Case Study 3 - Douglas Silber MBA540 Case Study 3 March 27,...

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Douglas Silber MBA540 Case Study 3 March 27, 2011 I certify that I am the author of this assignment and that any assistance I received in its preparation is fully acknowledged and disclosed in the assignment. I have also cited any sources from which I have used. I also certify that this assignment was prepared by me specifically for this course. 1. Why do many frms use cost-plus pricing For supply contracts? Using a cost-plus pricing system for supply contracts allows firms to better guarantee a profit. Due to the varying costs of supplies, a firm needs to ensure as best they can that they will not be losing their profit by selling below their cost for the item. By installing a cost-plus price system, a firm allows cushion room for price adjustments by their suppliers or hiccups in the market. For example, steel is a component in the lighting manufacturing industry and a major component of steel is oil. Oil is used not only to produce steel, oil is used in the shipping of steel and oil is used in and on the
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Case Study 3 - Douglas Silber MBA540 Case Study 3 March 27,...

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