What are some possible reasons why two suppliers did not provide quotations to Porto

SKU: assim15 Category:

What do you think will be the most important issue(s) to the seller?

 

Order Now

Negotiation- Porto Case

Buyer’s Information – Porto

Gerald Stecklein, a buyer for Porto, is responsible for developing a negotiating plan and strategy for the purchase of a component (called New Prod) for a newly designed product. After evaluating the quotations submitted by potential suppliers, he has decided to pursue purchase negotiations with Mechatronics.

New Prod was designed and developed by Porto engineers for a product currently under development. Prototypes of the component were produced by a small specialized firm without production volume capacity. Gerald knew the high-tech industry had between five and eight potentially qualified suppliers who were familiar with the complex manufacturing process required to produce New Prod. Supplier capacity was available since the industry was just recovering from a period of underutilization.

Seven suppliers received a request for quotation. The RFQ included a 12-month delivery schedule for 200,000 units plus a possible follow-on order for up to 200,000 units. The quotes also included payment terms and shipping (F.O.B. point) information (Exhibit 1B)

Five of the seven suppliers receiving RFQ’s responded. (Exhibit 2B). Mechatronics had the lowest quoted price at $5.90 per unit. Tyler Manufacturing was very close except for a high unit cost of transportation. Both companies were acceptable suppliers and Gerald decided to pursue negotiations with Mechatronics. He is well aware that the lowest quoted price does not always mean the lowest total cost. For that reason, Gerald knows that issues besides price will have to be discussed with Mechatronics. The requests for quotation were intended to reduce the list of suppliers before commencing negotiations.

Gerald requested a cost estimate for New Prod from his staff analyst to help him formulate his negotiating plan. The analysis (Exhibit 3B) provides a “should” cost of $4.10 per unit excluding tooling and transportation. This cost included learning curve effects. He believed that production times for this component should decrease as volumes increased due to learning. Based on discussions with internal engineers, Gerald estimated that production of this component should demonstrate  a 85%-90% learning rate.* He was not sure, however, that this rate applied specifically to Porto since he has not visited the Mechatronics facility.

Quality control measures were a vital concern for Gerald. All products were subject to strict quality guidelines and New Prod was no exception. Mechatronics, Tyler Manufacturing, and Space Metals each have a record of solid performance ratings for quality and delivery. With this information, Gerald now sat down and planned his negotiating strategy.

 

Exhibit 1B

Expected New Prod Delivery Schedule

MonthQuantity
December20,000
January20,000
February25,000
March15,000
April15,000
May15,000
June10,000
July10,000
August15,000
September20,000
October20,000
November15,000
Total200,000

 

Payment terms: Net 25

Transportation Terms: Sellers Plant, Freight Collect

Using Location: Detroit, Michigan

 

Exhibit 2B

Quotation Summary

SupplierUnit PriceTooling CostsEstimated Transportation

cost per unit

Bauer ManufacturingNo quote——————
Metal Modes$6.10$30,000$0.08
Tyler Manufacturing$5.95$40,000$.016
Avicraft, Inc.No quote——————
Technutronics$5.90$40,000$0.06
Aerobotics, Inc.$6.25$45,000$0.08
Space Metals$6.40$50,000$0.09

 

acc

 

In addition to specific requests by the instructor:

1. Given the unit price, tooling costs, and estimated transportation charges presented in Exhibit 2B, calculate the cost per unit for each supplier (using 200,000 units). What are some possible reasons why two suppliers did not provide quotations to Porto?

 

2. Prepare to negotiate a contract with Mechatronics. Identify the key issues and the range of your position on those issues. Remember that price is not the only variable subject to negotiation.

 

3. What do you think will be the most important issue(s) to the seller?

 

4. What do you believe is the lowest price that Mechatronics is willing to accept? What is the highest price for New Prod you are willing to pay? (This defines your negotiating range on the price issue)

 

Writing your homework and assignments all on your own is a difficult task. So, Assignments4u has made it easy for students by helping them in writing their assignments. Assignments4u will assist you in completing your tasks, and you can approach us with all your assignment, homework, and essay writing requirements.

We have over 4350+ experienced writers working as experts in different streams of study. Get all your academic doubts clarified and take pride in learning subjects like history, math’s or law. Our assignment help and essay help is available in countries like USA, Australia, New Zealand, Singapore and many more. Get programming assignment help, corporate finance assignment help, marketing assignment help or else business management assignment help in exchange for a nominal price.

Reviews

There are no reviews yet.

Be the first to review “What are some possible reasons why two suppliers did not provide quotations to Porto”

Your email address will not be published. Required fields are marked *

Sorry no more offers available

When assignments gets tough, get tougher

Want a fresh solution like this one? 
We are available 24/7
ORDER NOW
Share
Pin
Call Back