a supplier that is characterized by lack of trust, little communication, and short-term transactions is called a(n):

A. Adversarial relationship.

B. Arms-length relationship.

C. Acceptance of mutual goals.

D. Full partnership.

21. When you need to identify a supplier for a new purchase, the FIRST place that you should look is:

A. A local trade show.

B. The list of your company’s current suppliers.

C. The list of suppliers that your company has used in the past.

D. The Web site of industry groups.

22. Preparing an RFQ or RFP is an important step in:

A. Negotiation.

B. Online reverse auctions.

C. Supplier scorecards.

D. Competitive bidding.

23. Advanced Manufacturing Company is evaluating two suppliers for a component sourcing. After much internal discussion, AMC’s management has determined that the critical factors in choosing suppliers are: quality, delivery, price, and service. Further, management has rated the importance of these factors as 0.4, 0.3, 0.2, and 0.1, respectively. On a scale of 1 to 5, Supplier A is rated at 5, 3, 3, and 3, respectively. Supplier B’s ratings are 4, 4, 3, and 4. Which supplier has the better weighted score?

A. Supplier A

B. Supplier B

C. Neither, they both have the same weighted score.

24. Which of the following is true about the use of weighted scoring models for supplier selection?

A. Once developed, the model weights should never change.

B. The supply management department should determine the weights.

C. The highest-scoring supplier should always be selected to receive the business.

D. There is a good deal of subjectivity in developing and using the model.

25. An online auction used for sourcing:

A. Typically drives prices up as suppliers compete against each other.

B. Is used in situations similar to negotiation.

C. Can hurt supplier relationships.

D. Can only consider price.

26. Negotiation is typically used when:

A. Price is the most important factor.

B. There are many equally qualified suppliers who are willing to compete.

C. Early supplier involvement is needed in new product development.

D. There are standard product specifications that are clear and complete.

27. A legally binding document that signals to a supplier that goods and services are needed is a(n):

A. Purchase requisition.

B. Electronic data interchange.

C. Purchase order.

D. Supplier relationship management document.

28. All of the following are true about supplier scorecards EXCEPT:

A. They reduce the need for incoming quality inspection.

B. They are used to provide performance feedback to suppliers.

C. They are often used to categorize suppliers based on an overall score.

D. They are used to measure supplier performance based on key performance indicators.

29. A company has decided that it no longer needs to extensively count and inspect the products it receives from a particular supplier. This suggests that the purchasing company has begun:

A. Spend analysis.

B. Supplier certification.

C. Process simplification.

D. Time reduction analysis.

30. Williams Inc. has acquired software to help manage interactions with its supply base. This suggests that Williams Inc. is involved in:

A. Vendor-managed inventory.

B. Supplier relationship management.

C. Online reverse auctions.

D. Supplier auditing.

 

Chapter 10 Sourcing and Supply Management Answer Key

Multiple Choice Questions

1. All of the following are supply management goals EXCEPT:

A. Ensure timely availability of resources.

B. Purchase at the lowest price.

C. Enhance quality.

D. Assess technology and innovation.
Only B is not a goal of supply management. Rather than reduce purchase price, the appropriate goal is reduce total cost of ownership.

AACSB: Reflective Thinking
Blooms: Remember
Learning Objective: 10-01 Define supply management and understand its impact on a firm’s performance.
Level of Difficulty: 1 Easy
Topic Area: Supply Management’s Impact on Firm and Supply Chain Performance

2. In its own country, a former supplier to your company recently began selling its own product that is identical to a product that was developed by your company. This is an example of:

A. Supply risk.

B. Sustainability.

C. Insourcing.

D. Strategic sourcing.
Theft of intellectual property is one type of supply risk.

AACSB: Reflective Thinking
Blooms: Apply
Learning Objective: 10-01 Define supply management and understand its impact on a firm’s performance.
Learning Objective: 10-02 Understand how factors such as cost; risk; and globalization affect supply management decisions.
Level of Difficulty: 2 Medium
Topic Area: Supply Management’s Impact on Firm and Supply Chain Performance

3. Zanda Corp. had outsourced its production to a company located in Asia. Recently it decided to continue to outsource but bring the production back to a company located in the United States. This decision was likely made after Zanda:

A. Conducted a spend analysis.

B. Conducted a make or buy analysis.

C. Examined total cost of ownership.

D. Developed supplier certification processes.
The decision to bring production closer to home could only come after an analysis of total cost of ownership.

AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 10-01 Define supply management and understand its impact on a firm’s performance.
Learning Objective: 10-02 Understand how factors such as cost; risk; and globalization affect supply management decisions.
Level of Difficulty: 2 Medium
Topic Area: Supply Management’s Impact on Firm and Supply Chain Performance

4. If you are evaluating whether a supplier’s workforce is receiving fair wages, you are most likely doing a(n):

A. Spend analysis.

B. Assessment of sustainability.

C. ISO 9000 assessment.

D. Total cost of ownership assessment.
Wage disputes can affect the ability of a supplier to deliver on its commitments.

AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 10-01 Define supply management and understand its impact on a firm’s performance.
Level of Difficulty: 1 Easy
Topic Area: Supply Management’s Impact on Firm and Supply Chain Performance

5. Which of the following would NOT be a step in conducting a make/buy analysis?

A. Assessing quantitative costs of outsourcing

B. Evaluating new suppliers who could make the SKU

C. Assessing the relationship of the product to the firm’s core competencies

D. Conducting a detailed internal audit of purchasing practices
All are steps in make/buy analysis except reviewing internal purchasing practices.

AACSB: Reflective Thinking
Blooms: Remember
Learning Objective: 10-03 Analyze and make insourcing/outsourcing decisions.
Level of Difficulty: 1 Easy
Topic Area: Make an Insourcing/Outsourcing Decision

6. Outsourcing is often a good choice when:

A. There are only a few suppliers.

B. A product is in the mature phase of the life cycle.

C. Technology is new.

D. The product is critical to a firm’s competitiveness.
Outsourcing is often a good choice for mature products. There should be many capable suppliers and known technology Critical competitive items generally shouldn’t be outsourced.

AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 10-03 Analyze and make insourcing/outsourcing decisions.
Level of Difficulty: 1 Easy
Topic Area: Make an Insourcing/Outsourcing Decision

7. Qualitative factors that should be assessed when making an insourcing/outsourcing decision include all of the following EXCEPT:

A. Compatibility of the supplier’s organizational culture and values with your company

B. The importance assigned to the supplier’s location

C. The skills and knowledge of the supplier’s management team

D. The costs incurred at the start of the contract
The costs incurred at the start of a contract are quantitative, not qualitative costs.

AACSB: Reflective Thinking
Blooms: Remember
Learning Objective: 10-03 Analyze and make insourcing/outsourcing decisions.
Level of Difficulty: 2 Medium
Topic Area: Make an Insourcing/Outsourcing Decision

8. Which of the following is NOT a benefit of outsourcing?

A. Greater flexibility to change product specifications

B. Better access to market information

C. Lower supply management costs

D. Less capital needed for investment
When outsourcing, a company has to spend more time and effort managing a supplier, so supply management costs are likely to increase rather than to decrease.

AACSB: Reflective Thinking
Blooms: Remember
Learning Objective: 10-03 Analyze and make insourcing/outsourcing decisions.
Level of Difficulty: 2 Medium
Topic Area: Make an Insourcing/Outsourcing Decision

9. The process of understanding how a firm is spending its money and with which suppliers is called:

A. Strategic sourcing.

B. Make or buy analysis.

C. Market analysis.

D. Spend analysis.
Spend analysis refers to analyzing the dollars spent with which suppliers.

AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 10-04 Explain the steps in a strategic sourcing process.
Level of Difficulty: 1 Easy
Topic Area: Analyze Spend and Supply Markets

10. Aspen Corporation has discovered that it uses 10 different suppliers for a particular type of item, has bought 20 different models of that item, and total expenditures last year for the item were $100,000. Aspen most likely is conducting:

A. Supplier audits.

B. Spend analysis.

C. Supplier certification.

D. Make or buy analysis.
Spend analysis refers to analyzing the dollars spent with which suppliers.

AACSB: Reflective Thinking
Blooms: Apply
Learning Objective: 10-04 Explain the steps in a strategic sourcing process.
Level of Difficulty: 2 Medium
Topic Area: Analyze Spend and Supply Markets

11. Jones Company has identified an item for which the supply risk is high and the value of the purchase to the firm is low. A recommended sourcing strategy for Jones is to:

A. Multiple source.

B. Increase efficiencies.

C. Build partnerships.

D. Consolidate purchases.
When supply risk is high and the value of the purchase to the firm is low, multiple sourcing is recommended (see Figure 10-3).

AACSB: Reflective Thinking
Blooms: Apply
Learning Objective: 10-05 Describe the components in a sourcing strategy.
Level of Difficulty: 1 Easy
Topic Area: Develop a Sourcing Strategy

12. Which approach is likely to be used for leverage purchases?

A. Purchasing cards

B. Vendor-managed inventory

C. Using executive champions

D. Standardizing purchases
Standardizing purchases across the company increases the purchase volume needed for leverage purchases. Purchasing cards and VMI are used for noncritical purchases, and executive champions are used for strategic purchases.

AACSB: Reflective Thinking
Blooms: Apply
Blooms: Remember
Learning Objective: 10-05 Describe the components in a sourcing strategy.
Level of Difficulty: 1 Easy
Topic Area: Develop a Sourcing Strategy

13. Moderate- to high-risk purchases with low to moderate levels of spend are categorized as:

A. Noncritical.

B. Leverage.

C. Bottleneck.

D. Strategic.
Moderate- to high-risk purchases with low to moderate levels of spend are categorized as bottleneck, as shown in Figure 10-3.

AACSB: Reflective Thinking
Blooms: Apply
Blooms: Remember
Learning Objective: 10-05 Describe the components in a sourcing strategy.
Level of Difficulty: 1 Easy
Topic Area: Develop a Sourcing Strategy

14. Benefits of single sourcing include all of the following EXCEPT:

A. Quantity discounts.

B. More consistent quality.

C. Better supplier relationships.

D. Less supply risk.
Single sourcing increases supply risk.

AACSB: Reflective Thinking
Blooms: Understand
Learning Objective: 10-05 Describe the components in a sourcing strategy.
Level of Difficulty: 1 Easy
Topic Area: Develop a Sourcing Strategy

15. Squeaky Klean, a small consumer products company, purchases custom-designed plastic bottles for its cleaning products that are made at a single plant in Cleveland, Ohio. To make these bottles, specialized tooling must be purchased at a high cost and installed at a supplier’s plant. Its sourcing strategy for bottles should be to:

A. Use three or more suppliers.

B. Dual source.

C. Single source.

D. Insource bottle production.
For a small company, with a single production location, and high tooling costs, the lower capital investment needed for single sourcing will outweigh the potential cost savings and risk reduction of using dual or multiple sourcing. Plastic bottle production does not fit with the core competencies of a cleaning products manufacturer.

AACSB: Reflective Thinking
Blooms: Apply
Learning Objective: 10-05 Describe the components in a sourcing strategy.
Level of Difficulty: 3 Hard
Topic Area: Develop a Sourcing Strategy