Just-in-Time Principles

Glow Bright Co. manufactures light bulbs. Glow Bright's purchasing policy requires that the purchasing agents place each quarter's purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest cost bidder receives the order for the next quarter (90 working days).

To make its bulb products, Glow Bright requires 50,400 pounds of glass per quarter. Glow Bright received two glass bids for the third quarter, as follows:

Mid-States Glass Company: $23.00 per pound of glass. Delivery schedule: 50,400 (560 lbs. x 90 days) pounds at the beginning of July to last for 3 months.

Akron Glass Company: $23.15 per pound of glass. Delivery schedule: 560 pounds per working day (90 days in the quarter).

Glow Bright accepted Mid-States Glass Company's bid because it was the low-cost bid.

3. Considering just inventory financing costs, what is the additional cost per pound of Mid-States Glass Company's bid if the annual cost of money is 8%? Round to the nearest cent. $ per lb.