selected as potential from Request for Information (RFI) process. Clearly show your assumptions. (15 marks) (Total - 25 marks) Question 03 Company X is in the business of manufacturing & distributing biscuits in Sri Lanka & owns 10 manufacturing plants. Below are the details of two important raw materials sourced by company X from suppliers for the manufacturing process. Sugar Below table shows the sugar purchasing data by company X for the last 3 financials years. Parameter Quantity in kg Price per kg 2018/19 1,200,000 135 2019/20 1,380,000 139 2020/21 1,587,000 143 Below are some additional data about the supplier market for sugar. Currently there are only 2 suppliers in the market. These 2 suppliers are dominant in the market & show less interest in competing with each other in terms of pricing. Company A has been buying from one supplier for the last 2 years under 3 years' contract. . Page 4 of 6 Wrapping paper These wrapping papers are used to complete the biscuit packaging process & high quality is expected from the supplier. Below table shows the wrapping paper purchasing data by company X for the last 3 financials years. Parameter Wrapping papers Price per paper 2018/19 1,400,000,000 0.020 2019/20 1,610,000,000 0.021 2020/21 1,851,500,000 0.022 Below are some additional data about the supplier market for wrapping papers. There are numerous suppliers in the market, but the right quality is difficult to find. Company X has been purchasing from the same supplier last 3 years under a five years' contract. This supplier provides with the exact right quality required by company X, however company Xfinds it difficult handle this supplier in terms of supply lead time. Over the years, Company X has faced numerous production bottlenecks due to supply delays of wrapping papers. Below are some key financial data of company X for the financial year 2020/21. Parameter Value in LKR Revenue 837,500,000 Cost of sales 670,000,000 a) Analyze these 2 sourcing categories in terms of financial impact to company X & supply market risk. (10 marks) b) Explain the negotiation strategies for these 2 sourcing categories to optimize the return to company X (15 marks) (Total - 25 marks) selected as potential from Request for Information (RFI) process. Clearly show your assumptions. (15 marks) (Total - 25 marks) Question 03 Company X is in the business of manufacturing & distributing biscuits in Sri Lanka & owns 10 manufacturing plants. Below are the details of two important raw materials sourced by company X from suppliers for the manufacturing process. Sugar Below table shows the sugar purchasing data by company X for the last 3 financials years. Parameter Quantity in kg Price per kg 2018/19 1,200,000 135 2019/20 1,380,000 139 2020/21 1,587,000 143 Below are some additional data about the supplier market for sugar. Currently there are only 2 suppliers in the market. These 2 suppliers are dominant in the market & show less interest in competing with each other in terms of pricing. Company A has been buying from one supplier for the last 2 years under 3 years' contract. . Page 4 of 6 Wrapping paper These wrapping papers are used to complete the biscuit packaging process & high quality is expected from the supplier. Below table shows the wrapping paper purchasing data by company X for the last 3 financials years. Parameter Wrapping papers Price per paper 2018/19 1,400,000,000 0.020 2019/20 1,610,000,000 0.021 2020/21 1,851,500,000 0.022 Below are some additional data about the supplier market for wrapping papers. There are numerous suppliers in the market, but the right quality is difficult to find. Company X has been purchasing from the same supplier last 3 years under a five years' contract. This supplier provides with the exact right quality required by company X, however company Xfinds it difficult handle this supplier in terms of supply lead time. Over the years, Company X has faced numerous production bottlenecks due to supply delays of wrapping papers. Below are some key financial data of company X for the financial year 2020/21. Parameter Value in LKR Revenue 837,500,000 Cost of sales 670,000,000 a) Analyze these 2 sourcing categories in terms of financial impact to company X & supply market risk. (10 marks) b) Explain the negotiation strategies for these 2 sourcing categories to optimize the return to company X (15 marks) (Total - 25 marks)
