Supply Chain Negotiation

1729 words 7 pages
Assignment Sheet for Case Study:
Negotiation - Porto

This case is written by the authors of your textbook, Purchasing and Supply Chain Management, but may have been edited for our use in this course.

This is a TEAM assignment. Read and discuss this mini-case and answer the 5 questions at the end of the case. In this manner, you will develop a negotiation plan for the buyer. The very best way to approach this team case is to work on all aspects (each question) of this case together. If you simply divide up the questions and assemble individual answers, you will not have the best learning experience.

Only ONE member should post the case analysis for the team. Your analysis must be posted to SAFE ASSIGNMENT™ on our Blackboard™ site
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As a buyer for Porto, you are responsible for developing a negotiating plan and strategy for the purchase of the New Prod component from Technotronics.

New Prod was designed and developed by Porto engineers for a product currently under development. Prototypes of the component were produced by a small specialized firm without production volume capacity. Supplier overall capacity should be available since the industry is just recovering from a period of underutilization.

Seven suppliers received a request for quotation. The RFQ included a 12 month delivery schedule for 200,000 units plus a possible follow-on order for up to 200,000 units and also included payment terms and shipping information (Exhibit 1B).

Five of the seven suppliers responded to the RFQ (Exhibit 2B). Their quotes list unit price, tooling costs, and transportation costs separately. Technotronics had the lowest quoted unit price at $5.80 per unit. Tyler Manufacturing was very close. Both companies were acceptable suppliers and you decided to pursue negotiations with Technotronics. You are well aware that the lowest quoted price does not always mean the lowest total cost. For that reason, you know that issues besides price will have to be discussed with Technotronics. The RFQ was intended to reduce the list of suppliers before commencing negotiations.

You requested a cost estimate for New Prod

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