Question

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Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two vendors: Tappan Corporation and Hill Enterprises. Kinnear chooses the vendor based on price. Once the plastic is received, it is inspected to ensure that it is suitable for production. Plastic that is deemed unsuitable is disposed of.

The controller at Kinnear collected the following information on purchases for the past year:

	Tappan	Hill
Total purchases (tons)	5,500	8,500
Plastic discarded	165	425

The purchasing manager has just received bids on an order for 190 tons of plastic from both Tappan and Hill. Tappan bid $1,552 and Hill bid $1,539 per ton.

Required:

a. Assume all else remains the same. What bid by Tappan would make Kinnear indifferent between buying from Tappan or Hill? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

Answer: . componenty .: Given that kinner plastic manufactures apples variou for the air craft and Marine industry Kinnear busy plastic from two vendors .* * To ensure that it suitable for Production : The Purchasing manger has just recived bids on an order for 190 tong .. Talpan bid 1552 and Hill bid 1,539 Perton for happan 16500165) 5335 30.97 = 974 5500 5500 for hill. - 8075 -0.95=095% 181506 - 425) 8500 8500 Effective cost per ton of Hill 1539 - 1620 9

The -aplan =x. Therefore = 1620 . 62 6 x - X 15714