Case 12-1: Loren Inc.
Xinhong He, Lisi Xu, Ailun Zhang, Qifeng Xu, Shangjie Shen
Group: Fairy Tail
Brent Miller is the raw material buyer at Loren Inc.
Talk with representatives from four suppliers about raw material quotations
Discuss situations with his superior, Mr. Williams
Make recommendation for Loren’s annual hexonic acid requirements
Two more companies, Carter Chemical and American Chemical, offered their quotations
Carter Chemical - $1,268/ton, min.750 tons, with min. 1 year
American Chemical - $1,204, min. 1,050 tons; $1,192/ton, min. 2,250 tons, with min.
Loren expected to use approximately 3,000 tons of hexonic acid in the following year
Requirements for the past year amounted to 2,750 tons and had been supplied by
Canchem and Alfo at 60 and 40 percent, with $1,384/ton and $1,296/ton,
A single – bid policy established over the years
Suppliers should quote their best possible offer on their first and only quote, and all
suppliers should be willing to live with the consequences of their bid
Loren (Canada) was the Canadian subsidiary of a larger international chemical
Total Canadian sales were approximately $800 million and after-tax profits were
$40 million. Raw material and packaging costs were about 50 percent of sales