Question 1

"Identification" is the designation of goods as the subject matter of the sales contract.

Accepted Answer

Identification is the process of specifying the subject matter of a sales contract, identifying the goods that are to be sold.

Question 2

What does the small business owner give up if he/she doesn't take advantage of a vendor's discount? Demonstrate by calculating the interest rate on a $12,000 invoice that is 3/10 net 30.

Accepted Answer

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Question 3

Seller and buyer can agree to the terms under which title and risk of loss shift in a business transaction.

Accepted Answer

This statement is true. Sellers and buyers have the flexibility to negotiate and agree upon the terms of a transaction, including when title and risk of loss are transferred. This can be outlined in a contract or other agreement.

Question 4

Discuss the concept of the economic order quantity.What is its value to the small business owner and what are the three principal elements needed to calculate it?

Accepted Answer

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Question 5

Discuss the purchasing plan,briefly describing each of the five key elements of the plan.

Accepted Answer

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Question 6

In an "F.O.B.seller" (shipment)contract,both title and risk of loss transfer to the buyer when the seller delivers the goods to the carrier or shipper.

Accepted Answer

In an F.O.B. seller contract, the title and risk of loss transfer to the buyer when the seller delivers the goods to the carrier or shipper. This means that once the goods are in the possession of the carrier or shipper, the buyer becomes responsible for any damage or loss that may occur during shipment.

Question 7

Risk of loss always passes with title to the goods.

Accepted Answer

Risk of loss does not always pass with title to the goods. It depends on the terms of the contract and the applicable law. In some cases, the risk of loss may pass before title, for example, if the buyer has already taken possession of the goods or if the seller's breach of contract caused the loss.

Question 8

Timing is a critical element of the purchasing process.Explain the various elements of the timing of purchases: usage rate,stockouts,safety stock,reorder points,and demand patterns.

Accepted Answer

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Question 9

How does the EOQ with usage differ from the standard EOQ? Why is this difference important to the small business owner?

Accepted Answer

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Question 10

Both a buyer and a seller cannot have an insurable interest in the same goods.

Accepted Answer

Both a buyer and a seller can have an insurable interest in the same goods at different times or under certain conditions, such as when the goods are in transit or until the title has passed.

Question 11

A sales contract designated F.O.B.buyer requires the seller to deliver the goods to the buyer's place of business (or some other designated location),and risk of loss does not pass to the buyer until the goods are so delivered.

Accepted Answer

The statement accurately describes the terms of a F.O.B. buyer sales contract, where the seller bears the responsibility of delivering the goods to the buyer's location and assumes the risk of loss until delivery is completed.

Question 12

Under the Uniform Commercial Code,the party who has title to goods also has the risk of loss if those goods are lost,damaged,or destroyed.

Accepted Answer

Under the Uniform Commercial Code (UCC), the risk of loss does not necessarily follow the title. The risk of loss depends on the terms of the contract and the specific circumstances, such as whether the goods were delivered to the buyer or whether a breach of contract has occurred.

Question 13

Outline Deming's 14 Points.

Accepted Answer

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Question 14

A buyer gets an insurable interest in goods once they are identified as the goods pertaining to the contract.

Accepted Answer

This is a correct statement in regards to the doctrine of insurable interest. Once the goods are identified as those pertaining to the contract, the buyer obtains an insurable interest in them which allows them to insure the goods against damage or loss.

Question 15

Identify and briefly describe the types of discounts a small business might receive from a manufacturer.

Accepted Answer

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Question 16

The small business owner should concentrate purchases at a single supplier.

Accepted Answer

Concentrating purchases at a single supplier can lead to the business owner obtaining discounts, building a better relationship with the supplier, and reducing administrative efforts.

Question 17

Explain the philosophy of Total Quality Management,naming the ten things a small business owner should do to successfully implement a TQM program.

Accepted Answer

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Question 18

What should the role of price be as an element of the purchasing process?

Accepted Answer

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Question 19

A consignment contract means that the supplier (i.e. ,the consignor)retains title and risk of loss for the consigned merchandise.

Accepted Answer

Consignment contracts allow the supplier (consignor) to retain ownership and responsibility for the goods until they are sold, making it true that the consignor retains title and risk of loss.

Question 20

To add objectivity to the vendor selection process,many firms are establishing vendor certification programs.

Accepted Answer

A vendor certification program is a way for a firm to establish objective criteria and evaluate vendors based on their compatibility with the firm's business needs. This can improve the selection process by providing an objective measure of vendor qualifications and can help to reduce bias in the selection process.

Quiz 19: Supply Chain Management