10 October 2016 ASCM 628 9040 2168 Exercise 1 Individual Questions - Due 16 October 2016 Seller Pricing Strategies, Contracting Strategy, Application of Appropriate Contract Type, Quantitative Pricing Skills, Price Analysis Techniques, Market Research Analysis Please clearly indicate your selected answer by highlighting it. 1. Your organization has a requirement to build family housing in a previously undeveloped section of your base. An active environmental group has petitioned the State Department of Natural Resources to require a study of the effects of this development on the Frosted Elfin butterfly, an endangered species. Your market research indicates there is only one environmental engineering firm with the requested expertise and capability to do this effort. The results of the effort should culminate in a report outlining the population of the Frosted Elfin butterfly, its migration and mating habits, the composition of its habitat and the feasibility of moving the Frosted Elfin butterfly to another location. The government estimates that it will take a minimum of 2 environmental engineers 200 hours at an estimated rate of $250/hour to conduct the study and submit the report. What is the most appropriate contract type to use for this effort? a b c d Firm Fixed Price Fixed Price Level of Effort Fixed Price Incentive Fee Cost Plus Incentive Fee 2. A company introduced a smart-phone to the market at a time when its capability was essentially unmatched. As a result of the company's significant investment and the inability of the other companies to enter the market with a competitive alternative, the initial selling price was significantly higher than other phones entering the market. The company's earnings skyrocketed in the short term. What strategy pricing strategy did the company employ? a b c d Buy-in pricing Rule-of-thumb pricing Demand pricing Cost-plus pricing 3. An economic price adjustment clause was included in a two-year contract for 500,000 gallons of fuel at $3.50 per gallon. The Producer Price Index (PPI) for January 2015, the month of the award, is 175. If the PPI for January 2016 is 188, what will the contract price per gallon adjust to for the second year? a b c d $3.59 $3.76 $3.79 $3.90 4. Bob started a small homemade wood products business. He has a goal of contributing $25,000 to his grandson's college expenses. With his website up and running he is estimating his sales at 9,000 to 10,000 units this year. Given the following cost information, what should his minimum selling price be per unit? Fixed costs: Variable costs/unit: Most likely sales: Target Profit: a b c d $ 7,000.00 $ 6.00 9,000 units $ 25,000.00 $8.65 $9.56 $10.20 $11.15 5. You are the contacting specialist helping to form the government estimate for a new security guard contract. Based on the market research data and the information calculated below, which is the BEST Cost Estimating Relationship to build a government estimate? Contract 1 2 3 Range Average a Price $4,395,000 $2,001,000 3,500,000 $2,001,000$4,395,000 $5,444,319.4 4 Guard Posts 8 4 6 $ Per Post $549,375.00 $500,250.00 $583,333.33 Hours 600,000 273,500 480,000 $ Per Hour $7.33 $7.32 $7.29 $500,250$583,333.33 $7.31 Dollars per post, because the average of the dollars per post are more tightly clustered than the average of the dollars per hour. b Dollars per hour, because the average of the dollars per hour are more loosely clustered than the average of the prices per post. c Dollars per hour, because the averaged of the dollars per hours are more tightly clustered than the average of the dollars per post. d Dollars per post, because the average of the dollars per post are more loosely clustered than the average of the dollars per hour