Long term contracts with suppliers can help a firm with which of the following?
A)Manufacture all needed inputs internally
B)Acquire upstream firms in the vertical chain
C)Acquire downstream firms in the vertical chain
D)Counteract raw material price fluctuations and eliminate income risk
E)None of the above

Question

Quizplus · Accepted Answer

Long term contracts can help a firm counteract raw material price fluctuations and eliminate income risk by providing stability in the prices paid for inputs. This allows the firm to plan and budget more effectively, reducing uncertainty and volatility in its operations. Manufacturing all needed inputs internally or acquiring upstream/downstream firms is not necessarily related to the benefits of long-term contracts with suppliers.

Long Term Contracts with Suppliers Can Help a Firm with Which