PROBLEM STATEMENT
Although, the market for hexonic acid is currently stable, we must consider the volatility of the market in matching supply with the organization’s needs especially when hexonic acid and octonic acid have joint supply. Hence, we need to ethically select a supplier(s) who will provide Loren Inc. best value and assurance of supply of hexonic acid. Should the purchasing department change their policy on the single bidding to take advantage of Canchem’s offer? Should we just accept the offer?
ANALYSIS
Currently, Amchem and Canchem have submitted the lowest bids, however Canchem’s lowest bid is a second offer which goes against the company’s single bid policy. Accepting the second offer by Canchem, which is undoubtedly a very good …show more content…
Amchem alone is a big risk to the organization. They could not provide continuous supply to the parent company.
*from figure 1, Alfo was constantly given lower percentages because they hadigh price. This could make Alfo more alert for the need to offer lower prices and best value. Amchem always had about 75% and the highest percentage is because that percentage will allow us to take advantage of the lowest price of $1192.
RECOMMENDATION
ACTION …show more content…
With the current suppliers, we are like to pay for $ 4,046,400 for 3000tons of hexonic acid. However, with the selection of Alfo and Canchem, we will be paying an amount of $3,654,000. The difference between the current price and potential price is $392,400. As stated earlier, Amchem offers the lowest bid and Alfo, our current supplier will be our backup supplier since they have an unfilled capacity which assures us of reliable supplies. Also, Mr. Baker is likely to realize that the hexonic acid market is a buyer’s market and Alfo might reduce prices to be ahead of competition competition. The second option, provides a cost savings of at least 9%, which is good for Loren
Although, the market for hexonic acid is currently stable, we must consider the volatility of the market in matching supply with the organization’s needs especially when hexonic acid and octonic acid have joint supply. Hence, we need to ethically select a supplier(s) who will provide Loren Inc. best value and assurance of supply of hexonic acid. Should the purchasing department change their policy on the single bidding to take advantage of Canchem’s offer? Should we just accept the offer?
ANALYSIS
Currently, Amchem and Canchem have submitted the lowest bids, however Canchem’s lowest bid is a second offer which goes against the company’s single bid policy. Accepting the second offer by Canchem, which is undoubtedly a very good …show more content…
Amchem alone is a big risk to the organization. They could not provide continuous supply to the parent company.
*from figure 1, Alfo was constantly given lower percentages because they hadigh price. This could make Alfo more alert for the need to offer lower prices and best value. Amchem always had about 75% and the highest percentage is because that percentage will allow us to take advantage of the lowest price of $1192.
RECOMMENDATION
ACTION …show more content…
With the current suppliers, we are like to pay for $ 4,046,400 for 3000tons of hexonic acid. However, with the selection of Alfo and Canchem, we will be paying an amount of $3,654,000. The difference between the current price and potential price is $392,400. As stated earlier, Amchem offers the lowest bid and Alfo, our current supplier will be our backup supplier since they have an unfilled capacity which assures us of reliable supplies. Also, Mr. Baker is likely to realize that the hexonic acid market is a buyer’s market and Alfo might reduce prices to be ahead of competition competition. The second option, provides a cost savings of at least 9%, which is good for Loren