Which of the following BEST explains why forecast accuracy is important in contracts with suppliers?

Which of the following BEST explains why forecast accuracy is important in contracts with suppliers?
A . It locks in the lowest possible cost to the organization over the life of the contract.
B . . It allows the buying firm to gauge supplier performance degradation over the life of the contract.
C . It improves continuity of supply while allowing the supplier to reduce costs over time.
D . It allows the organization more freedom in procuring supply in the market.

View Answer

Answer: C

Explanation:

Accurate forecasts enable suppliers to optimize production and inventory levels, reducing costs and enhancing supply reliability. This mutual benefit strengthens supplier relationships.

Reference: Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management.