Review this case carefully and answer the questions at the end of the case in detail. You have just received a purchase request for the purchase of 5,000 roller bearings. The purchase request estimate is $80.00 per unit for a total of $400,000. The Government estimate is based on a recent estimate prepared by your local engineering staff as part of a routine review of items whose annual total purchase price exceeds $100,000. The estimate was prepared independently using manufacturing principles and factors commonly used in the bearing industry. The procurement history indicates that the last purchase of the item was three months ago. At that time, 2,000 units were purchased at a price of $120.00 each. Brittle Bearings has been the sole source for these bearings since they purchased them from their only competitor about five years ago. The price for the last competitive purchase was $57.50 five years ago, just before the purchase of their competitor. Review of the Producer Price Index (PPI) shows that average bearing prices have increased 40 percent of the past five years. 

QUESTIONS: 1. Based on the above information, what is your best estimate of a reasonable price for the roller bearings? 

Answer rating: 100% (QA)

Based on the information provided in the case we can apply different methods to estimate a reasonabl... View the full answer