All identified suppliers are able to produce to specifications provided by the purchasing company. However, quality performance related to the product can vary greatly.

Individual cost structures of the firms providing the fabrics can vary significantly.

Suppliers provide widely different levels of service and technical support.

All suppliers have to satisfy the same quality and delivery terms, payment terms, and transportation $($FOB seller's plant$).$

Industry capacity utilization is about $75$ percent.

All purchasing companies have purchased relatively small amounts from all of the suppliers previously, never totaling more than $$100,000$ per purchase.

Questions:

If your group represents a buyer, consider the different suppliers $-$ which one would you select? What type of contract would you use? If your group represents a manufacturer, consider the different purchasers $-$ which one would you select? What type of contract would you use?

What are the risks and rewards to consider in this case? How can the team balance these risks and rewards?

How will you prepare and negotiate a contract?

Based on the information within the case, which elements would you include within the draft contract? Why?