Products that share characteristics of predictable demand and low profit margin will have competition based on which of the following?
Correct Answer: B
For products with predictable demand and low profit margins, competition is often based on the lowest landed cost. Here's why:
* Cost Sensitivity: Low-margin products are sensitive to cost fluctuations, making cost control critical for maintaining profitability.
* Price Competition: In markets with predictable demand, customers often choose suppliers based on price, making the lowest landed cost a competitive advantage.
* Landed Cost: The total cost of a product delivered to the buyer, including production, transportation, tariffs, and handling, determines its competitiveness.
* Efficiency: Efficient supply chain operations that minimize costs across the entire supply chain help achieve the lowest landed cost.
References:
* Monczka, R., Handfield, R., Giunipero, L., & Patterson, J. (2015). Purchasing and Supply Chain Management. Cengage Learning.
* Christopher, M. (2016). Logistics & Supply Chain Management. Pearson.