'Supplier may want to encourage buyer's demand': the buyer tends to prefer lower price, if supplier

wants to encourage its customers to buy more, it needs to offer discount at bulk amount. So this

option is not acceptable.

'Supplier may have high fixed cost - variable cost ratio': Supplier with high fixed cost needs high

volumes to break even, but once achieved, it may be able to offer significant discounts for bulk

orders

'The supplier may have reached economy of scale': when economy of scale is reached, cost per unit

will be minimal which often leads to more favourable price.

'Supplier may need to open new facilities to meet increasing customer's demand': Increasing

customer's demands may excess supplier's current capacity. Therefore, supplier may need to extend

its capacity by investing more in facilities. To cover these fixed cost investment, supplier may charge

higher price.

LO 2, AC 2.1