In: Business and Management

Submitted By mayz19
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Loren Case Study
Chris Ray

Background Information.

Brent Miller is the raw material buyer at Loren Inc. He needs to speak with representatives from four suppliers about raw material quotations. Then discuss the situations with his superior, Mr. Williams.
Following this discussion he must make recommendation for Loren’s annual hexonic acid requirements.

Key Issues * Loren expected to use approximate 3,000 tons of hexonic acid in the following year * A single bid policy was established over the years. Suppliers should quote their best possible offer on their first and only quote, and all suppliers should be willing to live with the consequences of their bid * Total Canadian sales were approximately $800 million and after-tax profits were $40 million. Raw material and packaging costs were about 50 percent of sales. * Canchem offered a second superior bid that blew the competitions away but was a violation of company policy.

They should contract with both American Chemicals and Alfo. Brent has to disregard the second like it did not take place due to current company policy. With the predicted usage of 3000 tons of acid it meets the minimum 2250 order quantity to get the price at $1192.00 from AmChem. It has already been established that the quality is excellent. The issue is if a demand surge was to take place they might not be able to allocate enough acid. This is where Alfo comes in as a backup supplier. They have no minimum order volume so if there happens to be a shortage it could be possible to obtain from them as…...

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