Exam 13: Price Determination

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.

One of the most important and complex decisions a firm has to make is how much to _____________________.

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.

The underlying behavior of the improvement curve reflects a systematic improvement (percentage reduction) of labor per unit as a function of cumulative units produced.

The competitive bidding process should not be employed when the following conditions prevail: The dollar value of the bid must be large enough to justify the expense of bidding.The specifications of the product on service must be precise enough for both the buying and selling firms to accurately cost out.There are enough selling firms in the market.There is adequate time to use this form of bidding. The competitive process usually takes from four to eight weeks for most industrial firms.

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.

The price of a product or service should be expected to cover cost of _____________, plus a reasonable profit.

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?

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.

The purchasing professional must understand the dynamic nature of ________ cost.

ompanies are spending an increasingly larger percentage of their revenue dollars for __________________.

cost-based approach cannot succeed in a competitive market if the product does not remain acceptable to the Department of Commerce.

If setup cost and learning rates are ignored, a buying firm will, more than likely, _______________.

_________ costs are associated with non-manufacturing-related costs.Insurance, managerial salaries, property taxes, and depreciation expenses are examples of _________ costs.

There are some instances where the supplier will employ short-term strategic pricing in order to _______________.

The competitive bidding process must begin with an assessment sizing up the suppliers' _________________.

_______ discount represents the compensation for the buyer who eliminates a distributor or other middlemen from the transaction. _______ discounts are usually used by the manufacturer to protect a unique selling opportunity. This is accomplished by providing the buying firm an incentive to buy directly from the manufacturer.

Negotiations should not be used when there are time constraints, the specifications are not clearly stated, there are not enough sellers, and the dollar value is too low to consider using the competitive bidding process.

firm cannot afford to operate without _____________. _______ is essentially an economic cost of doing business.

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.