Study Guide for Chapter 7:

1. Discuss the possible ways that purchasing becomes aware of the need to
evaluate and select a supplier.
2. Discuss the sources of information available to a buyer when seeking
information about potential sources of supply.
3. What are various methods of evaluating and selecting suppliers?
4. Define and discuss the characteristics included in an effective supplier
survey.
5. What are the key supplier evaluation criteria?
6. What are the critical issues in supplier selection?
7. How can companies reduce supplier evaluation and selection cycle time?
8. Which of the following is not a commonly accepted source of information
regarding potential supply sources?

a. Current suppliers.
b. Sales representatives.
c. Television advertising. (*)
d. Experience.
e. Trade shows.
9. _____ is a program that distributors market to manager their customers inventory
for them.

a. Just-in-time
b. Vendor managed inventory *
c. Self-managed inventory
d. Countertrade
e. Preferred supplier
10._____ are more responsive to the buying firms changing needs and can
economically make frequent smaller deliveries.

a. Local suppliers *
b. International suppliers

c. Preferred suppliers
d. National suppliers
e. There is no relationship with the location of the supplier and customer
responsiveness.
11. All of the following are examples identified from recent research of entry
qualifiers that suppliers must satisfy to advance in the evaluation and selection
process except _____.

a. appropriate sales and marketing activities *

b. financial strength
c. appropriate business strategy
d. strong supportive management
e. design capability
12. Which of the following is not an example of points that should be considered
when evaluating a suppliers employee capabilities?

a. The degree to which employees are committed to quality and continuous

improvement.
b. The overall skills and abilities of the workforce.
c. Employee morale.
d. Workforce turnover.
e. Disclosure of environmental infractions. *
13. Which of the following is not a risk of selecting a supplier in poor financial
condition?

a. The supplier is unwilling to share its technical expertise with the purchaser. *
b. The supplier will go out of business.

c. Suppliers that are in poor financial condition may not have the resources to
invest in plant, equipment, or research that is necessary for longer-term
technological or other performance improvements.
d. The supplier may become too financially dependent on the purchaser.
e. Financial weakness is usually an indication of underlying problems.
14. All of the following are examples of questions that should be asked when
evaluating a supplier for longer-term relationship potential except _____.

a. How early in the product design stage is the supplier willing or able to
participate?
b. Does the supplier have an interest in joint problem solving and improvement
efforts?
c. What is the suppliers on-time delivery performance? *
d. Is the supplier willing to commit capacity exclusively to the buyers needs?
e. Will the supplier share cost data?
15. A/An _____ is responsible for understanding in-depth entire families or groups of
purchased goods and services.

a. third party
b. general buyer
c. preferred supplier
d. long-term buyer-supplier relationship
e. commodity team *