A valuable method of assessing supplier performance is to use a supplier performance index. This index is calculated by:

A) total purchase price  total supplier costs
B) total supplier costs  total purchase price
C) average purchase price  average supplier costs
D) average supplier costs  average purchase price

The supplier performance index is calculated as the total supplier costs divided by the total purchase price. This gives us a ratio of the costs incurred from the supplier compared to the total expenditure. A higher index indicates better supplier performance, as the supplier is able to deliver goods and services at a lower cost. Therefore, option B is the correct choice, which is total supplier costs  total purchase price.