APICS Certified Supply Chain Professional (CSCP) — Question 127

A company develops annual forecasts for key products and enters into annual contracts with key suppliers based on the forecasts. Which of the following benefits would the company most likely receive from this approach?

Answer options

Correct answer: B

Explanation

The correct answer is B, as long-term contracts based on forecasts can lead to negotiated lower prices with suppliers. The other options, while beneficial, are not guaranteed outcomes from merely entering into annual contracts; shorter lead times, improved service, and higher-quality products depend on other factors beyond just contractual agreements.