APICS Certified Supply Chain Professional (CSCP) — Question 69

A supplier is offering a price discount if more is ordered at one time. The offer should be analyzed to determine if a larger order is appropriate considering:

Answer options

• A. the impact of the increase in average inventory levels on ABC designations
• B. the reduction in material cost compared to the impact on total holding costs
• C. the impact of additional items on indirect costs
• D. the increase in transportation costs compared to the reduction in ordering cost

Correct answer: B

Explanation

The correct answer, B, highlights the need to compare the savings from reduced material costs with any potential increases in holding costs to determine if a larger order is beneficial. Options A, C, and D focus on different aspects of inventory management and cost considerations that are not directly relevant to the core decision of evaluating the cost-benefit of the discount offer.