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Definition
| Proces of analyzing each indivudal cost element(labor hours and rates, overhead, material, etc) that together add up to the final price. |
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Definition
| the price/cost equation across multiple processes that span two or more organizations across a supply chain. |
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Definition
| an analytical tool that identifies the primary external forces that are causing prices to either increase or decrease |
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| elements of price and cost drivers |
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Definition
| profit margin, selling and administrative costs, production overhead, direct labor cost, direct materials cost |
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Definition
| supplier analyzes the market to find the combination of price per unit and quantity of sales that maximizes its profit |
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Definition
| pricing is based on the assumptio nthat longrun profit ability depends on the market share obtained by the supplier. |
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Definition
| prices are set to achieve a high profit on each unit by selling to supply managers who are willing to pay a higher price because of lack of supply management sophistication. |
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Definition
| obtaining sufficient current revenue to pay for operating cost rather than on profit |
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| promotional pricing model |
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Definition
| presents pricing for individual products and services that is set to enhance the sales of the overall product line rather than to ensure the profitabiloity of each product |
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Term
| competition pricing model |
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Definition
| focuses on pricing actions or reactions to pricing proposals offered or expected to be offered by the suppliers competitors. |
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Definition
| offering incentives to pay invoices promptly |
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Definition
| more and more organizations are shifting their attention away from price management and toward cost management. |
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Term
| cost markup pricing model |
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Definition
| supplier simply takes its estimate of costs and adds a markup percentage to obtain the desired profit |
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Term
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Definition
| supplier is still attempting to obtain a profit related to its costs but instead of adding a markup to cost, the supplier establishes a price that will provide a profit margin that is a predetermined percentage of the quoted price. |
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Term
| rate of retunr pricing model |
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Definition
| where the desired profit is added to the estimated cost |
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Term
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Definition
| use to evaluate whether a suppliers price is justifiable and reasonable (revers engineering product) |
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Term
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Definition
| includes both cost and revenue data for an item to identify the point where revenue equals cost, and the expected profit or loss at different production volumes. |
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Definition
| Present value of all costs associated with a product, service or capital equipment that are incurred over its expected life. (measure costs beyond the standard unit price, transportation and tooling when evaluating purchas). |
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| Total cost of ownership 4 categories |
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Definition
| purchase price, acquisition costs, usage costs and end of life costs. |
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Term
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Definition
| 1. map the process and develop TCO categories 2. Determine cost elements for each category 3.Determine how each cost element is to be measured 4. Gather data and quantify costs 5. Develop a cost timeline 6. Bring costs to present value. |
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Term
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Definition
| the cost of the next best alternative. (lost sales, lost productivity and downtime. |
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Term
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Definition
| innovative approach used in initial stages of the new product development cycle to establish a contract price |
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