Which of the following refers to the practice of buying a commodity on the open market for immediate delivery?
Spot buying refers to the purchase of commodities on the open market for immediate delivery. This practice is typically used to meet urgent needs or take advantage of favorable market conditions. It contrasts with forward buying, which involves purchasing for future delivery to lock in prices or quantities.
A firm engaging in low-cost country sourcing wants to assume the least amount of risk when importing goods into its own country. Which of the following Incoterms 2020 rules would be MOST useful in achieving this goal7
In the context of low-cost country sourcing and minimizing risk when importing goods, the selection of appropriate Incoterms 2020 rules is crucial.
DAP (Delivered at Place) is the most suitable Incoterm for a firm wanting to assume the least amount of risk. Under DAP, the seller is responsible for all costs and risks associated with delivering the goods to a specified destination, which includes transportation, export customs clearance, and any other logistical arrangements until the goods are made available for unloading at the buyer's location. This significantly reduces the buyer's risk as the seller handles most of the transportation and logistics.
Other Incoterms, such as:
CFR (Cost and Freight): The seller pays for the cost and freight to bring the goods to the port of destination. However, the risk is transferred to the buyer once the goods are loaded on the vessel.
CPT (Carriage Paid To): Similar to CFR, but can be used for any mode of transport. The seller covers transport costs to a specified destination, but the risk transfers to the buyer upon handing over the goods to the first carrier.
EXW (Ex Works): The buyer assumes all risks and costs from the seller's premises onward, making it the highest risk for the buyer.
Incoterms 2020 by the International Chamber of Commerce (ICC)
'A Guide to Incoterms 2020' by the International Trade Centre (ITC)
PQR, Inc. produces office supplies for big box retailers. This is a highly competitive market and the requirement for maintaining a continuous inventory of product for retailers is a high priority for PQR. Recently, the firm experienced shipping delays from overseas suppliers. Which of the costs associated with shortages would be MOST critical for PQR?
In a highly competitive market like office supplies, the most critical cost associated with shortag-es is typically lost sales. If PQR, Inc. experiences shipping delays and cannot maintain continuous inventory, customers are likely to turn to competitors to meet their needs. This can result in im-mediate lost sales and potentially long-term loss of customer loyalty. The cost of lost sales often outweighs other costs like idle workers or production downtime because it directly affects revenue and market share. Reference:
* Chopra, S., & Meindl, P. (2015). Supply Chain Management: Strategy, Planning, and Op-eration. Pearson.
* Christopher, M. (2016). Logistics & Supply Chain Management. Pearson UK.
Which of the following describes a market structure where there are few sellers and many buyers and where price is controlled by either an industry leader or a cartel?
An oligopoly is a market structure where a few sellers dominate the market and many buyers ex-ist. In such a market, prices and output levels are often controlled by the leading firms or through collusion, such as forming a cartel. These firms hold significant market power, which allows them to influence prices and other market factors. Oligopolies are common in industries where high en-try barriers exist, such as telecommunications, airlines, and oil and gas. Reference:
* Perloff, J. M. (2016). Microeconomics: Theory and Applications with Calculus. Pearson.
* Mankiw, N. G. (2014). Principles of Microeconomics. Cengage Learning.
During an inventory review, a supply manager confirms that parts used for the maintenance of equipment sold during the previous year are still being stored in the warehouse. These parts cannot be used on current equipment. Which of the following BEST describes these parts'
Parts that were used for maintenance of equipment sold in the previous year but cannot be used on current equipment are best described as obsolete. Obsolete inventory refers to items that are no longer usable or saleable due to advancements in technology or changes in market demand. These parts should be identified and removed from active inventory to free up space and reduce carrying costs. Reference:
* Heizer, J., Render, B., & Munson, C. (2017). Operations Management: Sustainability and Supply Chain Management. Pearson.
* Chopra, S., & Meindl, P. (2015). Supply Chain Management: Strategy, Planning, and Op-eration. Pearson.
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