Podcast
Questions and Answers
What is the definition of a 'fair price' according to the perspective of a supply manager?
What is the definition of a 'fair price' according to the perspective of a supply manager?
What is the long-run requirement for prices to ensure a continuous supply?
What is the long-run requirement for prices to ensure a continuous supply?
Which statement best describes the relationship between 'fair price' and different sellers or substitute items?
Which statement best describes the relationship between 'fair price' and different sellers or substitute items?
Why might a prevailing market price NOT be considered a 'fair price'?
Why might a prevailing market price NOT be considered a 'fair price'?
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What does the author suggest is important for a supply manager to determine a 'fair and just price'?
What does the author suggest is important for a supply manager to determine a 'fair and just price'?
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Which of the following is NOT a factor influencing a fair price, according to the content?
Which of the following is NOT a factor influencing a fair price, according to the content?
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Based on the text, what is the MOST SIGNIFICANT characteristic of a fair price, from a supply manager's perspective?
Based on the text, what is the MOST SIGNIFICANT characteristic of a fair price, from a supply manager's perspective?
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According to the content, under what circumstances might the price of a specific item NOT necessarily cover its full share of costs?
According to the content, under what circumstances might the price of a specific item NOT necessarily cover its full share of costs?
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Which of the following statements MOST ACCURATELY reflects the author's perspective on fair pricing?
Which of the following statements MOST ACCURATELY reflects the author's perspective on fair pricing?
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What is the MAIN implication of the statement ‘a fair price to one seller for any one item may be higher than a fair price to another or for an equally satisfactory substitute item’?
What is the MAIN implication of the statement ‘a fair price to one seller for any one item may be higher than a fair price to another or for an equally satisfactory substitute item’?
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Study Notes
Fair Price in Supply Management
- A fair price for a supplier covers their costs, including a reasonable profit, ensuring a continuous supply of the correct quality, available when needed.
- Continuous supply is possible in the long run only from a supplier who is making a reasonable profit.
- Total supplier costs, including a reasonable profit, must be covered by total sales in the long run for supplier sustainability.
- Direct costs of individual items should be covered by price.
- A fair price for one item to one supplier might be higher than a fair price to another or for an equivalent substitute.
- The fact that a price is set by a monopolist or is established through collusion of sellers does not automatically make the price unfair or excessive.
- Prevailing market prices do not automatically equate to fair prices, especially those influenced by black markets, gray markets, or monopolistic/coercive actions.
- Evaluating a fair price involves using judgment, weighing factors such as production/services processes, cost structures, and factors in logistics such as storage, transportation, and delivery.
- A fair price is the lowest price ensuring continuous, good-quality supply when needed.
- One item may not always contribute its "full share" over a period, but the price should still cover direct costs.
- A fair price for a given item may be different among sellers or for substitute items. A buyer may pay different prices, and this is often acceptable.
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Description
This quiz explores the concept of fair pricing in supply management, emphasizing the importance of covering supplier costs while ensuring quality and availability. It discusses the impact of market dynamics on pricing and how fair prices can vary between suppliers. Evaluate your understanding of the principles of sustainable supplier relationships and fair pricing strategies.
