The basic trade-off to be considered by the supplier with production capacity is between
A)committing to an order from a high-price buyer or waiting for a lower price buyer to arrive later on.
B)committing to an order from a lower price buyer or waiting for a high-price buyer to arrive later on.
C)allowing the market to be controlled by price or capacity.
D)having marketing or operations establish the constraints within which orders are accepted.

Question

Quizplus · Accepted Answer

The supplier should consider committing to an order from a lower price buyer rather than waiting for a high-price buyer to arrive later on. This is because waiting may result in idle capacity and lost revenue, while committing to a lower price buyer ensures that the production capacity is being utilized efficiently. Additionally, it helps establish a long-term relationship with the buyer, leading to more stable and predictable demand in the future.

The Basic Trade-Off to Be Considered by the Supplier with Production