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Question 513 - CSCP discussion

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A firm usually buys one month of requirements at a time but has decided to buy two months of requirements for a certain product to take advantage of an order quantity discount...kely made this decision because:

A.
..transportation costs will decrease since the firm is buying less often.
Answers
A.
..transportation costs will decrease since the firm is buying less often.
B.
..The firm would like to spend less time on placing orders.
Answers
B.
..The firm would like to spend less time on placing orders.
C.
..The firm has determined that the price savings are greater than the extra holding cost.
Answers
C.
..The firm has determined that the price savings are greater than the extra holding cost.
D.
The firm wants to improve its inventory turns.
Answers
D.
The firm wants to improve its inventory turns.
Suggested answer: C

Explanation:

According to the APICS CSCP - Supply Chain Management Certification, order quantity discounts are price reductions offered by suppliers for buying larger quantities of a product or service. Order quantity discounts can lower the purchasing cost per unit, but they also increase the holding cost per unit, as more inventory is stored for longer periods of time. A firm should compare the price savings and the extra holding cost to determine whether an order quantity discount is beneficial or not.

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asked 16/09/2024
Nguyen Tan Hung
49 questions
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