Selecting New Supplier

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Decision Making

Case : “Selecting Supplier”

“SELECTING NEW SUPPLIER”

Currently Roberto Donadoni, Director of Engineering and Operations PETROCHEMICAL INDUSTRIAL LTD, can breathe with relief.  In the last 6 months, since the disrupted holiday vacation in Bali, Donadoni could not sleep.  But now he was smiling broadly. The cause of the problem of Hi-Grade 106 sheet film negative defection is known. From the verification results through laboratory tests found that, the sulfite acid (SO3) content of the separator paper that is supplied by a new supplier, even though it fulfill the standards set by the quality, is still 3% higher than the old supplier and therefore making a shorter expiration period. This makes the film sheets in the small shops that sold less smooth, have thick and flat results in all negative surface film after washing.

In accordance with the results of coordination meetings with the marketing and quality control, has decided to seek new suppliers of paper sheet separator films in order to get a supplier that really can support the production quality. This opportunity was given publicly for the separation of paper suppliers, including the old suppliers.

Coordination meeting decide that the location of the suppliers may not too far from the location of the factory in order to facilitate the delivery and ensure timely supplies. Also management wants a competitive price, the last purchase price is approximately Rp. 6000, - per sheet for a box contains 20 sheets of paper separator. The management prefer to associate with a supplier that has a production capacity of 10,000 boxes / month.

Purchases of more than 200 boxes usually get 10% discount. Management knows the current prices rose approximately 20% and did not object to the increase, although preferable if the price remains the same with the previous orders.

Management wants a supplier who is able to fulfill their needs of 20,000 boxes per 3 months. And each order can be accepted at 2 months after the ordering.

Payment is expected can be paid in 3 termin since the reservation until the goods arrive.

Based on previous experience, management does not tolerate delays in delivery, in such condition, the supplier should be willing to give discount of 0.0025 for each day of delay. And, the management wats that any delay occur may not exceed 2 weeks.

There are 4 suppliers who submit proposals, namely

1. ANNO NUMERO UNO Ltd.

Anno Numero Uno Ltd is the old a supplier, their paper separator product  contain Sulfite acid of approximately 1%. At this moment Anno Numero Uno Ltd is experiencing internal problems, even though they are recognized by their high quality products.

Sometimes the internal problems causing late delivery often average 15-day delay in any shipment.  Price quotes from Anno Numero Uno Ltd. is interesting because PETROCHEMICAL INDUSTRIAL LTD considered as existing customers, the price given the fixed price i.e. Rp.120.000, - per box and for each of ten boxes get a discount of 6%

Anno Numero Uno Ltd. have same location with PETROCHEMICAL INDUSTRIAL LTD in an integrated industrial bonded zone, currently, their production capacity is 8000 boxes per month

2. BETA FORZA  Ltd

Beta Forza Ltd is a new comer in the business of photography equipment suppliers, one of its divisions produce the separator sheet for negative film for professionals. Their selling price is Rp. 110.000, - per box with 15% discount every purchase of 20 boxes.

As a new player in this business they try to keep their customer satisfy, their delivery almost never late, this is due to the support of the production capacity of over 12,000 boxes per month