Page 159 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes  Technical Analysis: While fundamental price analysis often asks the question: “Where
should the price be?” given economic conditions, technical analysis asks the question:
“How will we get there?” As such, technical analysis often deals with the timing of pricing
decisions within a given price range. While sophisticated mathematical models are often
employed with technical analysis, the only data used is past price history, volume traded,
and in futures markets the open interest (i.e., how many futures contracts are outstanding).
As such, technical analysis is simply the analysis of price trends —by looking at past
prices, volume, and open interest technical analysts attempt to identify buy and sell signals
based on underlying market emotion. The idea is to reduce the opportunity cost of buying
too early or selling too late.
There are literally an infinite number of ways to look at past prices, but some of the more
common technical indicators include:
1. Bar Charts
2. Lines of support and resistance
3. Consolidation planes (also called price channels)

4. Key reversals
5. Price Gaps and
6. Moving Averages

Self Assessment

Fill in the blanks:
1. Purchasing research has to interact with the ………….....…. and engineering departments
of the company on a continual basis.

2. Purchasing research includes short and long-range studies of the internal ………….....….
and the external supply market.
3. An important part of anticipating both future ………….....…. and the risk that anticipated
prices will not be achieved is developing strategies for forecasting prices.

4. Most market analysts pay attention to both fundamental and ………….....…. factors even
though they may emphasize one over the other.
5. ………….....…. price analysis is based on the notion that the underlying supply/demand
conditions in a given market ultimately determine price.
6. Quantitative analysis combines knowledge of economic theory with mathematics and
statistics to establish explicit relationships between economic variables and ………….....….



Caselet What is Involved in Cost Forecasting and Cost Analysis?

n preparing a budget, a distance teaching institution needs to forecast two types of
costs: fixed and variable. The main fixed costs are likely to be capital investment and
Ithe salaries of full-time staff. Capital investment is needed for buildings and production
facilities, such as television studios and printing presses. Of course, it may be possible to
contract production services and thus reduce fixed costs. Salary costs will be determined
by the extent to which the institution hires its own content and learner support specialists
and how much it depends on consultants and part-time help.
Contd...

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