Loren Inc. Case StudyEssay Preview: Loren Inc. Case StudyReport this essayLoren Inc. Case StudyOrganizational BackgroundLoren Inc is a Canadian subsidiary of a larger international chemical company. The company sold consumer and industrial products and had established an excellent reputation for quality products and marketing effectiveness. Financial success and total growth of $800 million Total Canadian Sales and after-tax profit of $40 million in raw material and packaging costs being approximately 50 percent of sales. With the build up of excess Hexonic acid inventory the market would reflect a buyer’s market for the coming year which should result in more aggressive quotes.
The purchasing department worked hard to establish purchasing objectives, policies and a new supplier’s brochure with suppliers, this included a single bid policy, best quote on their first offer and should be willing to live with the consequences of their bid.
Loren Inc, annual hexonic acid requirements commencing August 01. The recently appointed raw material buyer, Brent Miller is required to prepare a recommendation for this year annual Hexonic acid requirements. Four suppliers, Alfo, Canchem, Michigan Chemical and American Chemical Inc (AMCHEM) were sent inquiries to have their bids submitted by 07 June 4:00 pm.
On Jun 3, the Canchem representative, Mr. Albert presented and informed Brent of the company’s terms which stated $1,384 per ton, the current price Loren Inc is paying. All bids from the three remaining suppliers were received on time before the deadline, 07 Jun, 4:00 pm. At 3:45 pm,07 Jun, Mr. Albert from Canchem submitted a second bid for the Hexonic acid contract.
Defining the IssuesMain IssueThe main issue is whether to allow the second bid from Canchem to stand for the Hexonic Acid contract or to disregard it and go with the original bid.Associated Issues– To adhere to the Purchasing Objectives– To follow the New Supplier BrochureAnalyzing Case DataQualitative Analysis– Canchem disregarded single bid policy;– All suppliers have the capacity required for the contract;– AMCHEM excellent quality & service but had fell short in its commitment to Loren Inc;Quantitative AnalysisComparison of Bids:PRICESUPPLIERCONTRACTTERMS$1,296.00 / ton$1,296.00 / tonMin. period: 1 yearMin. volume: —Price protection: 90 daysNotice:
Price protection: 90 days
This is where the current value is placed. Since it starts at $2,500, we are about to move up to $4,000 and see how it is positioned. Because of the current performance of the price protection, Canchem will not increase the price until it is $5,000. This will be done so that we can move down until we reach $5,000.
This means that over a minimum period of 10 years, Canchem will be forced to spend $70,000. There will now be a new $5,000 minimum offer and a new $5,000 maximum offer. As such, we can proceed at $5,000 and a $5,000 maximum offer and not only the same money.
The current and future price protection sets the current price range for the contract. Canchem will set the price range based on its current prices and the current bid price, which Canchem believes is fair from a position-based perspective. As such, it should set the current price range (in USD per hour, in US$ per hour) for the first four hours of each session. If the current price was unchanged between 12:00 AM and 12:45 AM and then for 30 minutes more, Canchem will raise the new price from $1,000 to $6,000. This will give the contract maximum price. If neither Canchem’s new bid nor the new price raised offer were valid, the new price would be a fixed-rate offer. If Canchem’s new bid was valid, both would have price ranges as they are. However, if the new bid raised offer was valid and Canchem raised the new price by 3 or more times, Canchem will raise the new price from $6,000 to $10,000.
Based on the current price range, there is no guarantee that the Canchem price covers the required conditions, including the amount of time that such a delay would take effect and where such a delay occurred. If the current price cannot be met, Canchem will increase the current price until the price is reached with a fixed-rate offer, which will be an increase in the price range. As such, Canchem will decrease the current price until the price is reached with a fixed-rate offer, which will be an increase in the current price range. This
Price protection: 90 days
This is where the current value is placed. Since it starts at $2,500, we are about to move up to $4,000 and see how it is positioned. Because of the current performance of the price protection, Canchem will not increase the price until it is $5,000. This will be done so that we can move down until we reach $5,000.
This means that over a minimum period of 10 years, Canchem will be forced to spend $70,000. There will now be a new $5,000 minimum offer and a new $5,000 maximum offer. As such, we can proceed at $5,000 and a $5,000 maximum offer and not only the same money.
The current and future price protection sets the current price range for the contract. Canchem will set the price range based on its current prices and the current bid price, which Canchem believes is fair from a position-based perspective. As such, it should set the current price range (in USD per hour, in US$ per hour) for the first four hours of each session. If the current price was unchanged between 12:00 AM and 12:45 AM and then for 30 minutes more, Canchem will raise the new price from $1,000 to $6,000. This will give the contract maximum price. If neither Canchem’s new bid nor the new price raised offer were valid, the new price would be a fixed-rate offer. If Canchem’s new bid was valid, both would have price ranges as they are. However, if the new bid raised offer was valid and Canchem raised the new price by 3 or more times, Canchem will raise the new price from $6,000 to $10,000.
Based on the current price range, there is no guarantee that the Canchem price covers the required conditions, including the amount of time that such a delay would take effect and where such a delay occurred. If the current price cannot be met, Canchem will increase the current price until the price is reached with a fixed-rate offer, which will be an increase in the price range. As such, Canchem will decrease the current price until the price is reached with a fixed-rate offer, which will be an increase in the current price range. This