Operations - Suppliers

Question 1

Describe ‘Discounts and Trade Credit’ as a factor to consider when choosing a supplier

Answer 1

Discounts
- Can receive them for regular orders
- They make the cost of raw materials cheaper → production cost is reduced

Trade Credit
- Allows the business a period of time without having to pay for purchases → helps with cash flow

Question 2

Describe ‘Cost of Materials’ as a factor to consider when choosing a supplier

Answer 2

• the price charged by a supplier to purchase raw materials
• higher cost = higher production cost (and vice versa)

Question 3

List 6 factors to consider when choosing a supplier

Answer 3

1. Lead Time
2. Reputation and Reliability
3. Location of Supplier
4. Quality of Raw Materials
5. Discounts and Trade Credit
6. Cost of Materials

Question 4

Describe ‘Location’ as a factor to consider when choosing a supplier

Answer 4

• How far the supplier is from the business
• Further away supplier = more expensive delivery = higher product price (and vice versa)

Question 5

Describe ‘Quality of Raw materials’ as a factor to consider when choosing a supplier

Answer 5

• Has a direct affect on business’s finished product
• Poor quality = wastage

Question 6

Describe ‘Repuation and Reliability’ as a factor to consider when choosing a supplier

Answer 6

Suppliers that have a good reputation and can be relied on to deliver goods on time will get more customers

Question 7

Describe ‘Lead time’ as a factor to consider when choosing a supplier

Answer 7

Amount of time taken between an order for stock being placed and order being delivered