OSCM4315

For most public bids, the minimum required number of bids that normally must be reached is ___________.

3

There are 7 general classes of purchases.

7

What actions can supply managers take to prevent identical pricing?

Choose award criteria for future bids that prevent identical bids. Allow large contracts to be broken into smaller bids. Encourage small sellers. Encourage firm bidding policies.

What are the types of contract options for pricing?

Cost-plus-incentive-fee Cost-no-fee Cost-plus-fixed-fee Firm-fixed-price

Contract cancellations normally happen when prices __________

DROP / FALL

_____________ involves purchasing the same commodity now and in the future.

HEDGING

Capital assets have a _______ dollar value.

HIGH

Price checking is normally ______________ with MRO or small value purchases.

IGNORED

Hedging can be seen as a form of

INSURANCE

To control forward buying, companies should establish ______________ .

SAFEGUARDS

Manufacturers typically rely on ________ for purchasing parts, components, and packing.

SALESPEOPLE

Taking advantage of price movements is the goal of ____________.

SPECULATION

What does a firm bidding policy stress over the price?

Service elements Quality

______ discounts encourage purchasing from a distributor rather than a manufacturer.

TRADE

____________ discounts encourage purchasing from a distributor rather than a manufacturer.

TRADE

True or false: Buyers should exclude those supplier that they feel are unlikely to be able to meet the quality requirements.

TRUE

True or false: The buyer should not pay more than the actual cost of auxiliary services.

TRUE

The supply manager for ABC manufacturing has chosen to end the contract with a supplier due to falling market prices, is the justified or unjustified.

UNJUSTIFIED

What are the uncertainties with forward buying?

Will the need be realized. Will the future price be higher or lower than current.

Supply managers must ensure that all required materials or parts meet quality standards and are available when needed by establishing a ___________ price for purchases.

fair

The market approach for pricing allows for fluctuations. When demand is low relative to supply, prices are expected to_____________.

fall

True or false: Price changes for parts and components are high and more frequent than raw materials.

false / Parts, components, and packaging price changes are less frequent and moderate compared to raw materials.

Which costs typically remain equal for each unit?

fixed

Capital assets have a ______ dollar value.

high

Contracts are beneficial for farmers to

manage price and production risks. smooth the flow of commodities to processing plants. produce specialty plants with relative pricing.

The prices for raw materials are driven by ____________ prices.

market

Governments can take an __________ role in determining prices.

active

Resale purchases provide a profit for the

buyer seller

Canadian pricing legislation applies to

buyers & sellers. Reason: Canadian legislation prohibits certain practices in an attempt to maintain competition and applies to both buyers and sellers.

ABC manufacturing has set the price for a popular component at 10% over direct costs, this is a ___________ approach for pricing.

cost

When no extra is reimbursed above actual cost, this is a

cost-no-fee.

The market can affect the pricing of commodities on a ______ basis.

daily

The forward buying decision maker will

depend up on the organizational structure.

A firm bid is one that

does not allow changes or modifications once a bid is submitted, unless there are unusual circumstances.

MRO purchases can be made through

e-procurement systems. internal procurement cards. buying on a cost-plus basis.

When providing a service, price _________ is more common to determine a price.

negotiation

Pricing for capital asset purchases can be accomplished by

negotiation. request for proposals. competitive bidding.

Quotations are typically required for

purchasing that exceeds a minimum dollar amount. most governmental purchases.

Commodities can be ________________ from the exchange if volumes are too small.

REMOVED

Determine if the cost is a direct or indirect cost. INDIRECT

-PROPERTY TAXES PAID ON THE FACILITY -MACHINE DEPRECIATION -UTILITIES FOR A PRODUCTION PLANT.

Most service contracts

-may quote based on percentage of total job cost. -estimate time required to complete. -can contain limitations for cost and time.

Determine if the cost is a direct or indirect cost. DIRECT

1 HR. OF MACHINIST TIME 30LBS OF SAND USED IN PRODUCTION. FEES PAID TO CONTRACTOR

What are the basic reasons for forward buying?

Assurance of supply to meet requirements. Assurance of supply to meet price.

The most commonly watched indicator of industrial purchase prices is the PPI and is released monthly by the

Bureau of Labor Statistics

Marketing and production contracts in agriculture are used instead of _______ sales.

CASH

Marketing and production contracts in agriculture are used instead of __________ sales.

CASH

VIrtually every sell offers _________ discounts.

CASH

Legal action is not often taken with suspected _________ due to the expense and uncertain outcomes.

COLLUSION

Public statutes normally provide that the award of purchase contracts should be made on the basis of open,________ bidding.

COMPETITIVE

After bids have been submitted, the amount submitted should be kept __________.

CONFIDENTIAL

If identical bids are received what options do supply managers have?

Call for new bids. Negotiate with one or more specific suppliers. Reject all bids.

ABC manufacturing has discovered some suspected collusion among their normal suppliers for raw materials. What options does the supply manager have?

Do nothing and accept the situation. Use substitute materials. Seek new sources of supply.

Where can the supply manager locate pricing trends?

Expert data Commodity exchanges Purchasing manager indexes

Prices on the commodity exchange accurately represent supply and demand.

FALSE

True or false: Bids are simply based on the lowest price from the bidder.

FALSE

True or false: Once a fair price is established, that is the price all buyers will pay.

FALSE / A fair price to any one seller may be higher than a fair price to another.

______________ buying is a process related to retail inventories, financial instruments, assets etc, wherein they are purchased in quantity excess to demand to counter future price rise.

FORWARD

Specialty item procurement requires a ____________ or __________ analysis.

MAKE OR BUY

A______ _________ ________ clause is a contractual arrangement between vendor and customer that guarantees the customer the best price the vendor gives to anyone.

MOST FAVORED CUSTOMER

What are some options for price changes?

Most-favored-customer clause Guarantee against price decline Price protection clause Escalator clause

What conditions should be met to best serve commodity exchanges?

The products traded are capable of reasonable price grading. The market contains a large enough volume of buyers and sellers.

Competitive bids must contain

a careful selection of sources. particular wording of requirements. careful bid analysis prior to awarding.

Manufacturers typically rely on ____________ for purchasing parts, components, and packing.

salespeople

A major limitation for commodity exchanges is

that grading is often not sufficiently accurate for all industries.

Bids can be rejected if

the lowest bid is unreliable. the lowest bid is higher than justifiable. collusion is suspected.

Along with price, analysis of suppliers' costs is also dependent upon the ____________ of product being sourced.

type