Question

1. 2. The data given is gathered and classified from relevant sources. It concerns a firm that employs multiple vendors (A-Z) and the annual expenditure of company of the company on every vendor.

SUPPLIER	COMMODITY	ANNUAL SPEND
A	Investment	$AA
B	Rebate Fulfillment	$BB
C	Advertising	$CC
D	Service Repairs	$DD
E	Benefits	$EE
F	Paper	$FF
G	Contract Labor	$GG
H	Paper	$HH
I	Telecommunication	$II
J	Service Freight	$JJ

You have found the average spend per supplier by commodity and graphed it.

Which of the following can be the intention of finding this?

1. Increasing or decreasing the volume per supplier
2. Saving administrative cost per supplier
3. Reducing or increasing the spending per commodity

1. 1,2
2. 2,3
3. 1,3
4. 1,2 and 3

Answer 1

Ans 1,2 and 3

As an example I have taken the following data :

Suppliers	Commodity	average annual spend in $mn
A	service repairs	10
B	service repairs	30
C	service repairs	40
D	service repairs	10
	Total	90

The graph shows the average annual spend of for suppliers

Thus one can get volume discounts by consolidating vendors two 2 only . Bringing down the number of vendors will bring down the administrative cost of managing them. The total spend on service repairs will also go down