APICS Certified Supply Chain Professional (CSCP) — Question 281

Which of the following types of contract tends to give both the buyer and seller some flexibility in that it allows for deviation from performance?

Answer options

• A. Fixed-price contract with escalation
• B. Fixed-price contract with incentives
• C. Fixed-price contract with economic price adjustment
• D. Fixed-price contract with award fee

Correct answer: B

Explanation

The correct answer is B, as a fixed-price contract with incentives encourages the seller to perform better while allowing for some adjustments based on performance. The other options, while they offer different structures, do not provide the same level of flexibility in performance deviations as the incentive-based contract.