Question

Pleasw answer 1-3. Do not cooy and paste from another edition please

CASE 5-2 Cyclone Transportation Cyclone Transportation is a medium-sized truckload carrier based in Ohio, United States. You are a procurement manager of this company, whose main responsibility is the procure- ment of diesel fuel for the company's fleet of Class 8 trucks. You have been assigned to negotiate the fuel contract for the Perrysburg, Ohio market. Your assistant has collected the following per gallon information concerning the major truck stop chains (A, B, and C) around that area. You will use this information to analyze each fuel vendor's proposed contract. DATE 10/20/17 10/21/17 10/22/17 10/23/17 10/24/17 CHAIN A RETAIL PRICE RETAIL PRICE (INCL. STATE TAX) (NO STATE TAX) 2.822 2.568 2.810 2557 2.938 2,674 2.958 2.692 2.664 CHAIN Retail price (incl. state tax). (no state tax) 2.705 2.681 TRUCK STOP COST (NO STATE TAX) 2514 2421 2.460 2.738 2.570 Date 10/20/17 10/21/17 10/22/17 10/23/17 N c N ả . N E N | N 9 odobo N N | 0 4 5 Truck stop cost (no state tax) 2.475 2.557 2,606 2439 2.550 2659 2.576 2.590 CHAIN Retail price (no state tax 2.690 Truck stop cost Ino state tax) 2.618 2.362 2.466 Date 10/20/17 10/21/17 10/22/17 10/23/17 10/24/17 2.588 2.516 2353 550 6

Answer 1

Given Values
Approximate monthly purchase of fuel is 100,000 gallons
Average fuel purchase per stop is 100 gallons
Approximate monthly refuelling stops would be 1,000
1)
Chain A
Date	Truck Stop Cost	Pump fees	Quantity	Value	Transaction Fees	Monthly Stops	Value	Total
10/20/2017	2.514	0.020	100,000	253,400	0.25	1000	250	253,650
10/21/2017	2.421	0.020	100,000	244,100	0.25	1000	250	244,350
10/22/2017	2.460	0.020	100,000	248,000	0.25	1000	250	248,250
10/23/2017	2.738	0.020	100,000	275,800	0.25	1000	250	276,050
10/24/2017	2.570	0.020	100,000	259,000	0.25	1000	250	259,250
		500,000	1,280,300				1,250	1,281,550
Average fuel cost = 1,281,550/500,000
2.563
Chain B
Date	Retail Price	Retail Discount	Quantity	Value	Transaction Fees	Monthly Stops	Value	Total
10/20/2017	2.705	0.030	100,000	267,500	0.00	1000	-	267,500
10/21/2017	2.681	0.030	100,000	265,100	0.00	1000	-	265,100
10/22/2017	2.659	0.030	100,000	262,900	0.00	1000	-	262,900
10/23/2017	2.576	0.030	100,000	254,600	0.00	1000	-	254,600
10/24/2017	2.590	0.030	100,000	256,000	0.00	1000	-	256,000
			500,000	1,306,100		5,000	-	1,306,100
Average fuel cost = 1,306,100/500,000
2.612
Chain C
Date	Truck Stop Cost	Pump fees	Quantity	Value	Transaction Fees	Monthly Stops	Value	Total
10/20/2017	2.618	0.030	100,000	264,800	0.50	1000	500	265,300
10/21/2017	2.362	0.030	100,000	239,200	0.50	1000	500	239,700
10/22/2017	2.466	0.030	100,000	249,600	0.50	1000	500	250,100
10/23/2017	2.516	0.030	100,000	254,600	0.50	1000	500	255,100
10/24/2017	2.353	0.030	100,000	238,300	0.50	1000	500	238,800
		500,000	1,246,500				2,500	1,249,000
Average fuel cost = 1,249,000/500,000
2.498
Date	Retail Price	Retail Discount	Quantity	Value	Transaction Fees	Monthly Stops	Value	Total
10/20/2017	2.690	0.020	100,000	267,000	0.50	1000	500	267,500
10/21/2017	2.588	0.020	100,000	256,800	0.50	1000	500	257,300
10/22/2017	2.543	0.020	100,000	252,300	0.50	1000	500	252,800
10/23/2017	2.714	0.020	100,000	269,400	0.50	1000	500	269,900
10/24/2017	2.550	0.020	100,000	253,000	0.50	1000	500	253,500
			500,000	1,298,500		2,500	2,500	1,301,000
Average fuel cost = 1,301,000/500,000
2.602
Offer by Chain C would cost plus
2) The cost plus proposal of Chain C is the lowest at $ 2.498 per gallon.Hence, the company should accept the
cost plus proposal of Chain C
3) Computation of additional retail discount offered bt Chain B to obtain business
Lowest fuel cost = $ 2.498 per gallon
Average fuel cost offered by Chain B = $ 2.612
Additional retail discount that should be offered by Chain B
= $ 2.612 - $ 2.498
= $ 0.114
Particulars				Amount
Retail discount originally offered by Chain B				0.030
Add: Additional discount required to be offered				0.114
Retail discount to obtain business				0.144