Question 1

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

Accepted Answer

A cost-based approach can still succeed in a competitive market even if the product does not remain acceptable to the Department of Commerce, as long as consumers value the product and are willing to pay for it. However, if the product becomes unacceptable to consumers or if competitors offer better alternatives, then the cost-based approach may no longer be successful.

Question 2

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.

Accepted Answer

Cash discounts are offered by selling firms as an incentive for prompt payment. These discounts encourage customers to pay their bills on time and help the selling firm manage their cash flow effectively. Other types of discounts like seasonal, quantity, trade, and rebates may also be offered by selling firms, but cash discounts are the most relevant to sound money management.

Question 3

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

Accepted Answer

E

Question 4

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

Accepted Answer

The price of a product or service should be expected to cover the cost of production, promotion, and distribution, plus a reasonable profit, to ensure sustainability and growth of the business. Therefore, option D is the correct answer.

Question 5

Perhaps the most important factor associated with the purchasing decision is the _____________ and the ______________ between the buying and supplying firms.

Accepted Answer

The answer of Perhaps the most important factor associated with...

Question 6

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

Accepted Answer

Price is certainly an important factor in purchasing decisions, but it is not the only one. Other factors such as quality, delivery, quantity standards, customer service, brand reputation, and more can also play a role in the decision-making process. Therefore, it is important to consider all of these variables when making purchasing decisions, rather than simply focusing on price alone.

Question 7

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

Accepted Answer

The answer of One of the most important and complex...

Question 8

_______ 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.

Accepted Answer

Trade discount is the type of discount that is offered to buyers to encourage them to purchase directly from the manufacturer instead of using a distributor or middlemen for the transaction. The aim of this type of discount is to protect the unique selling opportunity of the manufacturer by eliminating the need for intermediaries. It is not related to cash, quantity, seasonal or quality discounts.

Question 9

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

Accepted Answer

A fair price is reasonable and acceptable to both parties involved in the transaction. This approach builds trust and maintains a healthy relationship between the buyer and seller. A good consensus means that both parties come to an agreement through negotiation, rather than one party dictating the terms to the other. This ensures that each party's needs are being met, which is important for a long-term business relationship. Market price, discount price, low price, and standard price are all irrelevant if the pricing negotiation does not result in a fair price and good consensus.

Question 10

The market approach to pricing is more erratic simply because the supplier, through the use of market research, collects information on its __________ and from their ___________ to determine where the price should be pegged.

Accepted Answer

The market approach to pricing involves collecting information on competitors and customers to determine where the price should be set. Therefore, the correct answer is D, competitors and customers. The other options, such as markets/suppliers, expenses/sales representatives, and web site/sales representatives, are not directly related to determining pricing through market research.

Question 11

The objective of the purchasing department is to buy the _______ materials from the ______ supplier at the ______ time and at the ______ price.

Accepted Answer

The objective of the purchasing department is to buy the right materials (which meet the specifications and quality requirements) from the right supplier (who is reliable and meets the company's standards) at the right time (when the materials are needed, not too early or too late) and at the right price (which is fair and competitive, not necessarily the lowest). This holistic approach ensures efficiency, quality, timeliness, and cost-effectiveness.

Question 12

If you buy items for one-half the market price without obtaining appropriate quality, delivery, or quantity standards, your firm would _________________.

Accepted Answer

The answer of If you buy items for one-half the...

Question 13

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.

Accepted Answer

In a competitive environment, the effective buyer is likely to obtain goods and services at the market price, which reflects the equilibrium between supply and demand, assuming quality, delivery, and quantities are appropriate.

Question 14

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.

Accepted Answer

The term used for determining if the purchase price fits the buyer's competitive cost structure is "target pricing." This involves setting a price based on the company's cost structure, rather than simply paying the same price as competitors. If the target price is too low to generate interest from suppliers, the buyer may need to use value analysis to reevaluate the product and find ways to reduce costs. Option D correctly identifies the term "target pricing" and is therefore the best choice.

Question 15

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

Accepted Answer

The analysis phase requires the decision maker to investigate at least two potential sources of supply to compare and evaluate their offerings, pricing, and quality. Investigating more sources may be preferred, but at least two are necessary for comparison purposes.

Question 16

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

Accepted Answer

The answer of In the short term, a firm can...

Question 17

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.

Accepted Answer

The correct answer is B) conceptual and the economic impacts because purchasing decisions often involve considering the theoretical or abstract ideas (conceptual impacts) related to the purchase as well as the financial implications (economic impacts) of the buying decision. These two factors are crucial in analyzing and making informed purchasing decisions.

Question 18

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.

Accepted Answer

Power is a major psychological influence in buyer-supplier relationships. A powerful buyer could force a supplier to reduce prices, potentially driving them out of business. This reduction in competition could lead to price increases in the long run.

Question 19

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

Accepted Answer

The answer of The customer perception of _______________ is also...

Question 20

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.

Accepted Answer

Cash discounts are common for prompt payment, trade discounts are given to repeat customers or those who purchase in large quantities, and quantity discounts are based on the amount purchased. Seasonal and quality discounts are not as common as the other options listed. Therefore, option D is the best choice as it includes the most common and relevant types of discounts.

Quiz 13: Price Determination