CPP Cost Reduction & Value Analysis Strategies 2

Question 1

In value engineering (VE), which activity is performed FIRST in the job plan sequence?

Accepted Answer

Information phase

Answer

The information phase is the first step, where data about the item's cost, function, and requirements is gathered.

Question 2

A purchasing professional uses 'should-cost' modeling primarily to:

Accepted Answer

Establish a defensible price target before negotiations

Answer

Should-cost models estimate what a product or service ought to cost based on materials, labor, overhead, and profit, creating a negotiating baseline.

Question 3

Which cost reduction technique involves redesigning a product so that fewer components are needed to achieve the same function?

Accepted Answer

Parts consolidation

Answer

Parts consolidation reduces the total number of components, lowering assembly time, inventory, and procurement costs while maintaining function.

Question 4

Target costing is BEST described as:

Accepted Answer

Subtracting desired profit from market price to determine allowable cost

Answer

Target costing works backward from a competitive market price minus a required profit margin to establish the maximum allowable product cost.

Question 5

Early supplier involvement (ESI) in product development primarily contributes to cost reduction by:

Accepted Answer

Allowing suppliers to influence design for lower-cost manufacturability

Answer

ESI lets suppliers contribute manufacturing knowledge during design, preventing costly re-engineering and selecting cost-effective materials upfront.

(CPP) Certified Purchasing Professional Practice Test