In the Sourcing/purchasing Design Matrix, There Are Three Variables: Contract

question 71

Multiple Choice

In the sourcing/purchasing design matrix, there are three variables: contract duration, transaction costs, and specificity. Assume levels as short, medium and long for contract duration and for the rest, low, medium, and high. Vendor managed inventory belongs to

• A) long contract duration, high transaction costs and low specificity.
• B) short contract duration, high transaction costs and low specificity.
• C) long contract duration, low transaction costs and low specificity.
• D) long contract duration, high transaction costs and high specificity.
• E) long contract duration, low transaction costs and high specificity.

Understand the basic principles of inventory valuation methods including FIFO, LIFO, and the lower of cost or market.

Recognize the impact of inventory valuation errors on financial statements and company performance indicators.

Calculate days' sales in inventory and understand its significance.

Comprehend the implications of cost flow assumptions on the valuation of ending inventory and cost of goods sold.

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Definitions:

Assessment Instruments

Tools and methods used to evaluate or measure specific traits, abilities, or knowledge in individuals.

Observation

The active acquisition of information from a primary source using the senses or instruments that extend the senses.

Rank Order

A method of arranging data or items in a sequence based on their value or magnitude, from highest to lowest or vice versa.

Rating Scales

Tools used to quantify or categorize individuals' responses, attitudes, behaviors, or qualities, typically by assigning numbers or labels to different levels of an attribute or dimension.