Terrell Is Trying to Decide Whether to Concentrate His Purchases

question 55

Multiple Choice

Terrell is trying to decide whether to concentrate his purchases with one supplier or diversify with two or three. One factor in favor of a single supplier is

• A) insurance against interruptions caused by strikes.
• B) a particular supplier's superiority in product quality.
• C) knowing the customer's loyalty, the supplier may provide better prices and service.
• D) locating the best source in terms of price, quality, and service with each purchase.

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Definitions:

Carrying Costs

Expenses associated with holding inventory, including storage, insurance, and taxes.

Inventory Policy

Guidelines that govern how inventory is controlled and managed, including methods for ordering, storing, and using inventory.

Gadgets

Small mechanical or electronic devices or tools, often novel or ingeniously designed, used for specific practical purposes.

Supplier Performance Index

Supplier Performance Index is a quantitative score that measures and evaluates the performance of a supplier based on criteria like quality, delivery, and service.