In negotiating contracts for new products, flexibility is crucial, especially when dealing with un-certainties in demand and production schedules. A low minimum order quantity (MOQ) provides JKL, Inc. with the ability to order smaller amounts of materials as needed, reducing inventory holding costs and the risk of overstocking.
This flexibility can be particularly important during the initial stages of product introduction when demand forecasts may be less certain. Ensuring a low MOQ can also facilitate better cash flow management and reduce the potential for waste. Refer-ences:
*Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and Supply Chain Management. Cengage Learning.
*Burt, D. N., Petcavage, S. D., & Pinkerton, R. L. (2010). Supply Management. McGraw-Hill Education.