Lean Principles
Bright Night, Inc., manufactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter’s purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest bidder receives the order for the next quarter (90 working days).
To make its bulb products, Bright Night requires 54,000 pounds of glass per quarter. Bright Night received two glass bids for the third quarter, as follows:
Bright Night accepted Central Glass Company’s bid because it was the low-cost bid.
1. A manufacturing company gets quotes from each supplier and allocates the purchase order to the company which quotes the lowest price with the expected quality. Is this process effective in long run? Identify reason that supports the answer.
b
Reason:
c
2. A manufacturing company gets quotes from each supplier and allocates the purchase order to the company which quotes the lowest price with the expected quality. Are there any additional costs that are involved in bulk purchase for the quarter? Identify reason that supports the answer.
a
Reason:
a
3. Considering only inventory financing costs,
what is the additional cost per pound of Central Glass Company’s
bid if the annual cost of money is 8%? (Hint: Determine
the average value of glass inventory held for the quarter and
multiply by the quarterly interest charge, then divide by the
number of pounds.) Round to the nearest
cent.
$ per lb: ?
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Lean Principles Bright Night, Inc., manufactures light bulbs. Its purchasing policy requires that the purchasing agents...
Lean Principles Bright Night, Inc., manufactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter's purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest bidder receives the order for the next quarter (9 working days). To make its bulb products, Bright Night requires 52,200 pounds of glass per quarter. Bright Night received two glass bids for the third quarter, as...
Lean Principles
Lean Principles Soft Glow, Inc. manufactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter's purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest bidder receives the order for the next quarter (90 working days). To make its bulb products, Soft Glow requires 48,600 pounds of glass per quarter. Soft Glow received two glass bids for the third...
Lean Principles Soft Glow, Inc. manufactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter’s purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest bidder receives the order for the next quarter (90 working days). To make its bulb products, Soft Glow requires 48,600 pounds of glass per quarter. Soft Glow received two glass bids for the third quarter, as...
Soft Glow, Inc. manufactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter’s purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest bidder receives the order for the next quarter (90 working days). To make its bulb products, Soft Glow requires 57,600 pounds of glass per quarter. Soft Glow received two glass bids for the third quarter, as follows: Mid-States...
Lean PrinciplesSoft Glow, Inc. manufactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter’s purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest bidder receives the order for the next quarter (90 working days).To make its bulb products, Soft Glow requires 55,800 pounds of glass per quarter. Soft Glow received two glass bids for the third quarter, as follows:Mid-States Glass...
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