Supply Chain

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Tutorial 8
Sourcing & Purchasing Decisions


1. One advantage of outsourcing is that it:
a. gives the company a high degree of control over its operations. b. increases the company’s access to state-of-the-art products and processes. c. protects the company’s proprietary designs and processes. d. encourages the development of the company’s core competencies.

2. Which of these is an indirect cost associated with insourcing? e. Maintenance
f. Purchasing
g. Receiving
h. Quality control

3. Competitive bidding, active sourcing, and using industry standards are all actions that are appropriate if the sourcing strategy is to: i. Form partnerships with suppliers.
j. Maximize commercial advantage.
k. Simplify the acquisition process. (need to advertisement,but competitive is very differcult) l. Ensure supply continuity. (if competitive bidding, price high, supplier will leave)

4. When compared with single sourcing, multiple sourcing -> (lower risk)has the advantage of: dual and cross also double supplier, -dual is 2 different supplier to support same product. Cross is the supplier supply A, also need to supply B at the same time. m. spreading risk.

n. volume leveraging.
o. lower transportation costs.
p. reduced quality variability.

5. A sourcing strategy in which two suppliers are used for the same purchased product or service is: q. cross sourcing.
r. dual sourcing.
s. contingency sourcing.
t. multisourcing.

6. This table contains the performance criteria and scores for four potential suppliers to Kramerica Industries. Evaluate the data and identify the best source for Kramerica. Performance Dimension| Company A| Company B| Company C| Company D| Quality (W=0.4)| 3| 4| 2| 5|

Cost (W=0.3)| 4| 3| 5| 3|
Flexibility (W=0.2)| 5| 3| 4| 2|
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