Using Multiple Suppliers and Suppliers That Have Flexibility in Capacity

question 35

Multiple Choice

Using multiple suppliers and suppliers that have flexibility in capacity to respond to demand changes is a mitigation strategy for ______.

• A)capacity risk
• B)demand risk
• C)performance risk
• D)strategy risk

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Definitions:

Static Planning Budget

A budget based on a fixed level of activity, created at the start of a budgeting period, which does not change with actual levels of activity.

Flexible Budget

A budget engineered to tweak itself in alignment with volume or activity level shifts.

Employee Salaries

Payments made to employees for their services over a fixed period, typically regularly scheduled and in fixed amounts.

Activity Variance

The difference between budgeted activity levels and actual activity levels.