Chapter 12 The Purchasing Process TRUE FALSE assets or intangible assets department 1 As used in the purchasing process chapter the term goods and services refers to raw materials merchandise supplies fixed 2 The purchasing manager usually performs major buying activities as well as performing the administrative duties of running a 3 The purchasing supervisor is responsible for receiving incoming goods signing the bill of lading presented by the carrier reporting the receipt of goods and making prompt transfer of goods to the appropriate warehouse or department 4 In large organizations nearly all of the actual purchasing is done by professional buyers and their assistant s 5 Goal congruence exists when each individual managers goals are achieved 6 The connections between an organization including the flow of information materials and services from suppliers of raw materials through the organization s customers are its supply chain 7 When the data on the inventory record indicate a need to replenish the stock the inventory system prepares a purchase order 8 The purchase requisition is sent from the inventory control department to the purchasing department 9 Supply chain management is the combination of processes and procedures used to ensure the delivery of goods and services to customers at the lowest cost while providing the highest value to the customer 10 With continuous replenishment CRP a vendor obtains a buyer s current sales demand and inventory data in real time and replenishes the buyer s inventory 11 Notifications that a PO has been prepared and sent to the vendor are sent to the receiving department the accounts receivable process and the department or process that requested the purchase 12 Collaborative Planning Forecasting and Replenishment CPFR features collaborative processes across the supply chain using a set of processes and technology models including creating joint business plans sales forecasting order planning and forecasting order generation and order fulfillment 13 A retailer could misread a demand signal doubling it s normal order and the wholesaler could respond and also double it s order resulting in four times the retail order This is an example of the bullwhip effect 14 According to the context diagram for the purchasing process when a purchase order is sent to the purchaser the vendor responds by sending the goods along with a packing slip 15 Reorder point analysis reorders inventory when the item reaches a certain inventory level that was determined in advance based 16 EOQ is a technique that determines how much inventory to reorder based on an analysis that optimizes inventory ordering and on the item s purchase rate carrying costs 17 ABC analysis is a technique for ranking inventory items according to their relative importance 18 In selecting a vendor a buyer may need to obtain competitive bids by means of a document called a purchase order 19 A receiving report is an external request for the purchase of goods or services from a vendor 20 After the vendor has been selected the buyer prepares a purchase order 21 Inventory personnel use the vendor master data to select an appropriate vendor 22 A carbon copy of a multipart paper document is one in which selected data are blanked out so that persons receiving that copy will not have access to the data 23 The business document that accompanies the purchased inventory from the vendor and identifies the shipment and triggers the inventory receiving process is the packing slip 24 The document used to record merchandise receipts is called a purchasing report 25 Whereas a receiving report normally indicates that goods have been received some organizations use an acceptance report to acknowledge formally the satisfactory completion of a service contract 26 A repository of data about approved vendors is referred to as the AP master data 27 The purchase order master data is a compilation of open purchase orders that includes the status of each item on order 28 The warehouse master data contains a record of each inventory item which is stocked in the warehouse and or regularly ordered from a vendor 29 The purchase receipts data is an event data store with each record reflecting a receipt of goods and services 30 A paperless system would eliminate documents and forms as the medium for conducting business transactions 31 The warehouse number is the primary key for the relational table for inventory 32 The item number is the primary key for relational table for vendors 33 RFID is a chip with an antenna that can send and receive data from a reader and is useful to track items through the supply 34 An employee has a conflict of interest when he she has a financial interest direct of indirect in a company with which the 35 Digital signatures allows the vendor to determine that the sender of the message has the authority to send it and thus prevents chain employer does business an unauthorized purchase MULTIPLE CHOICE 1 The purchasing process is part of the process for a merchandising firm 2 The typical purchasing process would capture and record data related to the day to day operations of all of the following a b c d a b c d except order to cash purchase to pay conversion general ledger financial reporting shipping buyers receiving purchasing a b c d a b c d a b c d a b c d a b c d a b c d 3 As used in the text the term services specifically refers to 4 Which of the following is least likely to report directly to the vice president of logistics 5 Which of the following managers is most likely to report to the controller items having a physical existence and value work performed by employees work performed by outside vendors products normally held for resale controller receiving department purchasing department warehouse accounts payable department manager cashier purchasing department manager receiving department manager a purchase requisition is sent from inventory control to the purchasing department the purchase order is sent to the vendor goods or services are received from the vendor a copy of a receiving report is sent to the cashier goal congruence management perquisites management by exception control theory the purchase order the receiving report the stock notice allocate inventory 6 The typical horizontal flows of information in a purchasing process might include all of the following except 7 The purchasing manager is evaluated by his her supervisors based on purchasing inventory at the lowest price