Exam 15: Managing Suppliers and Customers

An example of an ordering cost is:

An example of a shortage cost is:

The advantage of a just-in-time (JIT)system is that there are huge savings in costs relating to the holding of inventory as JIT companies never hold inventories of any description.

When organisations assess their own performance in relation to suppliers,two of the measures they can use are the response time to support queries,and the number of suppliers or joint innovations generated.

GoGo Furniture has collected the following customer-related information: The total customer level cost is:

Lead time is:

Which of the following are performance measures used by firms to assess their own performance in relation to suppliers? i.Percentage of orders processed by electronic means ii.Number of expedited orders iii.Response time to customer queries iv.Reduction in the number of suppliers

Specialty Manufacturing requires 5400 gadgets per year for production.The firm decides to order 120 gadgets at a time.The costs of ordering are $50 per order and carrying costs per gadget are $2.Annual ordering costs are:

Specialty Manufacturing requires 5400 gadgets per year for production.The firm decides to order 120 gadgets at a time.The costs of ordering are $50 per order and carrying costs per gadget are $2.Annual carrying costs are:

Which of the following statements about just-in-time purchasing,compared with conventional purchasing systems,is/are true?

Break-even time may be defined as:

When calculating customer costs there are three levels of costs that must be considered - market level activities,customer level activities and order level activities.

The break-even time has which of the following characteristics? i.It cannot be established until after the product development cycle is completed ii.It encourages incremental projects. iii.It discourages major projects that take a long time.iv.It measures cash flow not profit.

Nonsuch Ltd wishes to know the break-even point on its product,ADV,and provides the following data.What is the break-even point in years?

Which of the following are customer costs at the market level? i.Market research ii.Regular sales calls iii.Advertising campaigns iv.Market development

Customer value is an important part of activity-based management and it enables an organisation to achieve both cost reduction and improved customer value through the use of which of the following? i.Identifying major opportunities for cost reduction ii.Determining root causes of these costs. iii.Developing programs to eliminate the causes of these costs.iv.Introducing performance measures to monitor the effect of these programs.