SCM Purchasing Management Ch 9-11

Life cycle costing (LCC):

may include costs that are 10-15 years in the future and highly uncertain

The lowest bid may not receive the order if:

the buyer discovers the lowest bidder is unrealiable, the lowest bid is higher than the buyer believes justifable and there is a reason to believe the bidders colluded

Portfolio analysis is:

the categorization of a spend map based on risks to acquire in the marketplace and value

A cash discount allows:

the seller to secure prompt payment, and the buyer to pay a lower price per unit.

with deregulation of the transportation industry and the development of intermodal service, the focus for the transport buyer is:

the carriers ability to handle multiple parts of the logistics process

Targeting costing starts with:

the selling price of an organization's end product minus the operating profit to establish the target cost

Hedging is a way to:

try to minimize price and exchange risks.

integrated carriers (truck-air) such as UPS and Federal Express, are able to capture a larger market share bc they:

utilize their own aircraft, have extensive ground networks and have accurate, real-time logistics tracking systems

Accepting a price discount for ordering larger quantities leads to lower levels of anticipation inventory

False

An escalator clause provides for an increase, but not a decrease, in price if costs change

False

Fintech firms assist manufactures in the development in design to cost, manufacture to cost, and purchasers to cost

False

In portfolio analysis, bottleneck items are characterized by high risk and high value

False

Indirect costs can be specifically and accurately assigned to a given unit of production or a specific identifiable task performed by a service provider

False

Marine transport is best suited for products of high value & extremely perishable

False

Online reverse auctions are useful means of price determination for customized items

False

Truckload shipments are typically for short haul distances composed to less than truckload shipments

False

True or False 3rd party logistics providers are carriers that always own assets, and act as intermediaries between trading partners ex. shippers, / carriers

False

Value engineering and value analysis use the same methods but value analysis is performed in the design stage and value engineering is performed in the redesign stage

False

The cost approach to pricing:

Means prices are set to cover direct costs, contribute to indirect, and provide a `profit

Organizations operating under a just-in-time system, prefer to ship by:

Truck

Although associated with a number of factors, the learning curve normally is most closely identified with the analysis of direct labor costs

True

In portfolio analysis, strategic goods and services are both more valuable to the buying organization and riskier to acquire

True

Life cycling can be used to justify the acquisition of expensive equipment on the basis of lower operating costs over the life of the asset

True

Logistics cost can be divided up into 3 categories: inventory carrying costs, admin costs, and transportation (with transportation costs accounting for the bulk of the cost)

True

Logistics is the management of inventory in motion and at rest

True

Target costing assist may result in company-wide cost reductions in design to cost, manufacture to cost, and purchase of the cost

True

The cost per hundred weight (cwt) is general higher for less than shipments compared to Truckload shipments

True

True or False Transportation costs increase as distance, quantity, and speed increase

True

True or False Two effective logistics cost reduction strategies are partnering agreements with logistics service providers and long-term contracts

True

In portfolio analysis, cost analysis can be used in acquisition if strategic goods or service to identify opportunities to:

avoid, eliminate or reduce costs in buyer and supplier cost structures

Marine transportation is:

best suited for hauling large tonnage over long distances and disadvantaged bc of the need for suitable networks, which are dependent on gov't support

compared to motor carriers, rail:

is relatively inflexible and slow, and has higher damage rates

A cash discount of 1/15, N/30 (1 percent cash discount if payment is made in 15 days, with the gross amount due in 30 days) is the equivalent of what approxiamte interest rate?

24 percent

Cost management tools and techniques that may provide data for negotiations with internal organizational stakeholders and externally with suppliers include:

activity-based costing, the learning curve and total cost of ownership

fuel efficiency and energy consumption considerations:

are a factor in transportation strategy development in many organizations

Transportation rates:

are established primarily through negotiation

decreasing total business logistics costs as percentage of the U.S. GDP may be attributed to

deregulation of the transportation sector, and improved logistics technology systems * e-commerce

labor and materials costs typically:

direct costs

Purchasers cab use activity-based costing to:

eliminate non value-adding activities, reduce activity occurrences and reduce the cost driver

When estimating the cost structure of a manufacturing supplier

equipment depreciation is typically the largest cost element in overhead

The fairest possible means of treating all suppliers alike in a competitive bidding situation is to:

establish a policy of firm bidding

If the deliver date is some months or years away and if there is substanial change of price escalation, a supplier may feel that there is far too much risk of loss to agree to sell under a:

firm-fixed-price (FFP)

compared to other modes of transportation, motor carriers provide the advantage of:

flexibility of point-to-point service

when cost analysis is applied to a supplier's price, the buyer:

identifies and analyses each cost element for cost reduction opportunities

The goal of value engineering and value analysis is to:

perform a function at the same or an improved level while reducing costs

This bond guarantees wire will be done according to specifications, in the time specified, and if another supplier does not rework or completes the order, purchasing is indemnified for those extra costs

performance bond

When using competitive bidding to determine prices, the purchaser should ensure that the bidders are:

qualified to make the item or service in a accordance with the buyer's specifications, able deliver it by the desired date, sufficiently reliable and numerous enough to ensure a truly competitve price

In portfolio analysis, the goal when purchasing bottleneck items is to:

reduce or elimination customization

If identical bids are received, the buyer might choose to:

reject all bids and negotiate with one or more suppliers

A transportation strategy should include consideration of:

safety on the ground, in the air and on water, environmental factors, such as pollution, consolidation of freight and alternative transport modes

Common methods of analyzing total cost of ownership (TCO) include:

standard cost models, unique cost models and segregating cost on the basis of pretransaction, transaction and post-transaction costs

Purchases categorized as leverage items in portfolio analysis have the following characteristics:

standard specification or commodity- type items`

The selection of the FOB point is important to the purchaser, bc it determines

who pays the carrier, when legal title to goods being shipped passes to the buyer, who is responsible for preparing & purchasing loss or damage claims and who routes the freight

A purchasing approach to minimize the acquisition costs and rely on competition to keep prices low is best suited for:

noncritical/routine items`

Qualifying sources is an example if a post-transaction cost phase in total cost of ownership

False

Costs incurred in the operation of a production plant or process, but normally cannot be related directly to any given unit of production or service provided, are called?

indirect costs

Straight Bill of Lading

is used when the goods have been paid for in advance of shipment & requires delivery

Items for which prices are comparatively low and the cost of price reduction efforts may exceed any price savings realized are:

maintenance, repair, and operating supplies

demurrage occurs:

may indicate poor delivering scheduling on the part of the buying organization