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NEW QUESTION # 270
A buyer for ABC, Inc. meets with a sales representative from XYZ Company to discuss the purchase of a product. The sales representative provides documentation to the buyer that the product will meet or exceed the specifications required by ABC. Based on thi information, the buyer places an order with XYZ.
However, upon inspection of the received product, the buyer learns that it does not meet ABC's specifications and cannot be used for the intended purpose. Which of the following is TRUE in this situation?
Answer: B
Explanation:
* Sales Representative's Promise: The sales representative from XYZ Company provided documentation that the product would meet or exceed ABC's specifications.
* Express Warranty: An express warranty is created when a seller makes a promise or provides assurance that a product will meet certain standards or specifications.
* Non-Conforming Goods: Upon inspection, the product did not meet the required specifications and could not be used for its intended purpose.
* Buyer's Rights: Under the Uniform Commercial Code (UCC) and similar laws, the buyer has the right to return non-conforming goods and seek a full refund when an express warranty has been breached.
* Conclusion: ABC is entitled to return the product and receive a full refund due to the breach of the express warranty.
References
* UCC (Uniform Commercial Code). (n.d.). Article 2 - Sales.
* ISM. (n.d.). Managing Warranties and Product Non-Conformance.
NEW QUESTION # 271
A supply manager works with engineering on an aerospace project. A request for quotation (RFQ) Is distributed to five potential suppliers, three of whom respond that they are not interested In the project. The two remaining suppliers say they are interested, but a high level of risk involving tight tolerances will force them to raise prices significantly, and neither will accept a firm fixed price contract. The supply manager arranges a conference with engineering and both suppliers. During this conference, it is determined that only three of the tolerances are truly critical. Based on this conference, a revised RFQ is issued.
This scenario is an example of which of the following aspects of supply management?
Answer: D
Explanation:
* Scenario Overview: The supply manager issued an RFQ to five suppliers; three declined, and the remaining two raised concerns about risk and pricing.
* Conference Outcome: A conference revealed that only three tolerances were critical, leading to a revised RFQ.
* Value Engineering: This process involves evaluating a project to reduce costs while maintaining quality by identifying essential versus non-essential specifications.
* Supply Manager's Role: By facilitating this discussion, the supply manager helped reduce project costs and risks, demonstrating the principles of value engineering.
References
* CIPS. (n.d.). Value Engineering in Procurement.
* ISM. (n.d.). Cost Management and Value Engineering.
NEW QUESTION # 272
In calculating cash flows, which of the following scenarios would lead to a decrease in net working capital?
Answer: B
NEW QUESTION # 273
A supply manager seeks bids on a new piece of capital equipment. The equipment is budgeted at $115,000.
Three suppliers send in bids of $110,000, $114,000 and 5135,000. After receiving the bids, additional negotiations with the low bidder result in a final cost of $105,000. In this situation, what should the baseline value be for calculating cost avoidance?
Answer: A
Explanation:
* Initial Bids Review: Evaluate the bids submitted by the suppliers ($110,000, $114,000, and $135,000).
* Lowest Bid Consideration: The lowest initial bid of $110,000 should be the baseline because it represents the market's competitive price before any negotiation.
* Calculate Cost Avoidance: After negotiations, the final cost is $105,000. The cost avoidance is calculated against the $110,000 baseline, showing the savings achieved through negotiation.
References
* Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.
* Burt, D. N., Petcavage, S. D., & Pinkerton, R. L. (2010). Supply Management. McGraw-Hill Education.
NEW QUESTION # 274
A study is conducted to determine what factors drive used car prices. The study initially examined two variables: the make of the car and the number of miles driven on the car. Not surprisingly, the group commissioning the study found that there was a strong relationship between these two variables and price. In an attempt to explain more of the variation in price the researcher added a thirdvariable:the car's age (in years).A prior study had shown that age was a significant factor in explaining used car selling prices. When added to the new model, however, the group found that although adding age explained more of the variation in price, age was no longer significant when combined with the car's make and miles. This problem is an example of:
Answer: C
NEW QUESTION # 275
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