eiling Stars, Inc, manulactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter's purchasing requirements out for bid. This is because the surchasing Department is evaluated solely by its ability to qet the lowest purchase prices. The lowest bidder receives the order for the next quarter ( 90 working days). To make its bulb products, Ceiline Stars requires 54,000 pounds of glass per quarter. Bright Night recelved two olass bids for the third quarter, as tollows: - Provo Glass Compary: $22.00 per pound of glass. Delivery schedule: 54,000(600 lbs. 90 days ) pounds at the beginning of luly to last for 3 months. - Orem Glass Company: 522.15 per pound of glass, Delivery schedile: 600 pounds per working doy ( 90 days in the guarter). Ceiling Stars accepted Provo Class Company's bld because it was the low-cost bid. 1. A manufacturing company gets evetes frem each supplier and allocates the purchase order to the company which quotes the lowest price with the expected quality. Is this process effecbue in long run? Identify reason that supports the answer. a. Yes b. 1Ab Reasona a. The pelicy is effective as ie lawers the cost of purchase. b. The pollicy considers the eueted price and the qualify of the product is ignored. c. The policy of the company is not practically viable as it is not bulding long-term relationships weth its mepliees. The reputation of the company may be atiected. a. Supcler relationships are not required as the products are purchased for the quarter alone. 2. A manulactaring compary oets quotes from each supplier and alocates the purchase order to the company which quotos the lowest orice with the expected mualicy. Are there anr additional costs that are ievolved in bulfopurchane fer twe gearter? identify reason that suppoits the answer. a. Tes b. 110 Hiesson: a. The cost of atorace, obsolescence, materal managemert and wastages are igine in in this concept. b. The cost of storagit, obsolescence, materill manopenent agd wastigges are indoded in the purchase coit computation. d. The resoonsibity of then manager is to get the lowest fid for the product and alf offer informatica is irrelevant: Considering only inventory financing costs, what is the additional cost per pound of Provo Glass Company's bid if the annual cost of money is ssi? (fint: Determine the average alue of alass inventory held for the quarter and multiply by the quarterly interest charge, then divide by the number of pounds.) Round to the nearest cent. X per ib. T check My Yor 1. Fecus on the long-tem strategies of bullding a long.term supply dhain strategy with tuppliers. 2. Purvew lean princioles in terms of advantages and cost management benefits. 3. Assume that the pounds supciy runs out try the end of the quater. Une the ayerage number of pounds and the prise per pound to itefermine the total ifventory investment. Apply the interest fate per quarter to that amount to determine inventory finanding cost for the quarter and how that impacta the addibinal cost per pound, Naw candider thils in your anwwer. Is 1ed. States stilit the lowicost biddee
