You should always choose the supplier that offers the lowest price per unit. Do you agree? Explain.
A. Agree. This is because the price or purchase cost of the items is the most
important, most obvious element of cost associated with purchasing and managing inventories.
B. Disagree. Choosing the supplier who offers the lowest price will not necessarily result in the lowest total purchase cost to the buyer. Buyers must examine all the elements of costs relevant to inventory management, not just the purchase price.
C. Agree. Other relevant cost items are ordering costs, carrying costs, stockout costs and quality costs are not as important as the lowest price. A low-cost supplier may well impose conditions on the buyer-such as poor quality, or frequent stockouts, or excessively high inventories-that result in high total costs of purchase.
D.Disagree. Agreements are negotiated in advance with suppliers. The cost per unit is not the only factor considered within the agreement.
