Question

You work for a food-processing plant that manufactures corn tortillas. You have been asked to review the activities of upstream management to determine if costs can be cut in that area. Which activities listed below will be your concern?

Select all that apply.a. Contacting the farming cooperative to negotiate the price of corn for your upcoming contract.b. Checking the feasibility of raising the price at which corn tortillas are sold to your business customers.c. Investigating the possibility of diversifying into producing not only corn tortillas but flour tortillas as well.d. Decreasing the cost resulting from returns due to improper handling and packaging of corn tortillas.

Answer 1

A) Contacting the farming cooperative to negotiate the price of corn for your upcoming contract.

Step-by-step explanation:

You need to cut upstream costs, which means costs related to the supply of materials, parts and components, and the processing of the final goods.

Upstream costs include the price of raw materials and in this case, the raw materials are bought from a farming cooperative. By negotiating a lower price for corn with them, you can actually reduce your upstream costs.