A supplier signs an agreement with a customer that states that $350,000 in savings will be earned by the customer over the next 18 months in exchange for a tenfold increase in the customer's share of supplies ordered by the customer. If the supplier achieves less than this promised savings, it will make up the difference. If the supplier achieves substantially more than promised, it participates in the extra savings. This is an example of ________.

Question

Quizplus · Accepted Answer

This is an example of risk and gain sharing, as both the supplier and customer are sharing the risks and benefits of achieving the promised savings.

A Supplier Signs an Agreement with a Customer That States