Exam 13: Price Determination

Large setup and tooling costs can easily be amortized by the buying firm.

In the short term, a firm can sell its products ____________; however, at some point, the firm will be required to _______________.

Negotiation should be used any time the buyer does not have confidence in the __________ price lists and competitive bidding seems unreasonable.

buying firm must consider the price variation that is inherent in buying __________ components in order to understand various design specifications and associated costs.

The general sources of price information are which of the following?

___________ price lists are usually prices generated based on the seller's total cost structure.

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.

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.

If the selling firm fails to give explicit specifications and/or prices for alternative quantities of the item, what appears to be a good buy may result in an excessive price.

The customer perception of _______________ is also important when determining market prices.

The buying firm, no matter how powerful, should attempt to obtain a ___________ and good consensus.

competitive firm's _____________ must include the following: The right material (quality).The right quantity.The right source.The right timing.The right price.

The analysis phase (of the buying decision) requires the decision maker to investigate _____________ sources of supply.

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.

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.

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.

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.

In general, price is important; however, remember __________ of many variables that go into purchasing decisions.

The buying firm must develop an estimate of the winning bid amount. The buying firm's estimate should be based on market data, including the following: The dollar value of previous bids.The expected profit from previous bids.The data set is used to estimate the probability of different bid scenarios. The scenario should include mock bids with low, moderate, and high profit margins.The expected profit equation is given as:(πA) = P(A) × y(A)

__________________ is becoming the most important competitive weapon necessary to ensure survival in today's competitive environment.