APICS Certified Supply Chain Professional (CSCP) — Question 365

Using which of the following elements, in addition to purchase price, describes the use of the total cost of ownership (TCO) model to make procurement decisions?

Answer options

• A. Life cycle costs
• B. Transportation costs
• C. Quantity discounts
• D. Economic order quantity (EOQ)

Correct answer: A

Explanation

The correct answer is A, as life cycle costs encompass all expenses related to the product throughout its lifespan, including maintenance and disposal. The other options, while relevant to procurement, do not provide a comprehensive view of the total cost of ownership, which focuses on the long-term costs associated with a purchase.