1. Why do you look beyond the lowest price when choosing a supplier? What other
ID: 459133 • Letter: 1
Question
1. Why do you look beyond the lowest price when choosing a supplier? What other factors need to be considered and why? (3 points)
2. What are the primary goals of purchasing? How can purchasing achieve these goals? (6 points)
3. Given the following information: Costs Make Option Buy Option Fixed Cost $125,000 $5,000 Variable Cost $15 $17 a) What is the break-even quantity? (2 points) b) If the requirement is 150,000 units, is it more cost-effective for the firm to buy or make the components? (2 points) c) What is the cost savings for choosing the cheaper option? (2 points)
Explanation / Answer
1. It is very important to look at the price factor when choosing a supplier. Lowest price may be profitable for business however it is more important to look beyond the lowest price to avoid risk. It is not always profitable to select the supplier based on the price and ignore the other factors. For proper functioning ofor the supply chain it is important to consider all the factors.
The other factors that needs to be considered are delivery time, payment terms, quality of goods, customer service, consistency, commitment etc. It is very important to keep a balance and consider everything in order to match the needs and suppliers offerings. Ignoring any of these factors may resuLtd in increase in cost, poor quality, delay in supply chain etc which overall affects company's reputation.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.