1. When buying with a performance or function specification:

most of the risk is borne by the buyer.

it is fairly easy to ensure that potential suppliers are quoting for exactly the same material or service.

the opportunity exists to purchase identical requirements from several sources.

the focus is on design more than results.

it may be difficult to compare quotations and the supplier may include a risk allowance in the price.

2. The inability to store services:

means timing is critical to successful service acquisition.

makes it easier to acquire services than goods.

facilitates supplier performance measurement.

makes it easier to evaluate the quality of the service.

is of little importance at the time of acquisition.

3. Simplification:

is an agreement on definite sizes, design, and quality.

is essentially a technical and engineering concept.

is a reduction in the number of suppliers manufacturing a certain item.

is an attempt to reduce conflicting information in specifications.

is an attempt to concentrate production on the most important product sizes.

4. Early supply and supplier involvement:

helps ensure that what is specified is procurable and represents best value.

is seldom necessary because internal users are best suited to identify needs.

is focused on early establishment of key contractual terms and conditions.

relies on cross-functional teams to manage the buyer-supplier relationship.

is a way to encourage internal customers to regularly interact with suppliers.

5. A buyer may be compelled to purchase by specification when:

a high degree of supplier expertise or skill is required and difficult to define.

the internal users preferences are impossible to overcome.

a supplier holds a needed patent.

an opportunity exists to purchase identical requirements from several sources.

the buyer wants the supplier to decide how to make the most suitable product.

6. An advantage of buying by performance or function over other specification methods is that it provides:

evidence that the buyer has given thought and careful study to the need and the ways in which it may be satisfied.

the opportunity for the potential supplier to establish how to make the most suitable product.

the potential for equitable competition by ensuring that the suppliers are quoting for exactly the same material or service.

a standard for measuring and checking materials as supplied.

an opportunity to purchase identical requirements from a number of different sources of supply.

7. Early supply involvement can be accomplished by:

staffing the engineering department with supply professionals.

using cross-functional teams on new product development.

encouraging internal customers to regularly interact with suppliers.

empowering internal customers to evaluate and select suppliers.

co-locating accounting staff in the purchasing/supply department.

8. Supply chain risks include:

interruptions to the flow of goods or services.

actions that lower the companys attractiveness to the investment community.

lack of regulatory compliance.

a and c

a, b, and c

9. Capital assets are long-term assets that:

are bought and sold in the regular course of business.

have an expected use of less than one year.

have an ongoing effect on the organizations operations.

are generally expensed.

are acquired for fairly small sums of money.