SCMN 3730 UPDATED 2026 EXAM SCRIPT QUESTIONS AND
SOLUTIONS SCORED A+
✔✔attributes of transaction cost economics - ✔✔incentives: economic incentives to
compel exchange
administrative control: ability to compel cooperation without additional need for
incentives
adaptation: the ability to change in response to disturbances
contract law: the need for formal enforcement of contracts to maintain exchange
relationships
✔✔the degree to which an asset can be redeployed for other purposes, comes in 6
forms - ✔✔asset specificity
✔✔the supply chain is situated as to economize transactions for a specific location -
✔✔site specificity
✔✔specialized equipment required to produce a component - ✔✔physical asset
specificity
✔✔specialized knowledge to perform a process - ✔✔human asset specificity
✔✔the value of products produced by a certain company - ✔✔brand name capital
✔✔discrete investments by a specific customer in an otherwise general-purpose facility
- ✔✔dedicated assets
✔✔timely responsiveness by on-site human assets is vital - ✔✔temporal specificity
✔✔types of governance - ✔✔market, hybrid, hierarchy
✔✔type of governance: purchase of the product in a free market - ✔✔market
✔✔type of governance: requires strong incentives and contract enforcement -
✔✔market
✔✔type of governance: does not cope well with asset specificity and administrative
controls - ✔✔market
✔✔type of governance: a combination of market and hierarchy - ✔✔hybrid
✔✔type of governance: contains the strengths and weaknesses of both in moderated
amounts - ✔✔hybrid
, ✔✔type of governance: vertical integration to control the supply chain - ✔✔hierarchy
✔✔type of governance: highly cooperative and ideal for high asset specificity -
✔✔hierarchy
✔✔type of governance: administrative controls are effective and little need for formal
contracts - ✔✔hierarchy
✔✔type of governance: lacks adaptiveness - ✔✔hierarchy
✔✔dangers of giving supply management to 1st tier suppliers - ✔✔less control, less
visibility if not interacting with lower-tier suppliers
✔✔two examples of less control - ✔✔costs, sustainability
✔✔two examples of less visibility - ✔✔technology developments, market information
✔✔only incurred if something is actively produced - ✔✔variable costs
✔✔not influenced by volume or production - ✔✔fixed costs
✔✔type of cost analysis: used for new products, or major changes in products -
✔✔target cost
✔✔type of cost analysis: estimated based off what the customer will pay or is already
paying, less required margin if not already losing money - ✔✔target cost
✔✔type of cost analysis: costs are allocated to categories and suppliers are asked to
meet or beat targets - ✔✔target cost
✔✔type of cost analysis: used as the base for supplier negotiation and development -
✔✔should cost
✔✔type of cost analysis: various approaches to estimate - ✔✔should cost
✔✔type of cost analysis: results are compared to suppliers' current practices to identify
opportunities for improvement - ✔✔should cost
✔✔type of cost analysis: ask suppliers for a cost breakdown - ✔✔supplier cost
disclosure
SOLUTIONS SCORED A+
✔✔attributes of transaction cost economics - ✔✔incentives: economic incentives to
compel exchange
administrative control: ability to compel cooperation without additional need for
incentives
adaptation: the ability to change in response to disturbances
contract law: the need for formal enforcement of contracts to maintain exchange
relationships
✔✔the degree to which an asset can be redeployed for other purposes, comes in 6
forms - ✔✔asset specificity
✔✔the supply chain is situated as to economize transactions for a specific location -
✔✔site specificity
✔✔specialized equipment required to produce a component - ✔✔physical asset
specificity
✔✔specialized knowledge to perform a process - ✔✔human asset specificity
✔✔the value of products produced by a certain company - ✔✔brand name capital
✔✔discrete investments by a specific customer in an otherwise general-purpose facility
- ✔✔dedicated assets
✔✔timely responsiveness by on-site human assets is vital - ✔✔temporal specificity
✔✔types of governance - ✔✔market, hybrid, hierarchy
✔✔type of governance: purchase of the product in a free market - ✔✔market
✔✔type of governance: requires strong incentives and contract enforcement -
✔✔market
✔✔type of governance: does not cope well with asset specificity and administrative
controls - ✔✔market
✔✔type of governance: a combination of market and hierarchy - ✔✔hybrid
✔✔type of governance: contains the strengths and weaknesses of both in moderated
amounts - ✔✔hybrid
, ✔✔type of governance: vertical integration to control the supply chain - ✔✔hierarchy
✔✔type of governance: highly cooperative and ideal for high asset specificity -
✔✔hierarchy
✔✔type of governance: administrative controls are effective and little need for formal
contracts - ✔✔hierarchy
✔✔type of governance: lacks adaptiveness - ✔✔hierarchy
✔✔dangers of giving supply management to 1st tier suppliers - ✔✔less control, less
visibility if not interacting with lower-tier suppliers
✔✔two examples of less control - ✔✔costs, sustainability
✔✔two examples of less visibility - ✔✔technology developments, market information
✔✔only incurred if something is actively produced - ✔✔variable costs
✔✔not influenced by volume or production - ✔✔fixed costs
✔✔type of cost analysis: used for new products, or major changes in products -
✔✔target cost
✔✔type of cost analysis: estimated based off what the customer will pay or is already
paying, less required margin if not already losing money - ✔✔target cost
✔✔type of cost analysis: costs are allocated to categories and suppliers are asked to
meet or beat targets - ✔✔target cost
✔✔type of cost analysis: used as the base for supplier negotiation and development -
✔✔should cost
✔✔type of cost analysis: various approaches to estimate - ✔✔should cost
✔✔type of cost analysis: results are compared to suppliers' current practices to identify
opportunities for improvement - ✔✔should cost
✔✔type of cost analysis: ask suppliers for a cost breakdown - ✔✔supplier cost
disclosure
