MGMT 3300 Final Exam UPDATED
ACTUAL Exam Questions and
CORRECT Answers
the zone of negotiation - CORRECT ANSWER - is perceived in exactly the same way by
buyer and seller in a negotiation
when developing a negotiation strategy, the negotiator should assess the positions of strength of
both (all) parties to: - CORRECT ANSWER - establish negotiation points and avoid setting
unrealistic expectations
a US buyer may be discouraged from sourcing offshore if: - CORRECT ANSWER - the
political situation in the country of interest is questionable
when sourcing offshore: - CORRECT ANSWER - the buyer should learn about the culture,
customs, norms, taboos, and history of the supplier's country
the world has grown a good deal smaller, figuratively, in the last 60 years, with the increased
speed of transportation and communication - CORRECT ANSWER - true
the process of attempting to determine all cost elements such as acquisition price, purchasing
administration, follow-up, expediting, inspection and testing, rework, scrap, downtime, lost sales
and customer returns is called: - CORRECT ANSWER - total cost of ownership
total cost of ownership (TCO) can be used to: - CORRECT ANSWER - highlight cost
reduction opportunities, compare suppliers in a supplier selection decision, prepare for a
negotiation and assess the reasonableness of a supplier's prices
the challenge in buyer-seller relationships is to find ways to foster the development of trust and
mutual understanding of the goals and objectives of each other's organization while maintaining
a professional relationship - CORRECT ANSWER - true
, purchasing represents the exchange of money for goods and services. often, a very large amount
of money is involved in this exchange. it is, therefore, vital that the transactions associated with
this process not be carried out at the highest ethical level - CORRECT ANSWER - false
total cost of ownership definition - CORRECT ANSWER - acquisition price price all other
associated costs often called in-house costs of pre- and post-transaction costs
a cash discount allows: - CORRECT ANSWER - the seller to secure prompt payment and the
buyer to pay a lower price per unit
if the buyer wants to motivate the seller to manage total costs, the best type of contract is: -
CORRECT ANSWER - cost-plus-incentive-fee (CPIF)
contract pricing is set and not subject to change. buyers prefer this option, often used in short-
range contracts - CORRECT ANSWER - firm-fixed-price (FFP)
forward buying: - CORRECT ANSWER - involves purchasing for known or estimated future
requirements
hedging: - CORRECT ANSWER - offsets transactions to protect against price and exchange
risks
competitive bidding, in general, is the most efficient means of obtaining a fair price for items
bought - CORRECT ANSWER - true
if a supplier offers a cash discount, the rule of thumb is the buyer always take the cash discount
(unless the buyer has cash flow issues) - CORRECT ANSWER - true
the market approach to pricing: - CORRECT ANSWER - implies that prices are set based on
what the market will bear
ACTUAL Exam Questions and
CORRECT Answers
the zone of negotiation - CORRECT ANSWER - is perceived in exactly the same way by
buyer and seller in a negotiation
when developing a negotiation strategy, the negotiator should assess the positions of strength of
both (all) parties to: - CORRECT ANSWER - establish negotiation points and avoid setting
unrealistic expectations
a US buyer may be discouraged from sourcing offshore if: - CORRECT ANSWER - the
political situation in the country of interest is questionable
when sourcing offshore: - CORRECT ANSWER - the buyer should learn about the culture,
customs, norms, taboos, and history of the supplier's country
the world has grown a good deal smaller, figuratively, in the last 60 years, with the increased
speed of transportation and communication - CORRECT ANSWER - true
the process of attempting to determine all cost elements such as acquisition price, purchasing
administration, follow-up, expediting, inspection and testing, rework, scrap, downtime, lost sales
and customer returns is called: - CORRECT ANSWER - total cost of ownership
total cost of ownership (TCO) can be used to: - CORRECT ANSWER - highlight cost
reduction opportunities, compare suppliers in a supplier selection decision, prepare for a
negotiation and assess the reasonableness of a supplier's prices
the challenge in buyer-seller relationships is to find ways to foster the development of trust and
mutual understanding of the goals and objectives of each other's organization while maintaining
a professional relationship - CORRECT ANSWER - true
, purchasing represents the exchange of money for goods and services. often, a very large amount
of money is involved in this exchange. it is, therefore, vital that the transactions associated with
this process not be carried out at the highest ethical level - CORRECT ANSWER - false
total cost of ownership definition - CORRECT ANSWER - acquisition price price all other
associated costs often called in-house costs of pre- and post-transaction costs
a cash discount allows: - CORRECT ANSWER - the seller to secure prompt payment and the
buyer to pay a lower price per unit
if the buyer wants to motivate the seller to manage total costs, the best type of contract is: -
CORRECT ANSWER - cost-plus-incentive-fee (CPIF)
contract pricing is set and not subject to change. buyers prefer this option, often used in short-
range contracts - CORRECT ANSWER - firm-fixed-price (FFP)
forward buying: - CORRECT ANSWER - involves purchasing for known or estimated future
requirements
hedging: - CORRECT ANSWER - offsets transactions to protect against price and exchange
risks
competitive bidding, in general, is the most efficient means of obtaining a fair price for items
bought - CORRECT ANSWER - true
if a supplier offers a cash discount, the rule of thumb is the buyer always take the cash discount
(unless the buyer has cash flow issues) - CORRECT ANSWER - true
the market approach to pricing: - CORRECT ANSWER - implies that prices are set based on
what the market will bear
