The procurement process for both direct and indirect materials should work on
consolidation of orders to take advantage of economies of scale and quantity discounts
Procurement process for indirect materials should focus on
decreasing transaction cost for each order
Procurement process for direct materials should focus on
improving coordination and visibility with the supplier
Understanding impact of incentives on the actions of a supply chain partner is especially important when
third party’s actions are not fully observable
Sales efforts and orders peak near the end of any month, quarter, or evaluation period is referred to as
the hockey stick phenomenon
Which contract increases the margin for the dealer as sales cross certain levels?
Threshold contract
Which contract is used when agents act on behalf of a principal and the dealer’s margin is set to be the same as the supply chain margin, the dealer exerts the right amount of effort?
Two-part tariffs
A downside to which contract is that it leads to surplus inventory that must be salvages or disposed?
buyback or returns contract
Contract used to induce performance improvement from a supplier along dimensions, such as lead time, where the benefit of improvement accrues primarily to the buyer, whereas the effort for improvements comes primarily from the supplier is a
shared savings contract
Contract that decreases overall costs but leads to higher lot sizes and thus higher levels of inventory in the supply chain is a
quantity discount contract
Contract that allows the buyer to modify the order as demand visibility increases closer to point of sale is a
quantity flexibility contract
Contract where the buyer pays a minimal amount for each unit purchased from supplier but shares a fraction of the revenue is a
revenue-sharing contract
Contract that allows a retailer to return unsold inventory up to a specified amount at an agreed upon price is a
buyback or returns contract
The difference between the values of the buyer and seller is referred to as
bargaining surplus
To create a win-win negotiation, two parties must
identify more than one issue to negotiate
Single sourcing for a product is used to
guarantee the supplier sufficient business when the supplier has to make a significant buyer-specific investment
Supplier performance should be compared based on
impact on total cost
The viability of suppliers is especially important for suppliers who
provide mission-critical products that would be difficult to replace
Good design collaboration for manufacturability and supply chain can
reduce product cost
Quantity discounts lower the unit cost
but tend to increase the required batch size and as a result the cycle inventory
Which of following is LEAST quantifiable?
support
Sourcing a product overseas may have
lower product cost but will generally incur a higher inbound transportation cost
The role of sourcing planning and analysis is
to analyze spending across various suppliers and component categories to identify opportunities for decreasing the total cost
The goal of procurement is
the enable orders to be places and delivered on schedule at the lowest possible overall cost
Price has traditionally been the only dimension that suppliers have been compared on during the process of
supplier scoring and assessment
The selection of suppliers, design of supplier contracts, product design collaboration, procurement of material, and evaluation of supplier performance are a part of
sourcing
Scoring the performance of suppliers ini terms of replenishment lead time thus allows the firm to evaluate the impact each supplier has on
the cost of holding safety inventory
Using third party requires firm to share demand information and in some cases intellectual property. This risk would be described as
leakage of sensitive data and information
WW Grainger and McMaster Carr are examples of
transportation aggregation by storage intermediaries
Craigslist and Ebay examples of
information aggregation
A third party increases supply chain surplus if it aggregates sourcing for many small players and facilitates economies of scale in ordering…
procurement aggregation
