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Lean Principles Bnght Night, Inc, manufactures fight bulbs. Its purchasing policy requires that the purchasing agents place each quarter's purchasing requirernen eut fer bid. Thisis because the Purchasing Department is evaluated solely by its ability to get the lovest purchase prices. The lowest bidder receives the order for the next quarter ( 90 working days). To make its bulb products, Bright Night requires 55,800 pounds of glass per quartec. Bright Night received two glass bids for the third quarter, as 7ollows: - Central Giass Company: $27.00 per pound of glass. Delivery schefule: 55,800(620 lbs. x.90 days) pounds at the beginning of July to last for months- - Ithaca Class Companyz $27.15 per pound of glass, Delivery schedule: 620 pounds per working day (90 days in the quarter). Bright Night accepted Central Glass Company's bid because it was the low cost bid. 1. A nunufacturing company gets quotes from each suppler and aliocates the purchase order to the company which quotes the lowest price with the expecied quality. Is this process effective in long run? Identify reason that supports the answer: a- Yesh b. No Reason: a. The polcy is effective as it lawers the cost of purchase- b. The policy considers the quoted price and the quality of the product is ignored. The policy of the company is not practically viable as it is not building long-term relationships with its suppliers. The reputation of the company may be sffected. d. Supplier relatienships 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 order to the company which quotes the lowest price with the expected quality. Are there any additional costs that are involved in bulk purchase for the quarter? Identify reason that supports the answer. a. Yes b. No Reasan! a. The cost ef storage, obsolescence, material management and wastages are ignered in this concept. b. The cost of storege, obsolescence, material management and wastages are included in the purchase cost computation. c. The cost related to quality can be compensated as the price of the material is low. d. The responsibility of the manager is to get the lowest bid for the product and all cther information is irrelevant. 3. Considering only inventory financing costs, what is the additional cost per pound af Central Glass Company's bid if the annual cost of money is 8\$c? (Mint: Determine the average value of glass inventory held for the quarter and maltiply by the quarterty interest charge, then divide by the number of pounds.) Round to the nearest cent. per lo. Finsabact T Deis My Wos 1. Focus on the ling-term strategies of building a long+term supply chain strategy w th supplers.. 2. Perixw lean prinoples in terms of advantages and cost manapement benefits, 3. Asture that the peands supply runs aut by the end of the quarter, Use the awerage number of pounds and the price per pound to determine the total irventary investment. Apgly the interegt rate per guarter to that amount to determifye inventory financing. cast for the