Question 1

The major benefits from cost-reduction efforts occur when supply management is not involved in the new-product/service development cycle.

Accepted Answer

A) True 
 B)False  False

Question 2

In should-cost modeling, the _____ provides a high level view of the supply chain, and then the supplier's primary cost elements are broken down into material, labor, overhead, transportation freight, inventory cost, maintenance costs, and others.

Accepted Answer

A)  PPI 
B)  value stream map 
C)  target price 
D)  product specification 
E)  None of the above. 
A)  PPI 
B)  value stream map 
C)  target price 
D)  product specification 
E)  None of the above. B

Question 3

In should-cost modeling, _____ include those components the company has direct control or influence over.

Accepted Answer

A)  direct costs 
B)  assumption variables 
C)  variable costs 
D)  decision variables 
E)  commodity prices 
A)  direct costs 
B)  assumption variables 
C)  variable costs 
D)  decision variables 
E)  commodity prices D

Question 4

In many cases, the price charged by a seller may have little or no relationship to actual costs.

Accepted Answer

A) True 
 B)False

Question 5

At the highest levels of the organization, top management uses break-even analysis as a strategic planning tool.

Accepted Answer

A) True 
 B)False

Question 6

The main risk in target and cost-based pricing concerns volume variability.

Accepted Answer

A) True 
 B)False

Question 7

In the _____, the seller is willing to take a lower price because of the potential mass market appeal of the product, resulting in substantially higher sales volumes.

Accepted Answer

A)  Revenue pricing model 
B)  promotional pricing model 
C)  revenue pricing model 
D)  cash discount model 
E)  market-share model 
A)  Revenue pricing model 
B)  promotional pricing model 
C)  revenue pricing model 
D)  cash discount model 
E)  market-share model

Question 8

The _____ presents pricing for individual products and services that is set to enhance the sales of the overall product line rather than to ensure the profitability of each product.

Accepted Answer

A)  price volume model 
B)  competition pricing model 
C)  market skimming model 
D)  promotional pricing model 
E)  revenue pricing model 
A)  price volume model 
B)  competition pricing model 
C)  market skimming model 
D)  promotional pricing model 
E)  revenue pricing model

Question 9

The emphasis of the _____ is on obtaining sufficient current revenue to pay for operating cost rather than on profit.

Accepted Answer

A)  price volume model 
B)  promotional pricing model 
C)  revenue pricing model 
D)  market skimming model 
E)  competition pricing model 
A)  price volume model 
B)  promotional pricing model 
C)  revenue pricing model 
D)  market skimming model 
E)  competition pricing model

Question 10

Strategic cost management approaches do not vary according to the stage of the product life cycle.

Accepted Answer

A) True 
 B)False

Question 11

Break-even analysis includes both cost and revenue data for an item to identify the point where revenue equals costs, and the expected profit or loss at different production volumes.

Accepted Answer

A) True 
 B)False

Question 12

A major benefit of multiple sourcing is a lower price that results from the higher volumes offered to a supplier.

Accepted Answer

A) True 
 B)False

Question 13

Price analysis focuses simply on a seller's price with little or no consideration given to the actual cost of production.

Accepted Answer

A) True 
 B)False

Question 14

​_____ = (Quality + Technology + Service + Cycle Time) ÷ Price.

Accepted Answer

A)  Cost 
B)  Efficiency 
C)  Value 
D)  Total cost 
E)  Target cost 
A)  Cost 
B)  Efficiency 
C)  Value 
D)  Total cost 
E)  Target cost

Question 15

In _____, a purchaser may have to use internal engineering estimates about what it costs to produce an item, rely on historical experience and judgment to estimate costs, or review public financial documents to identify key cost data about the seller.

Accepted Answer

A)  reverse price analysis 
B)  TCO analysis 
C)  penetration pricing 
D)  using the PPI 
E)  competition pricing 
A)  reverse price analysis 
B)  TCO analysis 
C)  penetration pricing 
D)  using the PPI 
E)  competition pricing

Question 16

In should-cost modeling, _____ are any components not under the direct control of the buying or supplying company but those that have a significant influence on the outcome being modeled.

Accepted Answer

A)  direct costs 
B)  assumption variables 
C)  overhead costs 
D)  transportation modes 
E)  decision variables 
A)  direct costs 
B)  assumption variables 
C)  overhead costs 
D)  transportation modes 
E)  decision variables

Question 17

In the framework for strategic cost management, _____ are high-value products or services and can be sourced through traditional bidding approaches that require price analysis using market forces to do the work and identify what is a competitive price.

Accepted Answer

A)  critical products 
B)  unique products 
C)  custom-made products 
D)  generics 
E)  commodities 
A)  critical products 
B)  unique products 
C)  custom-made products 
D)  generics 
E)  commodities

Question 18

A cost-based approach to determining price is clearly appropriate for all purchased items.

Accepted Answer

A) True 
 B)False

Question 19

A _____ is an analytical tool that identifies the primary external forces that are causing prices to either increase or decrease.

Accepted Answer

A)  market analysis 
B)  total cost analysis 
C)  cost analysis 
D)  make-buy analysis 
E)  target price analysis 
A)  market analysis 
B)  total cost analysis 
C)  cost analysis 
D)  make-buy analysis 
E)  target price analysis

Question 20

Using a traditional pricing approach, the selling price - profit = allowable product cost.

Accepted Answer

A) True 
 B)False

The major benefits from cost-reduction efforts occur when supply management is not involved in the new-product/service development cycle.

In should-cost modeling, the _____ provides a high level view of the supply chain, and then the supplier's primary cost elements are broken down into material, labor, overhead, transportation freight, inventory cost, maintenance costs, and others.

In should-cost modeling, _____ include those components the company has direct control or influence over.

In many cases, the price charged by a seller may have little or no relationship to actual costs.

At the highest levels of the organization, top management uses break-even analysis as a strategic planning tool.

The main risk in target and cost-based pricing concerns volume variability.

In the _____, the seller is willing to take a lower price because of the potential mass market appeal of the product, resulting in substantially higher sales volumes.

The _____ presents pricing for individual products and services that is set to enhance the sales of the overall product line rather than to ensure the profitability of each product.

The emphasis of the _____ is on obtaining sufficient current revenue to pay for operating cost rather than on profit.

Strategic cost management approaches do not vary according to the stage of the product life cycle.

Break-even analysis includes both cost and revenue data for an item to identify the point where revenue equals costs, and the expected profit or loss at different production volumes.

A major benefit of multiple sourcing is a lower price that results from the higher volumes offered to a supplier.

Price analysis focuses simply on a seller's price with little or no consideration given to the actual cost of production.

_____ = (Quality + Technology + Service + Cycle Time) ÷ Price.

In _____, a purchaser may have to use internal engineering estimates about what it costs to produce an item, rely on historical experience and judgment to estimate costs, or review public financial documents to identify key cost data about the seller.

In should-cost modeling, _____ are any components not under the direct control of the buying or supplying company but those that have a significant influence on the outcome being modeled.

In the framework for strategic cost management, _____ are high-value products or services and can be sourced through traditional bidding approaches that require price analysis using market forces to do the work and identify what is a competitive price.

A cost-based approach to determining price is clearly appropriate for all purchased items.

A _____ is an analytical tool that identifies the primary external forces that are causing prices to either increase or decrease.

Using a traditional pricing approach, the selling price - profit = allowable product cost.

Introduction to Purchasing and Supply Chain Management

The Purchasing Process

Purchasing Policy and Procedures

Supply Management Integration for Competitive Advantage

Purchasing and Supply Management Organization

Category Strategy Development

Supplier Evaluation and Selection

Supplier Quality Management

Supplier Management and Development: Creating a World-Class Supply Base

Worldwide Sourcing

Purchasing and Supply Chain Analysis: Tools and Techniques

Negotiation and Conflict Management

Contract Management

Purchasing Law and Ethics

Lean Supply Chain Management

Purchasing Services

Supply Chain Information Systems and Electronic Sourcing

Performance Measurement and Evaluation

Purchasing and Supply Strategy Trends

Filters

Exam 11: Strategic Cost Management

The major benefits from cost-reduction efforts occur when supply management is not involved in the new-product/service development cycle.

In should-cost modeling, the _____ provides a high level view of the supply chain, and then the supplier's primary cost elements are broken down into material, labor, overhead, transportation freight, inventory cost, maintenance costs, and others.

In should-cost modeling, _____ include those components the company has direct control or influence over.

In many cases, the price charged by a seller may have little or no relationship to actual costs.

At the highest levels of the organization, top management uses break-even analysis as a strategic planning tool.

The main risk in target and cost-based pricing concerns volume variability.

In the _____, the seller is willing to take a lower price because of the potential mass market appeal of the product, resulting in substantially higher sales volumes.

The _____ presents pricing for individual products and services that is set to enhance the sales of the overall product line rather than to ensure the profitability of each product.

The emphasis of the _____ is on obtaining sufficient current revenue to pay for operating cost rather than on profit.

Strategic cost management approaches do not vary according to the stage of the product life cycle.

Break-even analysis includes both cost and revenue data for an item to identify the point where revenue equals costs, and the expected profit or loss at different production volumes.

A major benefit of multiple sourcing is a lower price that results from the higher volumes offered to a supplier.

Price analysis focuses simply on a seller's price with little or no consideration given to the actual cost of production.

​_____ = (Quality + Technology + Service + Cycle Time) ÷ Price.

In _____, a purchaser may have to use internal engineering estimates about what it costs to produce an item, rely on historical experience and judgment to estimate costs, or review public financial documents to identify key cost data about the seller.

In should-cost modeling, _____ are any components not under the direct control of the buying or supplying company but those that have a significant influence on the outcome being modeled.

In the framework for strategic cost management, _____ are high-value products or services and can be sourced through traditional bidding approaches that require price analysis using market forces to do the work and identify what is a competitive price.

A cost-based approach to determining price is clearly appropriate for all purchased items.

A _____ is an analytical tool that identifies the primary external forces that are causing prices to either increase or decrease.

Using a traditional pricing approach, the selling price - profit = allowable product cost.

Introduction to Purchasing and Supply Chain Management

The Purchasing Process

Purchasing Policy and Procedures

Supply Management Integration for Competitive Advantage

Purchasing and Supply Management Organization

Category Strategy Development

Supplier Evaluation and Selection

Supplier Quality Management

Supplier Management and Development: Creating a World-Class Supply Base

Worldwide Sourcing

Purchasing and Supply Chain Analysis: Tools and Techniques

Negotiation and Conflict Management

Contract Management

Purchasing Law and Ethics

Lean Supply Chain Management

Purchasing Services

Supply Chain Information Systems and Electronic Sourcing

Performance Measurement and Evaluation

Purchasing and Supply Strategy Trends

Filters

_____ = (Quality + Technology + Service + Cycle Time) ÷ Price.