Deck 5: Price and the Vendor

Question 1

"Hedging" does not refer to the practice of ordering excess items to guard against running out of a popular menu item

Answer 1

True
It actually is a "contract on a future price."

Question 2

An arrangement made with a vendor to deliver specific goods on a regularly scheduled basis is referring to:

A) firm price
B) hedging
C) standing order contract
D) none of these answers is correct

Answer 2

C

Question 3

As a basic principle of purchasing, you should always choose the least price for the best quality available.

Answer 3

False
Other important issues such as timeliness and consistency of the vendor are must considerations.

Question 4

Which of the following is not true about "price index"?

A) It is a form of weighting the price averages to achieve accuracy
B) It is a set of numbers generated to indicate changes in product prices
C) This index can be used to compare multiple companies that offer different presentations of the same item
D) The basic food price index can only be calculated yearly

Question 5

Purchasers use this type of pricing to maintain a fixed price for a product or commodity they will need in the future. This is called a:

A) consignment purchasing
B) firm price
C) hedging
D) contract price

Question 6

The analysis of base month prices and future product prices will reveal the cost impacts of price changes by delineating the difference between vendors. This analysis is called:

A) market basket analysis
B) market analysis
C) basket analysis
D) pricing analysis

Question 7

The disadvantages to standing orders may be:

A) Storeroom access and security must be more consistently monitored
B) In some cases deliveries are not verified and invoices are not signed before the delivery person leaves the premises
C) It may be more expensive than other purchasing methods
D) All answers are correct

Question 8

Consignment purchasing and pricing depend on you conducting strict monitoring of the merchandise in your possession.

Question 9

You may unilaterally adjust payment of a bill to your vendor based on discrepancies in quality or quantity on a delivered order.

Question 10

One of the best ways to ensure that you are in compliance with regulations regarding food safety is to visit and inspect your vendor's premises unannounced.

Question 11

Any food-service business experiences price fluctuations. It is up to management to identify the pattern of the fluctuations and act on them. First, the manager should set a particular date, preferably at the beginning of a month. This is called the:

A) basic month
B) base month
C) fundamental month
D) beginning month

Question 12

It is vitally important to consider all the variables involved in selecting your vendor because once the contract has been negotiated, your attention can then be directed to other activities.

Question 13

The financial strength of a vendor is an important consideration in your selection process.

Question 14

Which description is not true regarding "pricing arrangements"?

A) To establish a written, binding contract, a definite price should be set forth in the purchase order; this may be either a specific price or a basis for determining a final price
B) In the case of standard items that have an established market price, such as beverages, it is not a binding contract if you don't put a price on the purchase order
C) In the case of standard items that have an established market price, such as beverages, even if you don't put a price on the purchase order it is still a binding contract
D) The established practice to avoid confusion or even legal problems is to include either a specific price or a basis for determining a final price in the body of the purchase order

Question 15

Considerations before awarding business to a vendor include:

A) consistency
B) availability
C) reliability
D) all answers are correct

Question 16

"Cost plus" pricing has the benefit of avoiding the price increases your vendor experiences.

Question 17

"Prime cost" is the basic cost of an item to be purchased.

Question 18

It is the most commonly used pricing method in day-to-day purchasing transactions. It means that the price to which the purchaser and the vendor agree will not change until the material is delivered and the transaction is completed. This is called a:

A) firm price
B) contract price
C) hedging
D) none of these answers is correct

Question 19

There are several different kinds of price arrangements that you can make with a vendor, including:

A) firm price
B) consignment purchasing
C) contract price
D) all answers are correct

Question 20

Consistency is most important in your vendor relationship because it lessons your effort in monitoring your relationship.

Question 21

Briefly describe "market basket analysis"?

Question 22

What is "price index" and what is it used for?

Question 23

What is a "firm price"?

Question 24

Define the relationship between price and value.

Question 25

List five considerations before awarding business to a vendor.

Question 26

What is a "hedging"?

Question 27

Describe "cost-plus."

Question 28

What does a purchasing manager or purchaser do after the purchase contract is signed with a vendor?

Question 29

What is a "contract price"?

Question 30

What is a "credit memo"?