Chapter 12—The Purchasing ProcessTRUE/FALSE1. As used in the purchasing process chapter, the term “goods and services” refers to raw materials, merchandise, supplies, fixed assets, or intangible assets.ANS: F2. The purchasing manager usually performs major buying activities as well as performing the administrative duties of running a department.ANS: T3. 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.ANS: F4. In large organizations, nearly all of the actual purchasing is done by professional buyers and their assistant(s).ANS: T5. Goal congruence exists when each individual managers' goals are achieved.ANS: F6. 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.ANS: T7. When the data on the inventory record indicate a need to replenish the stock, the inventory system prepares a purchase order.ANS: F8. The purchase requisition is sent from the inventory control department to the purchasing department.ANS: T9. 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.ANS: T10. With continuous replenishment (CRP) a vendor obtains a buyer’s current sales, demand, and inventorydata in real time and replenishes the buyer’s inventory.ANS: T11. 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.ANS: F12. 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.ANS: T13. 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.ANS: T14. 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 slipANS: F15. Reorder point analysis reorders inventory when the item reaches a certain inventory level that was determined in advance based on the item's purchase rate.ANS: F16. EOQ is a technique that determines how much inventory to reorder based on an analysis that optimizesinventory ordering and carrying costs.ANS: T17. ABC analysis is a technique for ranking inventory items according to their relative importance.ANS: T18. In selecting a vendor, a buyer may need to obtain competitive bids by means of a document called a purchase order.ANS: F19. A receiving report is an external request for the purchase of goods or services from a vendor.ANS: F20. After the vendor has been selected, the buyer prepares a purchase order.ANS: T21. Inventory personnel use the vendor master data to select an appropriate vendor.ANS: F22. 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.ANS: F23. 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.ANS: T24. The document used to record merchandise receipts is called a purchasing report.ANS: F25. 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.ANS: T26. A repository of data about approved vendors is referred to as the AP master data.ANS: F27. The purchase order master data is a compilation of open purchase orders that includes the status of each item on order.ANS: T28. The warehouse master data contains a record of each inventory item which is stocked in the warehouseand/or regularly ordered from a vendor.ANS: F29. The purchase receipts data is an event data store with each record reflecting a receipt of goods and services.ANS: T30. A paperless system would eliminate documents and forms as the medium for conducting business transactions.ANS: T31. The warehouse number is the primary key for the relational table for inventory.ANS: F32. The item number is the primary key for relational table for vendors.ANS: F33. RFID is a chip with an antenna that can send and receive data from a reader and is useful to track itemsthrough the supply chain.ANS: T34. An employee has a conflict of interest when he (she) has a financial interest (direct of indirect) in a company with which the employer does business.ANS: T35. Digital signatures allows the vendor to determine that the sender of the message has the authority to send it and thus prevents an unauthorized purchase.ANS: TMULTIPLE CHOICE1. The purchasing process is part of the ____ process for a merchandising firm.a. order-to-cashb. purchase-to-payc. conversiond. general ledger/financial reportingANS: B2. The typical purchasing process would capture and record data related to the day-to-day operations of all of the following except:a. shippingb. buyersc. receivingd. purchasingANS: A3. As used in the text, the term services specifically refers to:a. items having a physical existence and valueb. work performed by employeesc. work performed by outside vendorsd. products normally held for resaleANS: C4. Which of the following is least likely to report directly to the vice president of logistics?a. controllerb. receiving departmentc. purchasing departmentd. warehouseANS: A5. Which of the following managers is most likely to report to the controller?a. accounts payable department managerb. cashierc. purchasing department managerd. receiving department managerANS: A6. The typical horizontal flows of information in a purchasing process might include all of the following except:a. a purchase requisition is sent from inventory control to the purchasing departmentb. the purchase order is sent to the vendorc. goods or services are received from the