When cost analysis is applied to a supplier's price,the buyer:
A)identifies a cost reduction target with no insight into specific cost elements.
B)relies on supplier information about areas where it can cut costs.
C)recognizes that little cost data is available for most cost elements.
D)identifies and analyzes each cost element for cost reduction opportunities.
E)cannot expect any assistance from the supplier.

Question

Quizplus · Accepted Answer

When cost analysis is applied to a supplier's price, the buyer should identify and analyze each cost element for cost reduction opportunities. This involves a detailed analysis of the supplier's cost structure and the identification of cost reduction opportunities in each element. The buyer cannot solely rely on the supplier's information about areas where it can cut costs because the supplier may not fully disclose all cost-related information. Therefore, a thorough cost analysis helps in identifying potential savings and leads to a more informed decision-making process.

When Cost Analysis Is Applied to a Supplier's Price,the Buyer