Which of the following would be the BEST way for the buying firm to maximize the benefits of this discount?

A supply manager negotiates a volume discount with a key supplier. The supplier will provide a discount on screws, bolts, and nuts, based on the quantity indicated on the purchase order (PO).

Which of the following would be the BEST way for the buying firm to maximize the benefits of this discount?
A . Raise the reorder point on these items so that the firm can take the advantage of the volume discount arrangement
B . Communicate the volume discount arrangement to the engineering department so that the firm can consume these items in greater quantities
C . Set up the fixed order quantity on these items to ensure that each purchase order issued will meet the required quantity for the volume discount
D . Lower the reorder point on these items so that the firm can take the advantage of the volume discount arrangement

View Answer

Answer: C

Explanation:

Setting a fixed order quantity that meets the volume discount threshold ensures that each purchase order takes full advantage of cost savings, optimizing procurement efficiency.

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