486 Final

Critical to the implementation of purchasing and supply management techniques is the development of _________________
suppliers
supply chain partnerships
sources
long range strategies
a business plan
supply chain partnerships
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.
supply alliance / operations
strategic source / supply and operations
strategic alliance / supply chain
preferred supplier / strategic alliance
preferred partner / strategic
strategic alliance / supply chain
Within the win-win partnership dyad, buyer and supplier share goals as well as inherent risks through joint 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 ________________________.
improved service
technological innovation
product design with decreased cost
all of the above
A and C only
all of the above
Ideally, the end result for both firms should be _____________, yielding greater control of costs, cycle times, inventory, quality, and, ultimately, customer satisfaction.
Ideally, the end result for both firms should be _____________, yielding greater control of costs, cycle times, inventory, quality, and, ultimately, customer satisfaction.
decreased uncertainty
improved customer satisfaction
decreased customer complaints
increased certainty
higher quality and reduced defects
decreased uncertainty
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.
purchasing management
buyer-seller management
buyer-supplier partnering
buyer-seller partnering
purchaser-seller relations
buyer-supplier partnering
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.

buyer relations / partnering
partnering / relationships
partnering / partnership
strategic partners / buyer-seller relations
strategic partners / buyer-seller relations

partnering / partnership
Although many firms engage in partnering activities, the specific interpretation of a ___________ or partnership is at best vague.
strategic relationship
buyer-seller alliance
buyer-supplier partner
buyer-seller relationship
strategic alliance
strategic alliance
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
False
True
Supply chain partnerships bridge the barrier between buyer and seller, leading manufacturers to ________________.

share more information with their suppliers
ally with a reduced supplier base
ally with an improved supplier base
choose suppliers more wisely
choose suppliers more carefully

ally with a reduced supplier base
Some supply managers argue that implementation of many new manufacturing techniques necessitates _______________________.
a reduction in the number of suppliers
choosing suppliers more carefully
switching to multiple supply sources
negotiating delivery terms more favorable to the company
negotiating delivery terms more favorable to the company
a reduction in the number of suppliers
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 sales representatives
improved performance of all involved
a closer bond with supply firms
a reduced number of suppliers
JIT deliveries of needed supplies
a reduced number of suppliers
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.
improved supplier / sales representatives
reduced supplier / fewer suppliers
increased supplier / fewer sales representatives
improved marketing / multiple suppliers
improved operations / multiple suppliers
reduced supplier / fewer suppliers
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.

more in tangible benefits
less in tangible benefits
less in intangible benefits
more in intangible benefits
none of the above

less in intangible benefits
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 ___________________.
strategic advantage
a lead over the competition
a competitive advantage
control of the market
an improved market share
a competitive advantage
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 _______________.
become more competitive
operate like Pacific Rim companies
use the same processes
emulate these supplier alliances
improve relationships with suppliers
emulate these supplier alliances
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.
horizontal integration / mergers
vertical integration / cooperation
horizontal integration / cooperatives
stakeholders / stakeholders
vertical integration / partnerships
vertical integration / partnerships
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 _____________.
changes the specifications
does not deliver on time
fails to produce quality products
does not meet expectations
increases the price of his materials
does not meet expectations
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.
True
False
False
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.

strengths and weaknesses
strengths and benefits
strengths and risks
duration and strengths
risks and benefits

risks and benefits
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.

strengths and weaknesses
goals and aspirations
needs and participation
goals and strategies
goals and objectives

needs and participation
Guides to the implementation process are summarized below, with one exception. Which one is not one of the steps?
Establish strategic need for partnership
Develop partner criteria, evaluate suppliers, and select partner
Formally establish partnership
Maintain and refine partnership (possible reduction or dissolvement
Reward partner for superb quality and service
Reward partner for superb quality and service
The final step in the partnering process includes the maintenance of the relationship to ______________________________.
improve communications and processes
foster good communications and relationships
either enhance its development or bring about its dissolution
develop unified goals and objectives
develop unified goals and objectives
either enhance its development or bring about its dissolution
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.

True
False

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

increased production / easier
suspicion / difficult
greater opportunities / easier
a search for new partners / somewhat easier
euphoria / exciting

suspicion / difficult
A rule of thumb must be developed that can be used to decide whether or not a partnership _____________.
has sufficient potential
is appropriate
would work for both parties
would be a good opportunity for all involved
would not have any potential for success
has sufficient potential
The notion of interfirm power holds its roots in ______________ literature and has been extensively developed by marketing channel researchers.
management science
organizational behaviour
organizational science
social science
operations science
social science
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
False
True
Extremely complex in nature, ________ serves as a composite relationship-oriented variable, affecting both the ______________ in many transparent as well as concealed ways.

organizational science / buyers and sellers
power science / buyers and sellers
a partnership / target and source
power / target and source
a partnership / buyers and suppliers

power / target and source
Exploration of the effects of _______ on factors of the supplier buyer alliance provides the key to understanding the concept of the power-partnership link…
politics
power
negotiations
processes
persuasion
power
The notion of ______ in an interfirm relationship implies _______ dependence on the source; otherwise the _______ would not need to subject itself to the unbalanced relationship.
politics / some / seller
politics / heavy / source
power politics / seller / seller
power politics / target / source
power / target / target
power / target / target
________ is a direct result of dependence, and the extent of dependence is directly induced by _____________ of power.
Power politics / the sources
Politics / the targets
Power / perceptions
Power / sources
Power politics / the illusions
Power / perceptions
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.

True
False

False
The relationship between _______________ is dependent upon the origins of the commitment.
power and commitment
involvement and commitment
power and politics
power and involvement
power and involvement
power and commitment
___________ is nothing more than a form of compliance as well as identification and _________.

Commitment / feelings
Involvement / feelings
Involvement / cooperation
Cooperation / involvement
Commitment / involvement

Commitment / involvement
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.
seller / buyer s
buyer / seller s
supplier / buyer s
target / seller s
target / source s
target / source s
__________ is action without inherent desire, and, thus, _________ remains a relatively easy factor to measure since it implies action, not feeling.
Involvement / involvement
Cooperation / cooperation
Compliance / compliance
Commitment / commitment
Response / response
Compliance / compliance
Conflict can be defined as tension between two or more social entities… which arises from _______________________.
mutual distrust between all the parties
incompatibility of actual or desired responses
a difference of opinions or desires
a difference in core values
one party taking advantage of the other party
incompatibility of actual or desired responses
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
blocks
facilitates
enhances
fosters
hinders
__________ in the supply chain can be defined as the extent of contentment with the relationship.
Cooperation
Good Service
Good supplier relations
Dgodd public relations
Satisfaction
Satisfaction
Ultimate supply chain partner __________ remains the overriding factor in determining the future of a supply chain partnership.
relations
service
power
involvement
Satisfaction
Satisfaction
Drivers of satisfaction within supply chain partnerships include relationship-oriented factors such as _________________.
planning and mutuality
interdependence
operational information exchange
all of the above
A and C only
all of the above
A final point on the effects of power concerns the ultimate ______________ of the supply chain members as well as the supply chain itself.
profitability
performance and subsequent profitability
cost reductions and subsequent profitability
productivity and profitability
performance
performance and subsequent profitability
Performance may be defined as the ability to ________________.
execute intentions and goals
meet goals and objectives
attain goals and meet expectations
meet expectations and execute strategies
execute plans and meet profit goals
execute intentions and goals
________________ is still one of the hottest topics in the business world today.

Management By Objectives (MBO)
Theory X and Theory Y
Total quality management (TQM)
Theory Z
Organizational Development (OD)

Total quality management (TQM)
Effective _____ requires the integration of production planning, marketing, engineering distribution, and field service.

MBO
OD
RAM
PODS
TQM

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
MBO
TMQ
OB
PODS
TQM
MBO is an innovative way of thinking that affects the culture, the strategy, and the technology of a company.
True
False
False
Implementing TQM requires the following: Defining the _______. Identifying systems ________. Identifying systems ________.
vision / inputs / suppliers
objectives / processes / clients
mission / output / customers
vision / weaknesses / stakeholders
goals / strengths / shareholders
mission / output / customers
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 ____________.
product / supplier / goals
labor / labor / standards
customer / customer / expectations
project / employees / responsibilities
supplier / sellers / goals
customer / customer / expectations
Without high-quality raw materials or component parts from suppliers, a (n) _____________ program will not be successful.
quality management
strategic management
organizational development
production management
operations management
quality management
A healthy long-term relationship between suppliers and manufacturers is becoming more and more important and can result in ___________________.
improved customer service
improved product margins
improved profit margins
better quality products
reduced transaction costs
reduced transaction costs
The ______ suppliers usually get the long-run demand forecast and are involved in the manufacturer s product development.
backup
key
preferred
local
national
key
The _________ suppliers usually get a small volume of business and do not have a close working relationship with the manufacturer.
backup
key
preferred
local
national
backup
The suppliers ___________ systems must be consistent with the in-house quality requirements of the __________.

information management/seller
manufacturing/client
IT/customer
quality assurance/customer
internal/buyer

quality assurance/customer
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
False
True
The ____________ approach to manufacturing process control is to select production samples and compare the attributes of the sample to the specifications.
progressive
current
MBO
traditional
most effective
traditional
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
identified / faulty
solved / defective
identified / new
fixed / defective
diagnosed and resolved / substandard
The specification is ____________________, including specific characteristics such as weights and measurements that enable the product to work in a manner acceptable to the ___________.
a governmental document / inspector
a state mandate / auditor
a plan / buyer
a description of the required output / consumer
program / client
a description of the required output / consumer
The ____________ is actually the average distance a normal point is from the mean. Thus, the ____________ represents a more tractable measure of the variance.
common deviation / common deviation
standard deviation / standard deviation
quality variance / quality variance
enhances
fosters
standard deviation / standard deviation
_________ standards can be applied to both manufacturing and service firms using the same methodology. SPC provides input to the _________ approach.
Eight alpha / eight alpha
Sigma nine / sigma nine
One omega / one omega
Six epsilon / six epsilon
Six-sigma / six-sigma
Six-sigma / six-sigma
The ability to identify errors before they occur recycles scrap material, improves downstream inspections, and will promote profitability.
True
False
False
________ is a way to measure supplier quality. Supplying firms that follow the core philosophy of _________ will make excellent strategic partners.
Eight alpha / eight alpha
Sigma nine / sigma nine
Six sigma / six sigma
One omega / one omega
Six epsilon / six epsilon
Six sigma / six sigma
Six-sigma suppliers focus on all of the items listed below with one exception. Which one is the exception?
Defects per million as a standard metric
Provision of extensive employee training
Improvement of profit margins
The reduction of non-value-added activities
Improvement of profit margins
The __________ method (TM) nicely complements many of the advantages of SPC.
Tanner
Taguchi
Tupelo
Tasmania
Transactional
Taguchi
Although the basic ideas of TM are simple, the ___________ procedures are complex and can be difficult to __________.
implementation / understand
core / implement
basic / understand
statistical / understand
statistical / implement
statistical / implement
___________ components are those components not defined as strategic components.
Composite
OEM
Structural
Commodity-based
Common
Commodity-based
Intensive price competition and information technology have led to the implementation of a ______________ procurement approach for commodity components.
reverse auction
progressive
standardized
staple
multiple source
reverse auction
______________ is a methodology used to determine whether to accept or reject a batch of non-strategic components or items.

TQM
MBO
Quality Assurance
Acceptance sampling
Zero-defects

Acceptance sampling
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.
American Productivity Center Award / Master Malcolm
Deming Award / Malcolm Baldridge
National Productivity Center Award / Department of Commerce
Department of Commerce Award / Master Baldridge
Deming Productivity Center Award / Deming-Baldridge
Deming Award / Malcolm Baldridge
_____________________ 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. Malcolm Baldridge
Dr. Samuel E. Edwards
Dr. Malcolm Deming
Dr. Thomas Edison
Dr. W. Edwards Deming
Dr. W. Edwards Deming
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
False
True
In order to successfully achieve a __________, buying and supplying organizations must continuously improve their processes.
zero defect target
TQM goal
quality award
perfection goal or objective
productivity goal or objective
zero defect target
_________ 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.
USO 9500 / USO 9500
PSO 9000 / PSO 9000
ASO 9600 / ASO 9600
ESO 9000 / ESO 9000
ISO 9001 / ISO 9001
ISO 9001 / ISO 9001
______________ (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 Fabrication and Development
Quantity Functional Development
Quality Function Deployment
Quick Functional Development
Quick Fabrication and Development

Quality Function Deployment
Customer expectations include 1) fabrication, 2) appearance, 3) maintainability, and 4) reliability.
True
False
False
_______________ (QFD) is a methodology for collecting customer information to drive product development.
Quality Function Deployment
Quantity Functional Development
Quick Functional Development
Quality Fabrication and Development
Quick Fabrication and Development
Quality Function Deployment
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.
promotional-based evaluations and productivity-based evaluations
production-based evaluations and effectiveness-based evaluations
specification-based evaluations and goal attainment based evaluations
customer service-based evaluations and customer relations-based evaluations
process-based evaluations and performance-based evaluations
process-based evaluations and performance-based evaluations
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.
productivity-based
customer service-based
customer relations-based
effectiveness-based
performance-based
performance-based
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.

Tasmania
Truk
Taguchi
Tanner
Transactional

Taguchi
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.
government sanctions
consumer boycotts
court cases
consumer complaints
the loss of sales
the loss of sales
_____________ 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.
Specifications
Warranties
Guarantees
Return policies
Acceptance plans
Acceptance plans
Setting the ___________ criteria is usually based on either predetermined standards or basic statistics.
return
warranty
acceptance
specification
specification
acceptance
The new or modified part agreement between the buying and the selling firm is usually complete after ________________________ has been _____________.
a sample / produced
prototype / created and tested
an acceptable final test sample / generated and verified
production / set up and is in operation
the design / approved by engineering
an acceptable final test sample / generated and verified
One of the most important and complex decisions a firm has to make is how much to _____________________.

buy for its production lint
charge for its products and services
pay for its items and services
pay its employees
charge off as expenses

pay for its items and services
The price of a product or service should be expected to cover cost of _____________, plus a reasonable profit.

production
promotion
distribution
all of the above
A and B only

all of the above
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
discount
fair price
low
bargain
market price
If you buy items for one-half the market price without obtaining appropriate quality, delivery, or quantity standards, your firm would _________________.
have a competitive advantage
suffer the consequences
be at a strategic disadvantage
be rendered noncompetitive
be ahead of the competition
be rendered noncompetitive
In general, price is important; however, remember __________ of many variables that go into purchasing decisions.
it is the single most important
quality is the most important
it is only one
delivery is the most important
quantity standards are the most important
it is only one
The objective of the purchasing department is to buy the _______ materials from the ______ supplier at the ______ time and at the ______ price.
best quality / best / appropriate / lowest
best / best / appropriate / best
right / right / right / right
most / best / best / best
right / best / appropriate / lowest
right / right / right / right
Perhaps the most important factor associated with the purchasing decision is the _____________ and the ______________ between the buying and supplying firms.
business environment / power imbalance
economy / relationship
economy / power relationship
economic environment / power relationship
business economy / power imbalance
business environment / power imbalance
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
technological impacts
conceptual and the economic impacts
competitive impacts
economic and competitive impacts
productivity and economic impacts
conceptual and the economic impacts
The analysis phase (of the buying decision) requires the decision maker to investigate _____________ sources of supply.
at least two potential
at least five potential
all potential
the best
the best three
at least two potential
In the short term, a firm can sell its products ____________; however, at some point, the firm will be required to _______________.
at low prices / make money or close up shop
at above average prices / get competitive
at high prices / become competitive or lose sales
below its total cost / make a profit or quit the business
competitive prices / become profitable
below its total cost / make a profit or quit the business
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.

markets / suppliers
customers / research
expenses / sales representatives
competitors / customers
web site / sales representatives

competitors / customers
A cost-based approach cannot succeed in a competitive market if the product does not remain acceptable to the Department of Commerce.
True
False
False
The customer perception of _______________ is also important when determining market prices.

the company
value
quality and service
competition
value and quality

quality and service
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.

discount pricing / discount price
market pricing / market price
competitive pricing / competitive price
target pricing / target price
cost analysis / discount price

target pricing / target price
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.
prestige / chain store / discounts
feelings / strong / decreases
credibility / influential / increases
power / weak / decreases
power / powerful / increases
power / powerful / increases
The buying firm, no matter how powerful, should attempt to obtain a ___________ and good consensus.
fair price
market price
discount price
low price
standard price
fair price
There are some instances where the supplier will employ short-term strategic pricing in order to _______________.
gain a competitive advantage
increase market share or increase sales
gain a competitive advantage or close out obsolete items
close out discontinued items
gain market share or dump unwanted items
gain market share or dump unwanted items
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 quality
cash, seasonal, and trade
seasonal, trade, and quantity
cash, trade, and quantity
quarterly, cash, and quantity
cash, trade, and quantity
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.

seasonal
cash
quantity
trade
rebates

cash
_________ discounts are discounts granted to the buyer for buying larger quantities.
Trade
Cash
Seasonal
Preferred
quantity
quantity
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.

direcy costs
indirect costs
holding costs
transportation costs
cash outlay

holding costs
Justifying a quantity discount is the responsibility of the buying firm. The buyer must be able to document the actual cost savings.
True
False
False
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.
Robin-Parmer
Robinson-Patrick
Robinson-Patman
Martin-Parmer
Roberts-Pullman
Robinson-Patman
__________________ is becoming the most important competitive weapon necessary to ensure survival in today s competitive environment.
Strategic planning
Competitive analysis
A low price strategy
A differentiated market segmentation strategy
Price determination
Price determination
Companies are spending an increasingly larger percentage of their revenue dollars for __________________.
the acquisition of goods and services
labor
advertising and promotion
supplies
advanced technology
the acquisition of goods and services
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?
the number of sellers in the market
the number of buyers in the market
the general economic environment
all of the above
A and B only
all of the above
The general sources of price information are which of the following?
published price lists and quotations
other buyers in the market and trade journals
negotiations and competitive bidding
distribution
all of the above
all of the above
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.
Indirect/indirect
Direct/direct
Direct/direct
_________ costs are associated with non-manufacturing-related costs. Insurance, managerial salaries, property taxes, and depreciation expenses are examples of _________ costs.
Direct/direct
Indirect/indirect
Indirect/indirect
The purchasing professional must understand the dynamic nature of ________ cost.
indirect
direct
variable
labor
advertising
variable
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.
True
False
False
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
False
True
The ____________ techniques have been used extensively in cost estimating, pricing, negotiating contracts, and estimating the major implications of changes in design.
TQM
MBO
Herzberg
Deming
learning curve
learning curve
___________ price lists are usually prices generated based on the seller s total cost structure.
Discount
Trade
Standard
Catalogue
Preferred customer
Standard
The competitive bidding process must begin with an assessment sizing up the suppliers _________________.

labor and materials costs
pricing strategies on competitive positions
power
need for sales
competitive strength

pricing strategies on competitive positions
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.
True
False
False
Negotiation should be used any time the buyer does not have confidence in the __________ price lists and competitive bidding seems unreasonable.

catalogue
standard
trade
direct
discount

standard
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
low-priced
standard
custom
all
high-priced
If setup cost and learning rates are ignored, a buying firm will, more than likely, _______________.
become engaged in a price war
suffer from a competitive disadvantage
gain a competitive advantage
receive a major discount
fall into a competitive bidding trap
fall into a competitive bidding trap
Large setup and tooling costs can easily be amortized by the buying firm
True
False
False
____________ occurs between all forms of human groupings including individuals, groups, organizations, and countries.

Communicating
Trading
Bargaining
Swapping
Organizing

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

Communicating
Swapping
organizing
trading
bargaining

bargaining
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.
Mutual compromise must be possible. If one of the parties must choose between total victory and complete loss, no bargaining occurs. Bargaining situations require intermediate solutions for the parties involved.
The possibility must exist for provisional offers to be made by those involved in the situation.
The provisional offers must not determine the outcome of the situation until the terms are accepted by all parties
The provisional offers must determine the outcome of the situation, i.e., one party must lose and the other party must win.
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 ______________.
standard bargaining
implicit bargaining
routine bargaining
explicit bargaining
fail safe bargaining
explicit bargaining
Two-party bargaining can be divided into two types: _________ and ___________.
standard / routine
fail safe / goal oriented
distributive / integrative
win / lose
routine / fail safe
distributive / integrative
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.
standard
routine
distributive
fail safe
common
distributive
Discussion, understanding, and agreements are vital to ___________ bargaining.
distributive
common
standard
routine
fail safe
distributive
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.
standard-sum
routine-sum
fixed-sum
floating-sum
varying-sum
varying-sum
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 _______.
net-sum / net-sum / one
zero-sum / zero-sum / zero
routine-sum / routine-sum / two
zero-sum / zero-sum / ten
net-sum / net-sum / zero
zero-sum / zero-sum / zero
________________ 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
Routine bargaining
Distributive bargaining
Net-sum bargaining
Net-zero bargaining
Integrative bargaining
The word ___________ is derived from Latin and in civil law means trading on deliberations leading to an agreement.
bargaining
deliberating
discussion
negotiation
considering
negotiation
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.

organizer
bargainer
representative
executive
agent

bargainer
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?

initial offers
desired outcomes
rate of concession
the final maximum offer
maximum level of concession (zero profit level)

the final maximum offer
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

net-sum
zero-sum
distributive
routine
standard

distributive
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?
General bargaining predispositions
Social relationship with the opponent
Situational factors
Bargaining system
Social relationship with significant others
Bargaining system
Individual differences in bargaining predispositions may affect bargaining behavior. This is referred to as ________________.

Standard bargaining predispositions
Routine bargaining predispositions
Individualized bargaining predispositions
Cooperative bargaining predispositions
General bargaining predispositions

General bargaining predispositions
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 __________.

Social relationships
Compensation systems
Bargaining systems
Bargaining strategies
Payoff system

Payoff system
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?
General bargaining predispositions
Social relationship with significant others
Social relationship with the opponent
Payoff system
Situational factors
Social relationship with the opponent
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 the opponent
Social relationship with significant others
Social payoff systems
Social relationships with management
Social relationships with various parties
Social relationship with significant others
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
Payoff system
Physical systems
Forum factors
Physical and maintenance factors
Situational factors
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?

Negotiating
Planning
organizing
Operating
Bargaining strategy

Bargaining strategy
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?
maximum concession point
breakeven point
net-sum point
zero-profit point
minimum disposition
net-sum point
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.
True
False
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.
True
False
False
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
False
True
Usually a tougher bargaining one using a more extreme opening position, fewer concessions, and/or smaller concessions can obtain a more favorable agreement.

True
False

False
The best strategy is to give the other side the impression that one is _________.
tough
fair
rigid
tough but fair
not easily pushed around
tough but fair
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.

occasionally / frequent
always / less
frequently / less
sometimes / full
occasionally / full

always / less
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.
True
False
False
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.

worst
poorest
best
fairest
weakest

best
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.
statistical / physical
economic / psychological
management / economic
economic / financial
financial / psychological
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
statistical/physical
economic/financial
financial/psychological
management/economic
economic/psychology
The most important ____________ for a seller is to submit the most responsive Request for Proposal (RFP) or Request for Quote (RFQ).
bargaining tactic
organizing activity
strategic step
negotiating step
planning activity
planning activity
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
False
True
There are standard procedures for processing RFPs. After receipt of the initial proposals, the proposals should be screened for responsiveness in terms of ________.
technical quality and managerial capability
financial stability
experience on similar projects and other relevant criteria
All of the above
B and C only
All of the above
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
False
True
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.
True
False
False
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
False
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
False
True
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.

four
five
six
seven
eight

five