Purchasers Should Set Minimum Acceptable Performance Requirements for a Supplier

question 22

True/False

Purchasers should set minimum acceptable performance requirements for a supplier to meet before they become part of the supply base.

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Definitions:

Operating Cash Flow (OCF)

Cash generated from a company's regular business operations, indicating its ability to generate sufficient revenue to maintain operations.

Equivalent Annual Cost

A financial metric used to compare the cost effectiveness of various investments with different lifespans, by converting costs into an annualized figure.

Present Value

The present-day worth of future monetary amounts or cash flow series, determined by applying a specified rate of return.

Operating Cash Flows

The cash generated from a company’s normal business operations, indicating its capability to generate sufficient revenue to maintain and grow operations.