When a Buying Division Elects to Purchase from an Outside

question 136

Multiple Choice

When a buying division elects to purchase from an outside supplier,

• A)the impact on overall company profits is usually not considered in the decision.
• B)only fixed costs should be included in the decision analysis.
• C)the price from the outside supplier is likely to be more than the incremental cost to the supplying division.
• D)overall company profits should be enhanced.

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Definitions:

Supply Chain Strategy

A plan for managing all the resources involved in sourcing, producing, and delivering products and services to customers.

Lead Times

The duration between the initiation and the completion of a production process, or the time it takes for an order to be delivered after its placement.

Macro Processes

Refers to the overarching, large-scale operations or functions within a system or organization that influence its overall performance.

Supply Chain

A supply chain encompasses the sequence of processes involved in the production and distribution of a commodity, from the procurement of raw materials to the delivery of the finished product to the end consumer.