i) Which one of the following is not included in the 5 R in purchasing?

a) Quality

b) Quantity

c) Price

d) None of these

Answer: (d)
ii) Which of the following is not a function of purchasing management?
a)

Selecting the source

b) Placement of purchase order

b)

Physical controls of material

d) None of these
Answer: (d)
iii) The purchase order form is designed by
a)

Materials Manager

b) Purchase Manager
b)

Marketing Manager

d) None of them
Answer: (b)
v) The objective(s) of forward purchasing is / are
a) To guard against interruption in supply
b) To economize the use of storage space
c) To guard against the future rise in price
d) All of these
Answer: (a)
viii) JIT contributed to the
a) Reduced inventories and WIP
b) Reduced suppliers and vendors
c) Reduced information flows

d) Reduced manpower planning

Answer: (a)
xii) Hedging technique is used
a) When there is an organized commodity market
b) Where large quantities of a particular commodity are bought and sold
c) Both (a) and (b)
d) None of these
Answer: (c)
i) Purchase Budget has an impact on
a)

Profitability of the company

b)

Materials Budget of the company

c)

Bill of materials

d)

All of these

Answer: (d)
ii) Right quality means
a)

over specifying the quality standards for purchasers

b)

under specifying the quality for purchasing

c)

buying standard items

d)
Buying quality which suits the needs without incurring extra cost to the
company
Answer: (d)
iii) Purchase order is a legal binding contract only if it is
a)

accepted by the supplier

b) acknowledged by the supplier

b)

posted by the buyer

d) none of these
Answer: (a)

iv) JIT is a concept which means

a)

Japanese language

b)

Making a plan from time to time

c)

Getting the items just when they are needed for production

d)

Raising purchase order just before delivery.

Answer: (c)
vi) The type of purchasing where the purchaser tries to protect himself by entering
into two transactions a purchase and a sale contacts in two markets whose prices
fluctuate is known as
a)

Speculative Buying

b) Forward Buying
b)

Hedging

d) Blanket order
Answer: (c)
xii) The parameters for vendor rating include
a)

Price

b) Service
b)

Delivery

d) All of these
Answer: (d)
xi) The type of purchasing where the purchaser tries to protect himself by entering
into 2 transactions a purchase and a sale contacts in two markets whose prices
fluctuate is known as
a) hedging

b) speculative buying

c) forward buying

d) blanket order

Answer: (d)
iv) The document prepared on receipt of materials in store is known as
a) MRN

b) GRN

c) Challan

d) Bill of materials.

Answer: (c)
i) The system of purchasing from ones customer preferred to others is known as
a) Forward Buying
c) Reciprocal Buying

b) Tender Buying
d) Blanket Order

Answer: (c)
v) A stipulation in a contract of sale pertaining to goods which is essential to the
main purpose of the contract is called
a) Rejection
b) Warranty
c) Acceptance
d) Condition.
Answer: (d)
vi) When the contract of agency is in writing it is called
a) Law of agency
b) Qui facit peractum facit per se
c) Power of Attorney
d) none of these.
Answer: c
vii) An arrangement whereby the obligation to pay an exporter is undertaken by a
bank is called
a) Bill of Landing
b) Letter of Credit
c) International Credit
d) Hundi.
Answer: b
viii) The type of buying most suitable for C strategy of items of inventory is

a) Forward Buying
b) Tender Buying
c) Blanket Order
d) Systems Contract.
Answer: c

PART 2
1. Resources such as labor materials and energy are known as ___ in the
transformation process
outputs
intangibles
factors of production
inputs

2. A series of quality assurance standards designed to ensure consistent product

quality under many conditions is known as
statistical process control.
total quality standards.
total quality management.
ISO 9000.

3. The raw materials, components, completed or partially completed products,

and pieces of equipment a firm uses are often referred to as

Inventory.
order quantities.
production.
outputs.

4. In a large company, the department charged with determining the actual

processes to be used in turning inputs to outputs is
marketing research.
engineering.
operations
product planning.

5. Which of the following brings all resources required to create a product to a

central location?
fixed-position layout
process layout
product layout
continuous layout

6. Getting products to customers, obtaining and managing raw materials, and

packaging finished products are all activities of
procurement.
logistics
production.
materials management.

7. The development and administration of the activities involved in transforming

resources into goods and services is known as
operations management
manufacturing.
the transformation process.
production.

8. Which of the following is NOT a difference between manufacturers and service

providers?
nature and consumption of output
uniformity of inputs
uniformity of outputs
nature and consumption of input

9. The process through which inputs are converted into outputs is referred to as
the transformation process.
manufacturing.
materials management.
physical distribution.

10. The degree to which a good or service meets the demands and requirements
of customers is called
quality.
customer satisfaction.
effectiveness
productivity.

11. ____ involves building an item in self-contained units that can be combined or
interchanged to create different products.
Customization
Standardization
Process control
Modular design

12. Making identical, interchangeable components or complete products is

referred to as
customization.
standardization.
engineering.
mechanization.

13. Unique products are generally produced through

customization
standardization.
mechanization.
personalization.

14. Procurement is another name for?

consumption
disposition
budgeting
purchasing

15. Which of the following is the sequence of operations through which a product

must pass?
scheduling
critical path
transformation process
routing

16. A planning system that schedules the precise quantity of materials needed to
make a product is called
flexible scheduling
cycle time management.
material requirements planning
economic order quantities.

17. The activities and processes used in making both tangible and intangible
products is known as
manufacturing.
production.
operations.
the transformation process.

18. Customers' perceptions are important in determining

economic order quantities.
production schedules.
product specifications.
quality.

19. The raw materials, components, completed or partially completed products,

and pieces of equipment a firm uses are often referred to as
inventory.
order quantities.
production.
outputs.

20. Getting products to customers, obtaining and managing raw materials, and
packaging finished products are all activities of
procurement.
logistics.
production.
materials management.

PART 3
Materials Management Multiple Choice Questions with their answers. Answers are indicated in Italic
form.
1. Business cycle, price trends, National Economy are .
a. Micro Factors
b. Macro Factors
c. Controllable Factors
2. .also called part lists or building lists is the document generated at the
design stage.
a. MRP (Material Requirement Planning)
b. BOM (Bill of Materials)
c. MPS (Master Production Schedule)
3. is the scientific technique for planning the ordering and usage of
materials at various levels of production and for monitoring the stocks during these
transaction.
a. MPS
b. MRP
c. BOM
4. is the time that elapses between issuing replenishment order and
receiving the material in stores.
a. Replenishment time

b. Lead time
c. Idle time
5. is the task of buying goods of right quality, in the right quantities, at the
right time and at the right price.
a. Supplying
b. Purchasing
c. Scrutinizing
6. Which is not a part of 5Rs of buying?
a. Right Quality
b. Right Quantity
c. Right Source
d. Right Price
e. None of the above
7. Purchasing responsibilities can be divided into Buying, Clerical and ..division.
a. Packing
b. Traffic
c. Record
d. Follow up
8. The first activity of Purchasing cycle is
a. Communicating requirement to the purchase

b. Source Selection and development

c. Recognizing the need for procurement
d. Inspection of goods
9. Buying according to the requirements is called
a. Seasonal Buying
b. Hand to mouth buying
c. Scheduled Buying
d. Tender Buying
e. Speculative Buying
10. Procuring an item in staggering deliveries according to the delivery schedule finished to
the supplier by the buyer.
a. Seasonal Buying
b. Hand to mouth buying
c. Scheduled Buying
d. Tender Buying
e. Speculative Buying
11. Buying of the annual requirements of an item during its season.
a. Seasonal Buying
b. Hand to mouth buying
c. Scheduled Buying

d. Tender Buying
e. Speculative Buying
12. Raw Materials and WIP can be classified undera. Indirect Material
b. Direct Material
c. Finished Material
d. Standard Parts
13. ..are the basic materials which have not undergone any conversion since their
receipt from suppliers.
a. WIP
b. Raw Material
c. Finished Parts
d. Work Made Parts