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Chapter 10 - PURCHASING PRICE DETERMINATION AND COST...

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1 PURCHASING PRICE DETERMINATION AND COST ANALYSIS ONBP 221: Ch 10
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2 OUTCOMES Distinguish between the elements of value and how prices can influence the purchased value Differentiate between price analysis and cost analysis as methods for the supply manager to determine a fair price Undertake a search for sources of information regarding prices Undertake a breakeven analysis List the advantages of collaborative cost reduction drives Use the learning curve as a cost/price analysis tool
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3 INTRODUCTION Price is one of the main components of the value package that has to be taken into account when making purchasing decisions Closely related to concepts of quality and value
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4 QUESTION 1 1. Discuss the concept of price as a multifaceted decision. Price as an element of value A fair price A competitive price Page 150 - 152 t function value cos =
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5 QUESTION 2 1. Explain all the cost elements involved when determining price Direct costs of materials Direct labour costs Indirect manufacturing costs Profit mark-up Page 152 - 153
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