The Blue Scope Company needs a total of 125 metric tons of sheet iron which is 50 metric tons 4 -centimeter -sized iron sheets and 75 metric tons of 8 -centimeter -sized iron sheets for perform renovation work on client buildings. For the purchase of this piece of iron, Blue Scope Company has two options: 1. The company can buy the iron sheets directly from Kee Luly Berhad according to the required specifications; or 2. The company purchased 48 centimeter pieces of iron from Kee Luly Berhad and then the pieces of iron are cut to the size desired by Sprint Company. Sprint Company is a Company that provides services cutting iron sheets according to customer specifications, where the cutting charges charged according to the reservation. Both of these companies have dealt with Blue Scope Company and are suppliers reliable with high quality products. The Sprint Company tells its customers that there is a normal loss in work cuts, yet it does not exceed 2.5 per cent of metric tons of input. They recommend if customers want a certain quantity of iron sheets, the input supply of iron sheets is necessary sufficient to produce the required quantity of iron sheets. The deduction charge charged is based on the quantity of output produced, not the input controlled. 48 centimeter iron sheets are a regular inventory at Kee Luly Berhad and can be shipped to Sprint Company within five days after receipt of the purchase order from the Company Blue Scope. If Kee Luly Berhad is doing the piece cutting work iron, delivery to Blue Scope Company is 15 days from the date of receipt of the order. The Sprint Company, on the other hand, sets the delivery is 10 days after receipt of the pieces iron. 

Kee Luly Berhad and Syarikat Pecut have submitted the price list to Syarikat Skop Blue as follows: 

Kee Luly Berhad

Saiz (CM) M/Ton Cost per metric ton 

4 50 210.00

8 75 200.00

48 125 180.00

Syarikat Pecut

Size(CM) Metric Ton Cutting charges per metric ton of output 

4 50 18

8 75 15

Freight and Delivery Charges 

Destination Cost per Metric Ton(RM)

Kee Luly Berhad to Syarikat Skop Biru 10.00

Kee Luly Berhad ke Syarikat Pecut 5.00

Syarikat Pecut ke Syarikat Skop Biru 7.50

In addition to the above information, the Sprint Company states that if the Scope Company Blue buys 100 metric tons of output for each size of iron sheet, the price rate will be reduced by 12 percent per metric tonne. The Blue Scope Company is convinced that the same customer will place a new order in the near future. Although however, the Blue Scope Company will have to keep an additional piece of iron for two months with a holding cost of RM1.50 per month per metric tonne. No changes in the price charged by Kee Luly Berhad for each additional metric tonne sent to the premises of the Sprint Company. As Mrs. Marlinda's friend in the Accounts Department, you just received a phone call from him to ask for help. 

Be required: a) Provide an analysis for the following three alternatives in determining the best option should be selected by the Blue Scope Company: i. Purchase the required pieces of iron directly from Kee Luly Berhad. ii. Purchased 48 centimeter pieces of iron from Kee Luly Berhad and then cut by the Sprint Company into 50 metric tons of output of size 4 centimeters and 75 metric tons of output measuring 8 centimeters. iii. Take advantage of the reduced price cut rates by Sprint Company with buy 100 metric tons of output for each size of iron sheet (4 centimeters and 8 centimeters). Round all numbers to the nearest cent. 

b) Not relying on answer (a) above, give three (3) additional reasons, which describe non -financial information relevant to why Blue Scope Companies can opted to purchase iron steel directly from Kee Luly Berhad