L4M5 Exam Results

Mark-upis calculated as:

Mark-up %=(ProfitCost)×100\text{Mark-up \%} = \left( \frac{\text{Profit}}{\text{Cost}} \right) \times 100Mark-up %=(CostProfit​)×100

In this case:

Profit = $240 - $160 = $80

Cost = $160

Mark-up = (80 / 160) × 100 =50%

“Understanding mark-up percentages helps in assessing supplier pricing behaviour and negotiating realistic margins.”

(L4M5 Commercial Negotiation, 2nd edition, Section 2.1 - Pricing Models and Profit Margins)

Competitive bidding is generally recommended for high-value or complex purchases where the cost and time required for the bidding process are justified. For low-value, routine items like pens, the time and resources required for competitive bidding may outweigh the potential cost savings, as noted in CIPS best practices. Hence, Option C is the best answer.

Knowing supplier's fixed and variable costs is beneficial for the buyer in a negotiation. With these insights, the buyer would know the volume at which the supplier reaches break-even points and then offers significant discount due to economies of scale.

With a collaborative supplier, the appropriate approach is Win–Win (integrative). Both sides aim to create savings while maintaining partnership value. Win–Lose would damage collaboration, while Lose–Lose sacrifices value on both sides. Win–Perceived Win is based on optics rather than actual balance. By adopting a win–win approach, Maria ensures sustainable cost reductions while protecting critical NHS supplier relationships.