Vendor Evaluation - Auto-evaluation of price.

I've been working on Vendor Evaluation in PO, trying hard to understand how the auto-evaluation of price is done but still unclear. The method use in evaluation in the price's sub-criteria is "Automatic Determination from Purchasing Statistics: Price Level". What is type of price used For comparison?

 Price level is the % variance of the Market price and the effective price. Price change is the % variance effective price and the calculated effective price The system takes the market price (if maintained in the master records) & compares the effective price of the vendor. It then calculates the percentage variance between market price & the effective price to evaluate the price level. If on the other hand the market price is not maintained then it takes the effective price of all vendors & calculates the avg. effective price. And then gives the Price Level. Price change: The parameters that are taken in calculating the Price change are: 1) Market price last year & Market Price today 2) Calculate the difference (%) 3) Effective price last year + difference (from (2) / 100 ---> gives the effective price 4) Compare the effective price with today's effective price gives the price change