Test 2 Short Answer

Question 0

Costs associated with International purchasing

Answer 0

Unit price
Tooling 
Transportation 
Duties/tariffs
Port, terminal & handling fees
Communication costs

Question 1

Supplier management techniques

Answer 1

Cost-based system
Categorical system
Weighted-point system
Supply Base Optimization

Question 2

Write 5 cost/price benefits for International purchasing

Answer 2

Lower purchase price/cost
Lower labor costs
Greater access to product technology
Improved supplier relationships
Greater appreciation for purchasing

Question 3

State 5 barriers to worldwide sourcing

Answer 3

Lack of knowledge/skills
Longer lead-times
Diff. business customs, language & culture
Resistance to change
Currency fluctuations

Question 4

State 5 documents required for worldwide purchasing

Answer 4

Letters of credit
Multiple bills of lading
Dock receipts
Import license 
Certificates of origin

Question 5

Collaborative approaches to cost management

Answer 5

Target pricing

Cost savings sharing

Question 6

Types of contracts and considerations/benefits when selecting contract types

Answer 6

Types: Fixed-Price Contracts & Cost-Based Contracts

Component mkt. uncertainty 
Desired length of agreements 
Degree of trust b/w the contracting parties
Process of technology uncertainty
Supplier's ability to impact costs
Total dollar value of the purchase

Question 7

Factors to consider when building a TCO model

Answer 7

Use only for evaluating larger purchases
Obtain senior management buy-in
Work in a team
Focus on the bug costs first
Obtain a realistic estimate of the life cycle

Question 8

Steps needed to build a TCO model

Answer 8

Map the process and develop TCO categories
Determine cost elements for each category
Determine how each element is to be measured
Gather data and quantify costs
Develop a cost timeline for the length of the life-cycle
Bring costs to present value
Add the present values of the total costs over life-cycle

Question 9

Value engineering, its objective, value analysis process, etc

Answer 9

Objective: Increase the value of an item or service at the lowest cost w/o sacrificing quality

VA Process: Series of analytical questions to drive the waste out of the system

Question 10

Process mapping, sequential processes, etc.

Answer 10

Process mapping: tool that reduces processes to their components or activities

Sequential Process: sets of steps comprising the activity that occur one after another

Concurrent Process: steps performed concurrently during the main flow of work