Question 1

_____ are based on the notion that as purchase volume increase, cost structures change.

Accepted Answer

A)  Short-term contracts 
B)  Firm fixed price contracts 
C)  Long-term contracts with incentives 
D)  Time and materials contracts 
E)  Blanket orders 
A)  Short-term contracts 
B)  Firm fixed price contracts 
C)  Long-term contracts with incentives 
D)  Time and materials contracts 
E)  Blanket orders

Question 2

Which of the following is not an example of a contingency element of a long-term contract?

Accepted Answer

A)  Initial price. 
B)  Price-adjustment mechanisms. 
C)  Delivery dates and times. 
D)  Supplier performance improvement. 
E)  Evergreen, penalty, and escape clauses. 
A)  Initial price. 
B)  Price-adjustment mechanisms. 
C)  Delivery dates and times. 
D)  Supplier performance improvement. 
E)  Evergreen, penalty, and escape clauses.

Question 3

​In a firm fixed price contract, if market prices for a purchased good or service _____ the stated contract price, the _____ bears the brunt of the financial loss.

Accepted Answer

A)  rise above….purchaser 
B)  rise above….seller 
C)  fall below….seller 
D)  stay the same….seller 
E)  None of the above. 
A)  rise above….purchaser 
B)  rise above….seller 
C)  fall below….seller 
D)  stay the same….seller 
E)  None of the above.

Question 4

If suppliers are not forthcoming with labor and material cost data, cost models can be developed to improve the buyer's negotiating position using material/labor ratios available from industry databases.

Accepted Answer

A) True 
 B)False

Question 5

All of the following are important factors to consider when negotiating with a supplier over contract type except _____.

Accepted Answer

A)  component market uncertainty 
B)  degree of trust between buyer and seller 
C)  process or technology uncertainty 
D)  supplier's ability to impact costs 
E)  physical distance between the buyer and supplier facilities 
A)  component market uncertainty 
B)  degree of trust between buyer and seller 
C)  process or technology uncertainty 
D)  supplier's ability to impact costs 
E)  physical distance between the buyer and supplier facilities

Question 6

A/An _____ is similar to a/an _____ but allows the addition of items not originally included in the order and may allow the original purchase order to be extended for a longer term.

Accepted Answer

A)  closed-end order….open-ended order 
B)  national contract….national buying agreement 
C)  open-ended order….blanket order 
D)  open-ended order….pricing agreement 
E)  blanket order….national buying agreement 
A)  closed-end order….open-ended order 
B)  national contract….national buying agreement 
C)  open-ended order….blanket order 
D)  open-ended order….pricing agreement 
E)  blanket order….national buying agreement

Question 7

It is always a good idea to double-check all attachments to the contract, because many of the technical details are included here.

Accepted Answer

A) True 
 B)False

Question 8

A/An _____ is new intellectual property (such as tools, methodologies, and knowledge) developed as the result of the interaction between the enterprise and the consulting company.

Accepted Answer

A)  evergreen contract 
B)  output 
C)  good 
D)  service 
E)  residual 
A)  evergreen contract 
B)  output 
C)  good 
D)  service 
E)  residual

Question 9

Technical sections of the contract are typically the least source of misinterpretation of terms and conditions.

Accepted Answer

A) True 
 B)False

Question 10

In the _____ contract, if the supplier can demonstrate actual cost savings through production efficiencies or substitution of materials, the resulting savings from the initial price targets are shared between the supplier and the purchaser at a predetermined rate.

Accepted Answer

A)  time and materials 
B)  cost plus fixed fee 
C)  fixed-price with incentives 
D)  firm fixed price 
E)  fixed-price with escalation 
A)  time and materials 
B)  cost plus fixed fee 
C)  fixed-price with incentives 
D)  firm fixed price 
E)  fixed-price with escalation

Question 11

Which of the following is not one of the basic levels of service that a systems supplier can provide to the buyer?

Accepted Answer

A)  Turnkey. 
B)  Modular. 
C)  Shared. 
D)  All of the above. 
E)  None of the above. 
A)  Turnkey. 
B)  Modular. 
C)  Shared. 
D)  All of the above. 
E)  None of the above.

Question 12

The _____ clause of a contract states whether the buyer can expect to receive preferential status over the supplier's other customers.

Accepted Answer

A)  most favored customer 
B)  confidentiality 
C)  notices 
D)  liability 
E)  scope of agreement 
A)  most favored customer 
B)  confidentiality 
C)  notices 
D)  liability 
E)  scope of agreement

Question 13

The _____ clause in a contract provides guidelines regarding what type of reporting statistics and measures the supplier must provide to the buyer on a regular basis, defined clearly.

Accepted Answer

A)  statistics 
B)  notices 
C)  most favored customer 
D)  confidentiality 
E)  third-party rights 
A)  statistics 
B)  notices 
C)  most favored customer 
D)  confidentiality 
E)  third-party rights

Question 14

The _____ clause in a contract ensures that all information, technology, and so on shared between the parties remains confidential and is not shared with other customers or suppliers.

Accepted Answer

A)  assignment and contracting 
B)  liability 
C)  third-party rights 
D)  confidentiality 
E)  intellectual property 
A)  assignment and contracting 
B)  liability 
C)  third-party rights 
D)  confidentiality 
E)  intellectual property

Question 15

The _____ clause of a contract outlines the relationship between the Agreement and any other purchase orders issued by the company to the supplier.

Accepted Answer

A)  specifications, quality, and health, safety, environment 
B)  most favored customer 
C)  statistics 
D)  effective date and termination 
E)  purchase orders 
A)  specifications, quality, and health, safety, environment 
B)  most favored customer 
C)  statistics 
D)  effective date and termination 
E)  purchase orders

Question 16

A/An _____ specifies that business units within a corporate organization must buy from specific suppliers during the term of the contract.

Accepted Answer

A)  corporate agreement 
B)  Open-ended order 
C)  online MRO catalog 
D)  blanket order 
E)  open-ended order 
A)  corporate agreement 
B)  Open-ended order 
C)  online MRO catalog 
D)  blanket order 
E)  open-ended order

Question 17

The assignment and contracting clause of a contract stipulates whether the supplier can assign its rights described in the agreement to another party and whether subcontracting is permissible.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not one of the factors to consider when deciding which dispute-resolution mechanism to use?

Accepted Answer

A)  Status of the relationship between the parties in the dispute. 
B)  Type of outcome desired by the purchaser. 
C)  Type of contract leading to the dispute. 
D)  Level of emotion displayed by the principals. 
E)  None of the above. 
A)  Status of the relationship between the parties in the dispute. 
B)  Type of outcome desired by the purchaser. 
C)  Type of contract leading to the dispute. 
D)  Level of emotion displayed by the principals. 
E)  None of the above.

Question 19

A carefully worded and prepared contract is not subject to any form of dispute or disagreement.

Accepted Answer

A) True 
 B)False

Question 20

Generally speaking, the more complex the nature of the contract and the greater the dollar amounts involved, the more likely it is that a future dispute over interpretation of the terms and conditions will occur.

Accepted Answer

A) True 
 B)False

_____ are based on the notion that as purchase volume increase, cost structures change.

Which of the following is not an example of a contingency element of a long-term contract?

In a firm fixed price contract, if market prices for a purchased good or service _ the stated contract price, the _ bears the brunt of the financial loss.

If suppliers are not forthcoming with labor and material cost data, cost models can be developed to improve the buyer's negotiating position using material/labor ratios available from industry databases.

All of the following are important factors to consider when negotiating with a supplier over contract type except _____.

A/An _ is similar to a/an _ but allows the addition of items not originally included in the order and may allow the original purchase order to be extended for a longer term.

It is always a good idea to double-check all attachments to the contract, because many of the technical details are included here.

A/An _____ is new intellectual property (such as tools, methodologies, and knowledge) developed as the result of the interaction between the enterprise and the consulting company.

Technical sections of the contract are typically the least source of misinterpretation of terms and conditions.

In the _____ contract, if the supplier can demonstrate actual cost savings through production efficiencies or substitution of materials, the resulting savings from the initial price targets are shared between the supplier and the purchaser at a predetermined rate.

Which of the following is not one of the basic levels of service that a systems supplier can provide to the buyer?

The _____ clause of a contract states whether the buyer can expect to receive preferential status over the supplier's other customers.

The _____ clause in a contract provides guidelines regarding what type of reporting statistics and measures the supplier must provide to the buyer on a regular basis, defined clearly.

The _____ clause in a contract ensures that all information, technology, and so on shared between the parties remains confidential and is not shared with other customers or suppliers.

The _____ clause of a contract outlines the relationship between the Agreement and any other purchase orders issued by the company to the supplier.

A/An _____ specifies that business units within a corporate organization must buy from specific suppliers during the term of the contract.

The assignment and contracting clause of a contract stipulates whether the supplier can assign its rights described in the agreement to another party and whether subcontracting is permissible.

Which of the following is not one of the factors to consider when deciding which dispute-resolution mechanism to use?

A carefully worded and prepared contract is not subject to any form of dispute or disagreement.

Generally speaking, the more complex the nature of the contract and the greater the dollar amounts involved, the more likely it is that a future dispute over interpretation of the terms and conditions will occur.

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

Strategic Cost Management

Purchasing and Supply Chain Analysis: Tools and Techniques

Negotiation and Conflict 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 14: Contract Management

_____ are based on the notion that as purchase volume increase, cost structures change.

Which of the following is not an example of a contingency element of a long-term contract?

​In a firm fixed price contract, if market prices for a purchased good or service _____ the stated contract price, the _____ bears the brunt of the financial loss.

If suppliers are not forthcoming with labor and material cost data, cost models can be developed to improve the buyer's negotiating position using material/labor ratios available from industry databases.

All of the following are important factors to consider when negotiating with a supplier over contract type except _____.

A/An _____ is similar to a/an _____ but allows the addition of items not originally included in the order and may allow the original purchase order to be extended for a longer term.

It is always a good idea to double-check all attachments to the contract, because many of the technical details are included here.

A/An _____ is new intellectual property (such as tools, methodologies, and knowledge) developed as the result of the interaction between the enterprise and the consulting company.

Technical sections of the contract are typically the least source of misinterpretation of terms and conditions.

In the _____ contract, if the supplier can demonstrate actual cost savings through production efficiencies or substitution of materials, the resulting savings from the initial price targets are shared between the supplier and the purchaser at a predetermined rate.

Which of the following is not one of the basic levels of service that a systems supplier can provide to the buyer?

The _____ clause of a contract states whether the buyer can expect to receive preferential status over the supplier's other customers.

The _____ clause in a contract provides guidelines regarding what type of reporting statistics and measures the supplier must provide to the buyer on a regular basis, defined clearly.

The _____ clause in a contract ensures that all information, technology, and so on shared between the parties remains confidential and is not shared with other customers or suppliers.

The _____ clause of a contract outlines the relationship between the Agreement and any other purchase orders issued by the company to the supplier.

A/An _____ specifies that business units within a corporate organization must buy from specific suppliers during the term of the contract.

The assignment and contracting clause of a contract stipulates whether the supplier can assign its rights described in the agreement to another party and whether subcontracting is permissible.

Which of the following is not one of the factors to consider when deciding which dispute-resolution mechanism to use?

A carefully worded and prepared contract is not subject to any form of dispute or disagreement.

Generally speaking, the more complex the nature of the contract and the greater the dollar amounts involved, the more likely it is that a future dispute over interpretation of the terms and conditions will occur.

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

Strategic Cost Management

Purchasing and Supply Chain Analysis: Tools and Techniques

Negotiation and Conflict 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

In a firm fixed price contract, if market prices for a purchased good or service _ the stated contract price, the _ bears the brunt of the financial loss.

A/An _ is similar to a/an _ but allows the addition of items not originally included in the order and may allow the original purchase order to be extended for a longer term.