Chapter 14 Final

Chapter 14 Final - TEST BANK Sourcing and Supply Chain...

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TEST BANK Sourcing and Supply Chain Management – 4th edition Handfield, Monczka, Giunipero, and Patterson Chapter 14 True or False 1. In global commerce, people assume that the terms of one market are acceptable in another and do not recognize cultural or legal landmines. a. True (p. 499) b. False 2. Once a contract has been negotiated and signed, the real work is over. a. True b. False (p. 500) 3. It is often easy to go back and negotiate what contractual terms actually mean once the contract has been signed and a period of time has passed. a. True b. False (p. 501) 4. Most commonly used contracts are developed from earlier contracts that are subsequently modified to fit the situation at hand. a. True (p. 506) b. False 5. The least appropriate method of drafting a new contract is to start with a general form and samples of past contracts for similar situations. a. True b. False (p. 506) 6. It is always a good idea to double-check all attachments to the contract because many of the technical details are included here. a. True (p. 506) b. False This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher.
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7. Technical sections of the contract are seldom the greatest source of misinterpretation of terms and conditions. a. True b. False (p. 507) 8. In the firm fixed price contract, the price stated in the contract does not change, regardless of fluctuations in general overall economic conditions. a. True (p. 507) b. False 9. Fixed price contracts are the most complex and difficult for supply management to manage because of the need for extensive auditing and additional input from the buying side. a. True b. False (p. 507) 10. In a firm fixed price contract if the supplier increases its contract price in anticipation of rising costs, and the anticipated conditions do not occur, the buyer has paid too high a price for the good or service. a. True (p. 508) b. False 11. Escalation clauses allow only increases in the base price. a. True b. False (p. 508) 12. All contractual price changes should be keyed to a third-party price index, preferably to a well-established, widely published index. a. True (p. 508) b. False 13. Cost-based contracts are inappropriate for situations in which there is a risk that a large contingency fee might be included. a. True b. False (p. 509) This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher.
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14. Cost-based contracts are generally applicable when the goods or services procured are expensive, complex, and important to the buyer or when there is a high degree of uncertainty regarding labor and material costs. a.
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Chapter 14 Final - TEST BANK Sourcing and Supply Chain...

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