Supply Chain Final: Ch 10
To be fair, the basis and terms of cancellation should be agreed on in advance and made part of the terms and conditions of the purchase order
True
The lowest price that ensures a continuous supply of the proper quality where and when needed and allows the supplier to make a reasonable profit, is commonly known as:
a fair price
For goods bought on a non-recurring basis, the contract may provide for a reduction in price should the buyer ever again purchase the item
False
A fair price
is the lowest price that ensures a continuous supply of the proper quality where and when needed and at which the supplier makes a reasonable profit
the prime function of an organized commodity exchange is to furnish an established marketplace where
the forces of supply and demand operate freely
Hedging is a way to
try to minimize price and exchange risks
Online reverse auctions are useful means of price determination for special items
False
One justification for a quantity discount is that the buyer should not pay more than the actual cost of packing, crating, and transportation
True
The Robinson-Patman and Sherman Antitrust Acts are primarily designed to prevent the stronger party from imposing too onerous conditions on the weaker one and preventing collusion so that competition will be maintained
True
Governments play a role in establishing prices by establishing production and import quotas any by regulating the ways that buyers and sellers are allowed to behave in agreeing on prices
True
a cash discount allows
the seller to secure prompt payment, and the buyer to pay a lower price per unit
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 approximate interest rate?
24
if the buyer wants to motivate the seller to manage total costs, the best type of contract is
cost-plus-incentive-fee (CPIF)
buyers typically prefer a
firm-fixed-price (FFP) contract
The cost approach to pricing
means prices are set to cover direct costs, contribute to indirect, and attain a profit
Canceling a contract for a technicality when parket prices are falling is considered a perfectly acceptable and ethical practice
False
Competitive bidding, in general, is the least efficient means of obtaining a fair price for items bought
False
Items for which prices are comparatively low, and the cost of price reduction efforts may exceed any price savings realized, are called
MRO items
A cash discount of 2/10, N/30 (2 percent cash discount if payment is amde in 10 days, with the gross amount due in 30 days) is the equivilant of approximately a 36 percetn interest rate
True
An escalator clause provides for an increase, as well as a decrease, in price if costs change
True
Identical prices from various sources should
draw attention if the specification is complex or detailed
The fairest possible means of treating all suppliers alike in a competitive bidding situation is to
establish a policy of firm bidding
Public purchasers are required to award contracts to the lowest "responsible" and "responsive" bidder. This means the bidder is:
fully capable and willing to perform work and submits a bid that conforms to the invitation of the bid
The market approach to pricing
implies that prices are set based on what the market will bear
Costs incurred in the operation of a production plant or process are called
indirect costs
forward buying
involves purchasing for known or estimated near-term requirements
The Robinson-Patman Act basically requires that suppliers
must sell the same item, in the same quantity, to all consumers at the same price
in the event the bidder does not make proper payment to its suppliers, the bond that protects the buyers against liens that might be granted to these suppliers is called a:
payment bond
Items for which prices are comparatively stable and likely to be quoted on a list-price-less-discount basis are called:
standard production items
most direct costs are
variable costs