2 October 2017 ASCM 628 9040 2178

Exercise 1 (5 Points): Due 8 October 2017

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. When we set a primary goal of recovering our variable costs, what pricing strategy is employed?

  • Buy-in pricing
  • Rule-of-thumb pricing
  • Demand pricing
  • Cost-plus pricing

2. An economic price adjustment clause was included in a two-year contract for 700,000 gallons of fuel at $3.60 per gallon. The Producer Price Index (PPI) for January 2016, the month of the award, is 179. If the PPI for January 2017 is 185, what will the contract price per gallon adjust to for the second year?

  • $3.59
  • $3.65
  • $3.72
  • $3.76

3. External market variables influence the seller pricing strategies EXCEPT:

  • Nature of the product
  • Seller’s control variables
  • Market characteristics
  • Buyer’s control variables

4. Market research documentation is the foundation for the government’s cost estimate, expected level of competition, contract terms.

  • True
  • False

5. What is the purpose of Market Research?

  • To become informed buyers
  • Find sources capable of satisfying the agency’s requirements
  • Determine the most suitable approach to acquire supplies and services
  • All the above

6. All the following are price analysis techniques EXCEPT.

  • Comparison to other proposed prices
  • Comparison of price obtained through market research
  • The review and evaluation of the separate cost elements and profit in an offeror’s or contractor’s proposal
  • Comparison of proposed prices with Government cost estimates

7. Which of the following concepts are commonly used as quantitative techniques for contract pricing?

  • Price Indices
  • Cost-Volume-Profit Analysis
  • Regression Analysis
  • All of the above

8. What is the most important financial data element in Market Research?

  • Return on Investment
  • Seller’s sales forecasts
  • Return on Assets
  • Return on Equity

9. Your organization has a requirement to upgrade the electrical wiring in a previously unused aircraft hangar as part of a base renovation program. The scope considers labor and material for the effort. Assume that you have solicited an electrical contractor to perform the re-wiring task. Electrical diagrams are not available, and the subcontractor will have to submit an estimate without a detailed Statement of Work. Your market research indicates fluctuation in conditions, and capabilities to do this effort. What is the most appropriate contract type to use for this effort?

  • Firm Fixed Price
  • Fixed Price Level of Effort
  • Fixed Price Incentive Fee
  • Cost Plus

10. 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 (CER) to build a government estimate?



Guard Posts

$ Per Post


$ Per Hour

























  • Dollars per post, because the average of the dollars per post are more tightly clustered than the average of the dollars per hour
  • Dollars per hour, because the average of the dollars per hour are more loosely clustered than the average of the prices per post
  • Dollars per post, because the average of the dollars per post are more loosely clustered than the average of the dollars per hour
  • Dollars per hour, because the averaged of the dollars per hours are more tightly clustered than the average of the dollars per post

End of Exercise 1

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