SCM 486 Final

According to the __________________________, export controls and restrictions may be imposed for a range of specific purposes including national security; the protection of life, health, and the environment; and the preservation of national treasures.

1991 Trade Policy review of the European Communities

There are many ethical considerations that companies must learn in order to be successful. This is one reason that many companies hire ___________ to do their sourcing.

Brokers

The general uncertainty associated with the _____________ makes offshore sourcing a risky proposition.

Business Cycle

And like supply chain management, _____________ extends beyond a simple interfirm relationship to involve integration of confidential and vital processes such as strategy formation, planning, information flow, and operations

Buyer-supplier partnering

___________ is nothing more than a form of compliance as well as identification and _________.

Commitment / involvement

A third problem companies face in global sourcing is ____________. Many times there are delays and confusing in translations.

Communication

__________ is action without inherent desire, and, thus, _________ remains a relatively easy factor to measure since it implies action, not feeling.

Compliance / compliance

____________ is a form of agreement that involves the purchaser being given a share in the manufacture of a foreign designed product.

Coproduction

Ideally, the end result for both firms should be _______________, yielding greater control of costs, cycle times, inventory, quality, and, ultimately, customer satisfaction

Decreased uncertainty

Any business or individual wanting to import goods into the United States will have to work with the Export Administration (EA) of the U.S. Department of Commerce. Several steps that (a company needs) to be aware of are the following: 1. Determine whether the item (s) in question is subject to the exclusive jurisdiction of a State agency. 2. Determine if the technology or software is privately available. 3. For an item in a foreign country, the cost of the item must be determined. 4. For items made in a foreign country, determine whether it is a decontrolled item in the US. 5. Determine whether the foreign made item is subject to selective prohibition.

False

Before firms can enjoy the benefits of a buyer supplier partnership, they must first develop and design the partnership implementation process. A supplier partnership involves a significant attitudinal as well as structural change from traditional supply arrangements, so the allying firms must be meticulous to ensure that a true win-win partnership is developed.

False

MBO is an innovative way of thinking that affects the culture, the strategy, and the technology of a company.

False

One of the most important variables to consider is the exchange rate of currencies. Since predicting the fluctuation in currency markets is relatively easy, foreign purchases may actually cost less than negotiated depending on the length of the contract.

False

Two factors driven by power and critical to the partnership dyad are commitment and trust. Trust may be defined as the perception of being emotionally impelled.

False

The intense attention on the outflow of work to overseas locations has generated ___________ about which jobs or professions will be outsourced next.

Fear

Conflict can be defined as tension between two or more social entities... which arises from _______________________.

Incompatibility of actual or desired responses

Lead times and delivery times can create problems also. Longer times can ____________________. The extended lead time also might push back the date at which a firm is able to introduce new products to the market.

Increase inventory needs and drive up carrying costs

A few counties, notably _______________, are often targeted as the ones that are displacing American workers by offering cheap labor.

India and China

The ______ suppliers usually get the long-run demand forecast and are involved in the manufacturer s product development.

Key

A Harvard Business School study concluded that a key driver in the decline of U.S. competitiveness in the international marketplace has originated from investing _______________, such as supplier relations.

Less in intangible benefits

Since most offshore deals require the use of a ___________ the buying firm loses the use of funds when the _____________ is established.

Letter of credit / letter

___________________ is when the recipient obtains a share of the production work for its own order.

Licensed production

_________ are commercial compensation practices required as a condition of purchase of goods and services.

Offsets

Though ____________ has received abundant recognition over the last few decades from both researchers and practitioners alike, the concept of a ___________ is perhaps as old as or even older than business itself

Partnering / partnership

__________ inventory issues will always occur when a third party (the shipper) is involved. The problems become pronounced when offshore sourcing is used.

Pipeline

Exploration of the effects of _______ on factors of the supplier buyer alliance provides the key to understanding the concept of the power-partnership link...

Power

________ is a direct result of dependence, and the extent of dependence is directly induced by _____________ of power.

Power / perceptions

Guides to the implementation process are summarized below, with one exception. Which one is not one of the steps?

Reward partner for superb quality and service

Ultimate supply chain partner __________ remains the overriding factor in determining the future of a supply chain partnership.

Satisfaction

__________ in the supply chain can be defined as the extent of contentment with the relationship.

Satisfaction

Also termed a ______________, a supply chain partnership is a relationship formed between two independent entities in supply channels to achieve specific objectives and benefits, and it is these partnerships that form the essential building blocks of ________________ management

Strategic alliance / supply chain

_____________ is when a prime contractor substitutes an existing supplier with one located in the buying country.

Sub-contractor production

Effective _____ requires the integration of production planning, marketing, engineering distribution, and field service.

TQM

______ reaches much wider than the traditional quality view of incoming inspection and process control it means that the entire organization is working as a team, including top management and each and every employee.

TQM

________________ is still one of the hottest topics in the business world today.

Total quality management (TQM)

The FTC Act of 1934 created ___________ to encourage exports from foreign countries. The act allowed for the storage of goods within the U.S. boundaries without payment until the goods passed to the buying company.

Trade zones

Direct labor and materials costs, lead-time costs, transportation costs, and inventory costs are a part of both domestic and offshore sourcing. _____________ Tend to be higher when sourcing globally.

Transportation costs, inventory costs, and lead-time costs.

As defined by Maloni and Benton: the power of a supply chain member [is] the ability to control the decision variables in the supply strategy of another member in a given chain at a different level of the supply chain. It should be different from the influenced member s original level of control over their own supply strategy.

True

Depending on the performance and strength of the dollar, goods can cost American firms different amounts from whats expected

True

Due to technical expertise, German negotiators are extremely cautious. The opponent should be well prepared on technical details.

True

Each buying firm must specify in detail the agreed-upon quality targets. As an example, at a minimum, the following four issues should be addressed in any purchasing contract: PPM target agreement, Field failure and reliability requirements, Warranty agreement, Urgency to solve problems

True

If a buying firm is to be effective with an offshore sourcing strategy, it must either hire experts or develop specialists that are assigned to offshore suppliers. Ideally, these individuals must have experience in purchasing management, quality control, and basic accounting. This cost also must be considered in the evaluation process

True

Partnerships move beyond special influence transactions by involving efforts of both firms to coordinate functional activities. The three tiers listed below show how partnerships can be segmented based on the intensity and duration of the leadership. Tier I partnerships entail short-term, single-function/division coordination. Tier II partnerships extend coordination to integration and encompass multiple activities over a longer time span. Tier III partnerships dilate into significant levels of operational integration.

True

The buying firm must spend the necessary time to correctly specify and articulate quality expectations. Then evaluation makes sure that the sample is from a legitimate production run. Prototypes/lab samples should not be analyzed.

True

The distance between the buying and selling firm is significant in terms of time zones and physical location. Internet capabilities usually provide a partial solution.

True

Over recent decades, firms within the supply chain have begun to realize the advantages enjoyed from sharing of technology, information, and planning with other firms. Even competitors, and many modern business thinkers will claim that not only is a more open and relational attitude advantageous, but actually essential and inevitable in maintaining ___________________.

a competitive advantage

Despite the differences in opinions about the size of the supplier base, the major issue remains that a closer relationship with suppliers facilitates

a reduced number of suppliers

Some supply managers argue that implementation of many new manufacturing techniques necessitates _______________________.

a reduction in the number of suppliers

Drivers of satisfaction within supply chain partnerships include relationship-oriented factors such as _________________.

all of the above (planning and mutuality, interdependence, operational information exchange)

Supply chain partnerships bridge the barrier between buyer and seller, leading manufacturers to ________________.

ally with a reduced supplier base

Implementing TQM also requires the following: Negotiating __________ requirements. Developing a supplier specification that details ___________ requirements and expectations. Determining the necessary activities required to fulfill those requirements and ____________.

customer / customer / expectations

SPC uses two control charts to ensure quality in manufacturing: the sample mean (X-bar) chart and the sample range (R) chart. The control chart limits are established for X-bar and R charts based upon tolerances set during the design stage of the product. In most cases, problems are ________________ before any ___________ parts are produced, thus reducing scrap and rework

diagnosed and resolved / substandard

Recognizing partnerships between buyer and supplier, as a fundamental driver for the success of the Pacific Rim supply chain processes, American firms have begun to _______________.

emulate these supplier alliances

When doing business in France, (a buyer) will often go through a (n) _________ whose credentials are impeccable. (The) choice of __________ is important.

intermediary contact / an intermediary

China is now a _______ player in the world economy and accounts for more than 6 percent of world trade. This is remarkable for a developing economy. There has been strong import growth, both for processing trade and for domestic consumption

major

The focus has been on a single aspect of outsourcing: the __________ of jobs, and, in particular, the outsourcing of ________ jobs.

migration / white-collar

Implementing TQM requires the following: Defining the _______. Identifying systems ________. Identifying systems ________.

mission / output / customers

A final point on the effects of power concerns the ultimate ______________ of the supply chain members as well as the supply chain itself.

performance and subsequent profitability

The notion of ______ in an interfirm relationship implies _______ dependence on the source; otherwise the _______ would not need to subject itself to the unbalanced relationship.

power / target / target

Extremely complex in nature, ________ serves as a composite relationship-oriented variable, affecting both the ______________ in many transparent as well as concealed ways.

power / target and source

The major problems when doing business in China are the language barrier, business practices, and a fluid and diverse legal system. A well-specified _______________ is a basic requirement when buying from China.

procurement strategy

he suppliers ___________ systems must be consistent with the in-house quality requirements of the __________.

quality assurance/customer

A healthy long-term relationship between suppliers and manufacturers is becoming more and more important and can result in ___________________.

reduced transaction costs

The first step in the supplier partnership implementation process includes the strategic verification of the need for a supplier partnership. Here, the firm must evaluate the potential ____________ of a partnership in comparison to traditional processes.

risks and benefits

The notion of interfirm power holds its roots in ______________ literature and has been extensively developed by marketing channel researchers.

social science

Although many firms engage in partnering activities, the specific interpretation of a ___________ or partnership is at best vague.

strategic alliance

Abandonment of partners may lead to __________, making future partners _________ to attract.

suspicion / difficult

Power essentially attempts to force a _______ to comply with the ________ desires, and, like commitment, the level of compliance and more importantly cooperation are critical to the relationship tenure as well as profitability.

target / sources

The ____________ approach to manufacturing process control is to select production samples and compare the attributes of the sample to the specifications.

traditional

_________ is a set of standards that document the implementation of a quality program. In order to be certified, suppliers need to provide documentation to an external examiner that they meet the ________ requirements. Once a firm is certified, it will be listed in a directory so that all of its potential customers can know which firms have been certified and to what level.

ISO 9001 / ISO 9001

Implied by the law at the time the principal grants express authority to the purchasing agent. Example is if the purchasing agent is given the express authority to make a contract, he also has the implied authority to negotiate the terms of the contract.

Implied Authority

Six-sigma suppliers focus on all of the items listed below with one exception. Which one is the exception?

Improvement of profit margins

_______________ occur where products or services transferred in an offset arrangement are unrelated to the specific products referred to in the export agreement.

Indirect Offsets

_________ costs are associated with non-manufacturing-related costs. Insurance, managerial salaries, property taxes, and depreciation expenses are examples of _________ costs.

Indirect/indirect

When a company or organization has a set project scope or need and wants to make it known what the price and details are so vendors can bid for the completion of the project

Industry example of a RFP

When a purchasing manager wants to get an idea for the market, but doesn't want to jump into a legally binding contract.

Industry example of an RFQ

Exists where there are areas of mutual concern and complementary interests. The situation is a varying-sum schedule such that, by working together, both parties can increase the total profits available to be divided between them. An example is between manufacturers and distributors, when an item is sold at retail they get profits.

Integrative Bargaining

________________ exists where there are areas of mutual concern and complementary interests. The situation is a varying-sum schedule such that, by working together, both parties can increase the total profits available to be divided between them.

Integrative bargaining

- Lack of top management support - Lack of employee readiness and support -Lack of support from design engineers - Low product quality - Lack of communication - Lack of cooperation from suppliers - Lack of support from carrier companies

Problems with Implementing JIT

Some of the more popular forms of counter trade are as follows with one exception. Which one is the exception?

Production transfer

A report that contains basic information to assist in purchasing. By definition it will contain an on-hand balance. Also typically contains on-order and some movement information such as short-averages, etc.

Purchasing by Stock Status

Visually inspecting inventory and deciding if you have enough

Purchasing by observation

The buying professional who is considering offshore sourcing must be prepared to fully analyze both the ___________ factors

Qualitative and quantitative

______________ (QFD) focuses on how businesses develop high quality products for (their) customers. QFD is driven by cross functional market research. This is the process of understanding customer expectations, and how well providers of products address these expectations

Quality Function Deployment

_______________ (QFD) is a methodology for collecting customer information to drive product development.

Quality Function Deployment

The customer perception of _______________ is also important when determining market prices.

Quality and Service

Two factors of value

Quality and price

Without high-quality raw materials or component parts from suppliers, a (n) _____________ program will not be successful.

Quality management

What does a buyer typically negotiate over?

Quality, lead time, price

_________ discounts are discounts granted to the buyer for buying larger quantities.

Quantity

- Purchasing by observation - Purchasing by stock status - 1st generation purchasing systems - 2nd generation purchasing systems - demand based purchasing

Self-Controlled Purchasing

The physical and social setting of the bargaining may have an effect. Is the bargaining being conducted in the home territory of one of the bargainers or on neutral ground? What, if any, is the seating arrangement? Which of the factors is this statement referring to?

Situational factors

________ is a way to measure supplier quality. Supplying firms that follow the core philosophy of _________ will make excellent strategic partners.

Six sigma / six sigma

_________ standards can be applied to both manufacturing and service firms using the same methodology. SPC provides input to the _________ approach.

Six-sigma / six-sigma

This factor refers to the relationships of the bargainers to significant others not participating directly in the bargaining. Which of the following is this statement referring to?

Social relationship with significant others

One of the factors refers to the social relationship existing between the bargainers. Examples are degree of friendship or differences in status or power. Which of the following factors is this referring to?

Social relationship with the opponent

Negotiation should be used any time the buyer does not have confidence in the __________ price lists and competitive bidding seems unreasonable.

Standard

___________ price lists are usually prices generated based on the seller s total cost structure.

Standard

Critical to the implementation of purchasing and supply management techniques is the development of ______________

Supply chain partnerships

The ________ method (TM) addresses design and engineering (offline) as well as manufacturing (online) quality. This fundamentally differentiates TM from SPC, which is purely an online quality control method.

Taguchi

The __________ method (TM) nicely complements many of the advantages of SPC.

Taguchi

A supplier will decide to allocation money to a specific class of trade, a particular region, or a particular product. Done to bolster sales at specific areas.

Target Funding deal allowance method of allocation

________________________ occur as a result of an offset are research and development agreements conducted in the buying country.

Technology transfers

Elimination of waste and continuous improvement

The JIT Philosophy

In order to qualify for the (Malcolm Baldridge) Award, applicants must address the following categories: 1. Leadership 2. Information and analysis 3. Strategic quality planning 4. Human resource development and management 5. Management of process quality 6. Quality and operational results 7. Customer focus and satisfaction

True

It is not enough to set as an objective to negotiate a percentage improvement from the seller s original price proposal. The buyer should never reveal (his/her) objectives to the seller. The negotiation s objectives should also use a data driven approach to determine minimum and maximum pricing strategies.

True

Can be used to refer to management of inventory at the warehouse level or all the way to the shelf. Doesn't necessarily mean that the vendor owns the inventory. Typically the customer still owns the inventory, but the vendor is just deciding on how much is carried.

Vendor Managed Inventory (VMI)

The new or modified part agreement between the buying and the selling firm is usually complete after ________________________ has been _____________.

an acceptable final test sample / generated and verified

The analysis phase (of the buying decision) requires the decision maker to investigate _____________ sources of supply.

at least two potential

The ____________ needs to determine how he/she, as a decision maker, ought to behave in light of his/her analysis of how his/her opponent might behave.

bargainer

If you buy items for one-half the market price without obtaining appropriate quality, delivery, or quantity standards, your firm would _________________.

be rendered noncompetitive

In the short term, a firm can sell its products ____________; however, at some point, the firm will be required to _______________.

below its total cost / make a profit or quit the business

Giving a bargaining opponent the impression that tough bargaining is because of one s payoff system and that one is firm but fair is the _________ strategy.

best

Perhaps the most important factor associated with the purchasing decision is the _____________ and the ______________ between the buying and supplying firms.

business environment / power imbalance

The first question a purchasing professional should ask a supplier is, How much of a discount can I receive if I buy from you? Some of the more popular discounts are __________________ discounts.

cash, trade, and quantity

The market approach to pricing is more erratic simply because the supplier, through the use of market research, collects information on its __________ and from their ___________ to determine where the price should be pegged.

competitors / customers

Given the complexity of the buying decision, the purchasing professional must be prepared to analyze each significant buying situation on the basis of the ___________________ of various buying decisions

conceptual and the economic impacts

Discussion, understanding, and agreements are vital to ___________ bargaining.

distributive

Economists, on the other hand, have seen ____________ bargaining as a problem that only involves two parties dividing fixed resources with no opportunity for any outside influence of third parties

distributive

The parties in __________ bargaining are in basic conflict and competition because of a clash of goals: the more one party gets, the less the other gets.

distributive

Two-party bargaining can be divided into two types: _________ and ___________.

distributive / integrative

With its many benefits, supply chain partnerships retain several inherent risks that can be potentially damaging to participants. First and foremost, heavy reliance on one partner can be disastrous if the partner _____________.

does not meet expectations

In general, __________ theory can help predict the approximate outcome of bargaining situations, but _____________ conditions will cause the true solution to vary around the predicted outcome point.

economic / psychological

A combined _____________ approach will help provide the truest solution and best approach to understanding bargaining and negotiation situations and their outcomes.

economic/psychology

The final step in the partnering process includes the maintenance of the relationship to ______________________________.

either enhance its development or bring about its dissolution

Performance may be defined as the ability to ________________.

execute intentions and goals

A bargaining situation can then be defined as an interaction where parties with certain disagreements confer and exchange ideas about a possible solution until a compromise is reached or the bargaining is terminated. This is referred to as ______________.

explicit bargaining

If setup cost and learning rates are ignored, a buying firm will, more than likely, _______________.

fall into a competitive bidding trap

The business priorities increasing customer service and reduce expenses can be paired together

false

There are some instances where the supplier will employ short-term strategic pricing in order to _______________.

gain market share or dump unwanted items

A rule of thumb must be developed that can be used to decide whether or not a partnership _____________.

has sufficient potential

In general, price is important; however, remember __________ of many variables that go into purchasing decisions

it is only one

The effective buyer in a competitive environment will more than likely obtain purchased goods and services at a __________ given that quality, delivery, and proper quantities are appropriate.

market price

Once a partner is selected, the establishment of the actual relationship provides the critical step in which the partners must create a complete sense of awareness about the ______________ of all involved parties.

needs and participation

The word ___________ is derived from Latin and in civil law means trading on deliberations leading to an agreement.

negotiation

Various names have been used to describe the amount that must be exceeded in the bargaining interaction in order to obtain a profit. Several of the names are listed below. However, one is incorrect. Which one?

net-sum point

One of the most important and complex decisions a firm has to make is how much to _____________________.

pay for its items and services

The ___________ evaluation is an assessment of the supplier s actual performance on a variety of criteria, such as delivery reliability, cost, quality defect rate, etc.

performance-based

The most important ____________ for a seller is to submit the most responsive Request for Proposal (RFP) or Request for Quote (RFQ).

planning activity

The major psychological influence in a buyer supplier relationship is __________. It is conceivable that a (n) _________ buyer could force a supplier to eliminate its overhead from the ultimate price. The danger for the buyer is that this so-called good buy may drive the supplier out of business and that this reduction in competition may result in massive price __________ in the long run.

power / powerful / increases

The relationship between _______________ is dependent upon the origins of the commitment.

power and commitment

The competitive bidding process must begin with an assessment sizing up the suppliers _________________.

pricing strategies on competitive positions

The buyer s evaluation of the supplier s performance is a catalyst for the supplier development activities. There are two main categories for the supplier evaluation. Identify the two correct evaluations.

process-based evaluations and performance-based evaluations

Equation for value. It has no label.

quality / price * 100

The objective of a drastically ____________ base precludes an acceptance of supplier partnerships because a firm must accept dependence upon _____________ before they can internalize legitimate forms of supply chain management and supplier partnerships.

reduced supplier / fewer suppliers

The objective of the purchasing department is to buy the _______ materials from the ______ supplier at the ______ time and at the ______ price.

right / right / right / right

The ____________ is actually the average distance a normal point is from the mean. Thus, the ____________ represents a more tractable measure of the variance.

standard deviation / standard deviation

Although the basic ideas of TM are simple, the ___________ procedures are complex and can be difficult to __________.

statistical / implement

In the end, the buying firm must determine whether the purchase price fits its competitive cost structure. This is called ____________. If the _________ is too low to generate interest from suppliers, it may be necessary for the buyer to consider applying a value analysis approach to the product in question.

target pricing / target price

Companies are spending an increasingly larger percentage of their revenue dollars for __________________.

the acquisition of goods and services

All of the following, with one exception, are the minimum necessary variables for a model of the overall bargaining process (which) include both the decision maker s and the opponent s ______________. Which one is the exception?

the final maximum offer

The most severe penalty for poor quality expectations is (are) ____________. If the quality of the inputs to the productive system is inferior, the final product will be inferior.

the loss of sales

In a __________ schedule bargaining situation, the profits (and/or losses) of the respective bargainers, when added together, need not always equal the same fixed amount.

varying-sum

While many firms have sought ___________ through acquisition to harness supplier expertise, some argue that _____________ can provide similar benefits without the necessity of ownership and arduous exit barriers.

vertical integration / partnerships

In order to successfully achieve a __________, buying and supplying organizations must continuously improve their processes.

zero defect target

In the ________ bargaining situation, the profits (and/or losses) of the respective bargainers always sum to the same fixed amount. The term _________ stands for the fact that what one bargainer gains, the other losses and the gains (and/or losses) net out to be _______.

zero-sum / zero-sum / zero

Price reflects more than cost and profit; pricing decisions also must be based on the degrees of competition and buyer seller relationships. According to the textbook the competitive pressures of price also must consider which of the following?

All of the above (The number of sellers in the market, number of buyers in the market, general economic environment)

The price of a product or service should be expected to cover cost of _____________, plus a reasonable profit.

All of the above (production, promotion, distribution)

The general sources of price information are which of the following?

All of the above (published price lists and quotations, other buyers in the market and trade journals, negotiations and competitive bidding, distribution)

There are standard procedures for processing RFPs. After receipt of the initial proposals, the proposals should be screened for responsiveness in terms of ________.

All of the above (technical quality and managerial capability, financial stability, experience on similar projects and other relevant criteria)

A strategy of _________ reciprocating both the frequency and magnitude of the other bargainer s concessions was found to be more effective in obtaining concessions from the other bargainer than strategies involving _______ reciprocation.

Always / less

A discount is given on the amount of product that is sold out of a retailer's or wholesaler's warehouse/distribution center. Does not cause forward buying at the warehouse/distribution center, but still has the capacity to cause it downstream at the retailer. Effective rate of 75%

Count Recount Allowance

___________ is the exchange of goods for goods in full or partial payment of a sales transaction. Progressive companies must participate in ____________ or risk losing market share.

Counter trade / counter trade

__________ is when the seller exchanges products for compensatory amounts of commodities.

Counter-purchase

In most cases, suppliers have money to help you fund special deals and advertisements. Three ways: 1. "Pigs to the trough" 2. Accrual 3. Target Funding

Deal Allowances Method of Allocation

1. Off-invoice allowance 2. Count recount allowance 3. Scan allowance

Deal Allowances Method of Distribution

The purchasing process is completed throughout many different areas of the organization, and not in a centralized location. Allows individual's needs to be met quicker and easier, since purchasing can be made immediately.

Decentralized Purchasing

Utilizing point of sale demand data to drive inventory levels at various points in your supply chain.

Demand Based Purchasing

There are major quality awards that ensure that suppliers are TQM effective. The most universally known quality awards are the ____________ and the ________________ National Quality Award.

Deming Award / Malcolm Baldridge

The buying firm, no matter how powerful, should attempt to obtain a ___________ and good consensus.

Fair Price

A bargainer s resistance to making concessions is negatively correlated to both the time required to make a further concession and the probability of withdrawing from the negotiations.

False

A cost-based approach cannot succeed in a competitive market if the product does not remain acceptable to the Department of Commerce.

False

Ultimate dissolution of the partnership may be necessary if the firms are able to successfully work through the critical steps of partnership formation or synergies can be recognized.

False

Usually a tougher bargaining one using a more extreme opening position, fewer concessions, and/or smaller concessions can obtain a more favorable agreement.

False

When it comes to negotiations Americans can assume that the English and American business operate in the same manner

False

When the buying firm is buying from sellers that service firms similar to the buying firm s markets, the prices will more than likely increase.

False

When the dollar has a weak performance over the life of a contract, a firm can realize savings through the exchange rates

False

Offers that can't be revoked or rejected after its been put in writing and signed. The only way it can be revoked is if the terms of the contract are not met. An industry that doesn't use this are construction, car sales, and real estate.

Firm Offer

The model [the buyer-seller interactions exchange model] is built on the relationships inherent in a bargaining situation and illustrates at least _______ major types of relations that can be affected by any bargaining interaction.

Five

1. The parties must be capable 2. The subject of the matter must be legal and valid 3. There must be mutual consideration 4. The parties must reach an agreement by offer and acceptance

Four components of an enforceable contract

1. The offer may lapse 2. The offer may be rejected 3. The offer may be revoked 4. The offer may be accepted

Four possible outcomes of an offer

The direct and indirect costs tend to add unexpected costs to purchased items. However, the significant benefits associated with offshore sourcing enable the buying firm to ___________ domestic suppliers

Gain leverage over

Individual differences in bargaining predispositions may affect bargaining behavior. This is referred to as ________________.

General bargaining predispositions

Communication can be described as the __________ that holds together a sourcing relationship.

Glue

Many of the exclusively foreign costs are established by ____________ and are very difficult to avoid.

Governments

A buying firm must consider the price variation that is inherent in buying __________ components in order to understand various design specifications and associated costs.

High-priced

Conflict is present in the supply chain when one supply chain member ________ goal attainment and performance of another. Conflict is an omnipresent factor in any supply chain relationship.

Hinders

The buying firm must consider its total cost of accepting a quantity discount. Specifically, the ___________ associated with carrying larger quantities must be compared to the expected benefit of the discounts.

Holding costs

The supplier announces to their sales representative that there is money available and the sales representative runs and gobbles up as much of it as they can.

"Pigs to the trough" deal allowance method of allocation

Five ways to transport in order by cost per volume (highest to lowest)

1. Air 2. Truck 3. Rail 4. Water 5. Pipeline

As discussed in class, three divisions that encompass the functions of the purchasing department are:

1. Negotiation 2. Category Management 3. Replenishment

Purchasing systems that use trend analysis and typically are only good for ordering turn-stock merchandise

1st generation purchasing systems

Purchasing systems that include more advanced techniques. May have code dating and data mining capabilities. Most advanced use causal based forecasting like regression analysis.

2nd generation purchasing systems

- lower costs - suppliers prefer it - better at monitoring change in the industry - allows supply manager to have more authority and credibility - better inventory control

Advantages of Centralized

- very little initial investment - replacing defective materials is easier - lower internal transportation costs - procedure is streamlined - purchases can be made quicker

Advantages of Decentralized

_____________ must be developed to determine the disposition of a lot of raw materials on component parts. If a batch of parts is inferior, it should be rejected and returned to the supplier.

Acceptance plans

______________ is a methodology used to determine whether to accept or reject a batch of non-strategic components or items.

Acceptance sampling

Most common method. A set amount of money is accrued for each case of a product a customer buyers. That money is then kept in a fund to give back to allocate back to the same customer that accrued it

Accrual deal allowance method of allocation

Has its own power source. a Battery

Active RFID

The condition under which ____________ takes place is when two or more parties have divergent interests or goals and communication between the parties is possible.

Bargaining

____________ occurs between all forms of human groupings including individuals, groups, organizations, and countries.

Bargaining

Of the items listed below which is the factor that includes the specific actions of the bargainer during bargaining. For example: How extreme is his/her opening? Does he/she concede frequently or infrequently?

Bargaining strategy

The findings by psychologists can be categorized under six areas, each representing a major factor assumed to affect bargaining. Listed below are five of the six areas. However, one is incorrect. Which one?

Bargaining system

In today s business environment, when sound money management is so important, selling firms will offer ________ discounts if payments for goods and services are promptly remitted.

Cash

All functions of the purchasing process for a plant is completed in a singular location, not scattered throughout the entire organization. A higher discount can be used due to bulk purchasing, resulting in lower overall costs.

Centralized Purchasing

___________ components are those components not defined as strategic components.

Commodity-based

Where can the expressed authority be found?

Company Bylaws

The agreement that lets the buyer have a set amount of time to buy that good payment to the seller. Might be utilized in commodities or real estate.

Contract Options

The cost components of price determination can be divided into direct and indirect costs. _______ costs relate to the actual units of production. If the unit is not produced, ________ costs are not incurred.

Direct/direct

- redundancies - no volume discounts - no specialization - lack of control - potential lack of quality

Disadvantages of Decentralized

- must coordinate purchased parts with production schedules - high engineering involvement - pressure to buy from local community - may not be cost-effective for smaller companies - may become to large/complex to manage

Disadvantages of centralized

Bargaining where the total gains is "distributed" between the two parties, and each party usually wants as much as it can get. Without some degree of cooperation, either party can block the bargaining

Distributive Bargaining

_____________________ is known as the father of the Japanese post-war industrial revival and was regarded by many as the leading quality guru in the United States.

Dr. W. Edwards Deming

- Transmission to accommodate about any communication any industry needs - The vast majority of purchase orders and invoices are transmitted via this - Used to be for big companies, now all companies use it

Electronic Data Interchange (EDI)

The purchasing manager does not have express or implied authority, but the purchasing manager still needs to take action. When the purchasing manager must protect the principal's rights or property when a consultation with the principal is impossible at the time.

Emergency Authority

Conferred to the purchasing manager by the principal. It occurs automatically when the purchasing manager is appointed.

Express Authority

Conceding only in response to a strike threat by the other side gives the impression that one is strong, while sometimes reciprocating a concession gives the impression that one is tough. This leads to the general conclusion that every agreement ought to lie somewhere between the two starting points of the bargainers.

False

Customer expectations include 1) fabrication, 2) appearance, 3) maintainability, and 4) reliability.

False

Improvements are possible in the way most tasks are performed. The improvement process may have an insignificant effect on the buyer s total purchase price.

False

Justifying a quantity discount is the responsibility of the buying firm. The buyer must be able to document the actual cost savings.

False

Large setup and tooling costs can easily be amortized by the buying firm

False

The ability to identify errors before they occur recycles scrap material, improves downstream inspections, and will promote profitability.

False

The buyer must be thoroughly prepared for each and every negotiation. Data collection is the first step in the preparation process. The next step involves setting the time and place of the negotiations and then identifying the negotiation team members.

False

The level of resistance also is assumed to be related to the minimum necessary share. As a bargainer concedes toward his/her minimum necessary share, (his/her) resistance should increase. It also can be predicted that for a given offer, the lower the minimum necessary share, the greater the resistance.

False

- Reduced inventory levels - improved lead-time reliability - scheduling flexibility - improved quality and customer satisfaction - reduced costs of parts - constructive synergies with suppliers

JIT Purchasing Advantages

The ____________ techniques have been used extensively in cost estimating, pricing, negotiating contracts, and estimating the major implications of changes in design.

Learning Curve

The category of purchasing Total Quality Management belongs to

Negotiations

A discount is taken off of the price of the product for every case that is purchased at any given node in the supply chain. This stock-up buying is usually referred to as a "forward buy". If an entity in the supply chain tries to buy enough product at the expiration of a deal to have enough inventory until the next deal begins, this is called "bridge buying". The most inefficient method of passing on deals. Rate of 60%

Off-Invoice Allowance

No internal power source. No battery

Passive RFID

Payoffs result from various aspects of the negotiated agreement. For example, certain terms may yield a specific amount of profit, or there may be a bonus for attaining a specified agreement, or the time spent in bargaining may involve certain costs. This is referring to __________.

Payoff system

__________________ is becoming the most important competitive weapon necessary to ensure survival in today s competitive environment.

Price determination

Proposal requested from a potential seller or a service provider to determine what products and services are potentially available in the marketplace to meet a buyer's needs and to know the capability of a seller in terms of offerings and strengths of the seller. Not an invitation to bid, not binding on either the buyer or sellers. and may or may not lead to an RFP or RFQ.

Request for Information

A solicitation made, often through a bidding process, by an agency or company interested in procurement of a commodity, service, or valuable asset, to potential suppliers to submit business proposals. Brings structure to the procurement decision and is meant to allow the risks and benefits to be identified clearly up front.

Request for Proposal

Used when discussions with bidders are not required (mainly when the specifications of a product or service a re already known) and when price is the main or only factor in selecting the successful bidder.

Request for Quotation

1. Purchase order and invoice transmission of EDI 2. On-time payment of invoices 3. Full-pallet purchase requirements 4. Full truck requirements 5. Adherence to marketing programs. Not just buying in bulk

Requirements for Volume Discounts

1. The name of the principal or company is shown on the document 2. All parties involved know that the purchasing agent is acting on behalf of the company of principal 3. The agency relation is shown on the document 4. The purchasing agent is acting within the scope of their authority

Requirements so you are not held liable for purchases made by you

Intensive price competition and information technology have led to the implementation of a ______________ procurement approach for commodity components.

Reverse Auction

1. A single buyer offers a contract out for bidding 2. Multiple sellers offer bids on the contract 3. The price decreases as sellers compete to offer lower bids 4. Can go to higher or lower bidders based on buyers' specifications

Reverse Auction Aspects

The ___________ Act suggests that it is illegal to offer a quantity discount for commodities of like grade and quality that are not based on differences in the cost of manufacturer sales, or delivery resulting from the differing methods or quantities in which such commodities are sold or delivered.

Robinson-Patman

A discount is given on the amount of product that is sold out of the retailer's cash register. Does not allow for forward buy behavior. 90% effective rate.

Scan Allowance

According to the textbook, three additional conditions also must exist in order for bargaining to occur. Which of the following is not one of those conditions?

The provisional offers must determine the outcome of the situation, i.e., one party must lose and the other party must win.

The best strategy is to give the other side the impression that one is _________.

Tough but fair

The buyer s bargaining strengths are: The number of bidders . The urgency of the buyer needs. The length of time before agreement. The status of the buyer.

True

The procedure for a formal negotiation [a short version] is given below: 1. Select team 2. Determine objectives 3. Prepare 4. Determine bargaining strength 5. Develop a plan 6. Set strategy 7. Determine tactics 8. Follow-up

True

The seller s bargaining strengths depend on the following: The sellers current capacity. The probability of being the successful bidder. The sellers deadline. The status of the seller.

True

The underlying behavior of the improvement curve reflects a systematic improvement (percentage reduction) of labor per unit as a function of cumulative units produced.

True

Time pressure in psychological experiments has been exerted in various ways: High or low probability that the present round of offers would be the last. Warning that time was almost up. Number of offers remaining before penalties for additional offers. Cost of each of the trial offers.

True

The purchasing professional must understand the dynamic nature of ________ cost.

Variable

When the profits or losses of the bargainers, when added together, don't always equal the same fixed amount. Occurs in customer service, where to gain a 5% increase in customer service levels, you might need to double costs.

Variable Sum Situation

When the profits or losses of the respective bargainers always sum to the fixed amount. Can be found in retail situations. The less the consumer the pays, the less profit there is for the retailer

Zero Sum Situation

Brv > Srv, then an agreement can be reached. You want your first offer to be below the Srv, the maximize this.

Zone of Possible Agreements (ZOPA)

The specification is ____________________, including specific characteristics such as weights and measurements that enable the product to work in a manner acceptable to the ___________.

a description of the required output / consumer

Setting the ___________ criteria is usually based on either predetermined standards or basic statistics.

acceptance

The _________ suppliers usually get a small volume of business and do not have a close working relationship with the manufacturer.

Backup

_________ is the non monetary exchange of goods-for-goods.

Barter

The associated qualitative risk profiles of _______________ in some foreign countries must be evaluated.

All of the above (The impact of national interest, the ethical consequences of sweat shop labor, hazardous working conditions)

The costs of global sourcing include some of the same costs found in domestic sourcing; there are also costs that are different. These costs are grouped into the following categories:

All of the above (administrative, foreign, common)

Most of the global risk issues are _________________

All of the above (distance and communication, time value of money and quality issues, pipeline problems and staffing issues, competitive)

Exclusively foreign costs are those that would not be incurred if a domestic source were found. Examples of these costs are:

All of the above (duty charges, custom fees, import fees, currency exchange costs)

Within the win-win partnership dyad, buyer and supplier share goals as well as inherent risks through join planning and control, seeking to create a supply chain with increased information flow and enhanced loyalty. Like the overall goal of supply chain management, such coordination allows for _________________

All of the above (improved service, technological innovation, product design with decreased cost)