GL Interiors, Inc., a privately-held enterprise, has
a subcontract to produce overhead storage bins for a Boeing airplane. Although
GL was a low bidder, Boeing was reluctant to award the business to GL, a newcomer
to this kind of activity. Consequently, GL assured Boeing of its financial
strength by submitting its audited financial statements. Moreover, GL agreed to
a penalty clause of $5,000 per day to be paid by GL for each day of late delivery
for whatever reason.
Leesa Martinson, the GL purchasing agent, is responsible for acquiring
materials and parts in time to meet production schedules. She placed an order
with a GL supplier for a critical manufactured component. The supplier, who had
a reliable record for meeting schedules, gave Martinson an acceptable delivery
date. Martinson checked up several times and was assured that the component
would arrive at GL on schedule.
On the date specified by the supplier for shipment to GL, Martinson was
informed that the component had been damaged during final inspection. It was
delivered ten days late. Martinson had allowed four extra days for possible
delays, but GL was six days late in delivering to Boeing and so had to pay a
penalty of $30,000.
What department should bear the penalty? Why?