TEST BANK Sourcing and Supply Chain Management – 4th edition Handfield, Monczka, Giunipero, and Patterson Chapter 2

14. Relying on a list of preferred suppliers can increase the time and resources required for evaluating and selecting suppliers.

a. True

b. False

15. In drafting a purchase order, purchasing must take great care when wording such an agreement because it is a legally binding document.

a. True

b. False

16. Almost all firms establish blanket purchase orders with their suppliers.

a. True

b. False

17. It is very important for the buyer to adequately understand existing market conditions prior to signing a fixed-price contract to prevent contingency pricing from adversely affecting the total cost of the purchase over the life of the contract.

a. True

b. False

18. Cost-based contracts are generally less favorable to the buyer because the threat of financial risk is transferred from the seller to the buyer.

a. True

b. False

19. There is an incentive, at least in the short run, for suppliers to be inefficient in cost-based contracts because they are rewarded with higher prices.

a. True

b. False

20. The responsibility for concealed damage is simple and easy to detect.

a. True

b. False

21. Material discrepancies usually result from incorrect quantity shipments.

a. True

b. False

22. The buyer may assume that the purchasing cycle ends with the receipt of an ordered item or the selection of a supplier.

a. True

b. False

23. The way that MRO items are typically dispersed throughout an organization makes monitoring MRO inventory relatively simple.

a. True

b. False

24. Purchasing personnel are no longer involved with transportation buying and the management of inbound and outbound material flows as this is now considered to be a logistics management function.

a. True

b. False

25. Some purchasing departments spend 80% of their time managing 20% of their total purchase dollars.

a. True

b. False

26. The dollar value of the items covered by purchasing cards is relatively high.

a. True

b. False

27. The key benefit to online ordering through electronic catalogs is the ability to match pictures of items with their descriptions.

a. True

b. False