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Chapter 6 Section 8 Answers
Chapter 6 Section 8 Answers
Procurement refers to the raw materials, component parts, and supplies bought
from outside organizations to support a companys operations. It is closely related
to logistics since acquired goods and services must be entered into the supply
chain in the exact quantities and at the precise time they are needed. Procurement
is also important because its costs often range between 60 and 80 percent of an
organizations revenues.
The text provides five potential procurement objectives that could be discussed.
They are supporting organizational goals and objectives; managing the purchasing
process effectively and efficiently; managing the supply base; developing strong
relationships with other functional groups; supporting operational requirements.
3. Name and describe the steps in the supplier selection and evaluation process.
Identify the need for supply => can arise from the end of an existing supply
agreement or the development of a new product. Situation analysis looks at both
the internal and external environment within which the supply decision is to be
made. Identify and evaluate potential suppliers delineates sources of potential
information, establishes selection criteria, and assigns weights to selection
criteria. Select supplier(s) is where an organization chooses one or more
companies to supply the relevant products. Evaluate the decision involves
comparison of expected supplier performance to actual supplier performance.
Lean Six Sigma integrates the goals and methods of the Lean and Six Sigma
approaches in the pursuit of quality. What sets Lean Six Sigma apart from its
individual components is the recognition that organizations cannot focus only on
quality or speed. An organizational focus on improving quality is needed as it
relates to responsiveness.
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Multiple Choice Questions
1. ____ refers to the raw materials, component parts, and supplies bought from outside
organizations to support a companys operations.
a. Inbound logistics
b. Procurement
c. Materials management
d. Supply management
e. None of the above
(b; p. 97)
a. materials management
b. supply management
c. purchasing
d. inbound logistics
(c; p. 98)
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5. With respect to the supplier selection and evaluation process, ____ looks at both the
internal and external environment within which the supply decision is to be made.
6. ____ is the third step of the supplier selection and evaluation process.
7. What is the final step in the supplier selection and evaluation process?
a. evaluate decision
b. implement decision
c. select suppliers
d. provide feedback
(a; p. 100)
a. specification
b. situation analysis
c. problem recognition
d. planning
(d; p. 103)
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10. ____ is often a major shortcoming to many global procurement plans.
a. Implementation
b. Evaluation
c. Specification
d. Monitoring and improving
(a; p. 103)
11. ____ materials refer to stock that exceeds the reasonable requirements of an
organization.
a. Waste
b. Obsolete
c. Scrap
d. Excess
(d; p. 104)
12. ____ materials are materials that are no longer serviceable, have been discarded, or
are a by-product of the production process.
a. Excess
b. Scrap
c. Obsolete
d. Waste
(b; p. 105)
a. Waste
b. Scrap
c. Obsolete
d. Excess
(a; p. 105)
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True-False Questions
1. Procurement refers to the raw materials, component parts, and supplies bought from
outside organizations to support a companys operations. (True; p. 97)
2. First and foremost, procurements objectives must manage the purchasing process
effectively and efficiently. (False; p. 98)
4. The first step in supplier selection and evaluation is situation analysis. (False; p. 99)
7. One reason for the growth of the supplier development concept is that achieving
competitive advantage in the supply chain is predicated on purchasers adopting a
more aggressive approach. (True; p. 101)
8. Reduced costs and reduced cycle times are two benefits associated with Six Sigma.
(True; p. 102)
10. Problem recognition is the first step in global procurement. (False; p. 103)
11. Because global sourcing increases the distance that components and inputs must be
moved, managers must consider the tradeoff between transportation and holding
costs. (True; p. 103)