medium · GMAT Verbal
Manufacturer Arden shifted 20% of a critical component’s orders to a second supplier. Unit cost rose 3%, but during a regional shutdown the company maintained 90% of planned production, while single-source competitors experienced prolonged stoppages. Diversification is not free: duplicate qualification and smaller purchase volumes raise ordinary-period costs. Still, for components whose absence halts the entire line, the added cost can function as insurance against disproportionate disruption losses.
Which new situation most closely follows the principle supported by the passage?
- A firm dual-sources every office supply regardless of whether a shortage affects operations.
- A manufacturer keeps one supplier solely because its per-unit price is lowest.
- A firm adds suppliers but does not qualify whether their facilities share the same regional risk exposure.
- A company calls higher purchase volume “diversification” while buying from the same supplier.
- A pharmaceutical producer dual-sources a low-cost vial stopper whose shortage would stop all packaging.
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