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Celling Stars, Inc., manufactures light bulbs, Its purchasing policy requires that the purchasing agents piace each quarter's purchasing requirements out for bid. This is because

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Celling Stars, Inc., manufactures light bulbs, Its purchasing policy requires that the purchasing agents piace each quarter's purchasing requirements out for bid. This is because the Purchasing Department is evalaated solely by its ability to get the lowest purchase prices. The lowest bidder receives the order for the next quarter (90 working days). To make its bulb products, Ceiling 5tars requires 54,000 pounds of glass per quarter Bright Night received two glass bids for the third quarter, as follows: - Provo Giass Company: $26.00 per pound of glass. Delivery schedule: 54,000 ( 600 lbs. x90 days) pounds at the beginning of July to last for 3 months. - Orem Glass Compony: $26.15 per pound of glass. Delivery schedule: 600 pounds per working doy (90 dsys in the quarter). Ceiling Stars accepted Provo Glass Company's bid because it was the low-cost bid. 1. A manufacturing company gets quotes from each supplier and allocates the purchase order to the company which quotes the lowest price with the expected quaity. Is this process effective in long run? Identify reason that supports the answer. a. Yes b. No Reason: a. The policy is effective as it lowers the cost of purchase. b. The policy conviders the quoted price and the quality of the product is ignored. c. The policy of the company is not practically viable as is is not bulding long-term relationships with its suppliers. The reputation of the company may be affected. d. Supplier relationships are not required as the products are purchased for the quarter alone. 2. A manufacturing company gets quotes from each supplier and allocates the purchase onder to the company which quotes the lowest price with the expected cialty. Are there any additional costs that are involved in bulk purchase for the quarter? tdent y reason that supports the answer. a. Yes b. No Is this process effective in long run? Identify reason that supports the answer. a. Yes b. No Reason: a. The policy is effective as it lowers the cost of purchase b. The policy considers the quoted price and the quality of the product is ignored. c. The policy of the company is not practically vable as it is not bullaing long-term relationships with its suppliers, The reputation of the company may be affected. d. Supplier relationshlas are not required as the products are purchased for the auarter alone. 2. A manufacturing company gets quates from each supplier and allocates the purchase order to the company which quotes the lowest price with the expected quality. Are there any addiboal costs that are involved in bulk purchase for the quarter? Identify reason that supports the answer. a. Yes b. No Resson: a. The cost of storage, obsclescence, material management and wastages are lgnored in this concept. b. The cost of storage, obsolescence, material management and wastages are included in the purchase cost computabion. c. The cost related to quality can be compensated as the price of the material is low. 9. The responsibility of the manager is to get the lowest bid for the product and all other information is irrelevant. 3. Considening only inventory financing costs, what is the additional cost per pound of Provo Giass Company's bid if the anrual cost of money is ans (hent: Getermine the average value of glas inventory held for the quarter and muitiply by the quarterfy interest charge, then divide by the number of pounds. Aound to the nearast cent. Celling Stars, Inc., manufactures light bulbs, Its purchasing policy requires that the purchasing agents piace each quarter's purchasing requirements out for bid. This is because the Purchasing Department is evalaated solely by its ability to get the lowest purchase prices. The lowest bidder receives the order for the next quarter (90 working days). To make its bulb products, Ceiling 5tars requires 54,000 pounds of glass per quarter Bright Night received two glass bids for the third quarter, as follows: - Provo Giass Company: $26.00 per pound of glass. Delivery schedule: 54,000 ( 600 lbs. x90 days) pounds at the beginning of July to last for 3 months. - Orem Glass Compony: $26.15 per pound of glass. Delivery schedule: 600 pounds per working doy (90 dsys in the quarter). Ceiling Stars accepted Provo Glass Company's bid because it was the low-cost bid. 1. A manufacturing company gets quotes from each supplier and allocates the purchase order to the company which quotes the lowest price with the expected quaity. Is this process effective in long run? Identify reason that supports the answer. a. Yes b. No Reason: a. The policy is effective as it lowers the cost of purchase. b. The policy conviders the quoted price and the quality of the product is ignored. c. The policy of the company is not practically viable as is is not bulding long-term relationships with its suppliers. The reputation of the company may be affected. d. Supplier relationships are not required as the products are purchased for the quarter alone. 2. A manufacturing company gets quotes from each supplier and allocates the purchase onder to the company which quotes the lowest price with the expected cialty. Are there any additional costs that are involved in bulk purchase for the quarter? tdent y reason that supports the answer. a. Yes b. No Is this process effective in long run? Identify reason that supports the answer. a. Yes b. No Reason: a. The policy is effective as it lowers the cost of purchase b. The policy considers the quoted price and the quality of the product is ignored. c. The policy of the company is not practically vable as it is not bullaing long-term relationships with its suppliers, The reputation of the company may be affected. d. Supplier relationshlas are not required as the products are purchased for the auarter alone. 2. A manufacturing company gets quates from each supplier and allocates the purchase order to the company which quotes the lowest price with the expected quality. Are there any addiboal costs that are involved in bulk purchase for the quarter? Identify reason that supports the answer. a. Yes b. No Resson: a. The cost of storage, obsclescence, material management and wastages are lgnored in this concept. b. The cost of storage, obsolescence, material management and wastages are included in the purchase cost computabion. c. The cost related to quality can be compensated as the price of the material is low. 9. The responsibility of the manager is to get the lowest bid for the product and all other information is irrelevant. 3. Considening only inventory financing costs, what is the additional cost per pound of Provo Giass Company's bid if the anrual cost of money is ans (hent: Getermine the average value of glas inventory held for the quarter and muitiply by the quarterfy interest charge, then divide by the number of pounds. Aound to the nearast cent

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