Final answer:
Auctions are most suitable for supplier selection when the primary consideration is the quantifiable acquisition cost, as they drive down the price by allowing competitive bidding.
Step-by-step explanation:
For supplier selection in general, auctions are best used when the quantifiable acquisition cost is the primary component of total cost. Auctions allow different suppliers to bid competitively for the contract to supply goods or services, driving down the price to the lowest possible point that is viable for the suppliers. This mechanism is particularly effective when the purchase is a commodity for which the primary differentiator among suppliers is price, and where the costs can be easily quantified. This is in contrast to products or services that may have significant qualitative differences or where other factors such as delivery schedules, reputation, and after-sales service play a crucial role in supplier selection.
In supplier selection, Request for Proposals (RFPs) are best used when the quantifiable acquisition cost is the primary component of total cost. RFPs are a formal invitation to suppliers to submit a proposal for providing goods or services. They allow the buyer to outline their specific requirements and allow suppliers to submit their proposed cost and solutions. By evaluating the proposals received, the buyer can select the supplier that offers the most competitive price for their needs.