Reconsider Figure. Suppose Supplier B improves its conformance quality so that the chemicals it produces are now 99.9% pure. The chart at the top of this page shows the new competitive situation:

a. Will this be enough to make Supplier B competitive? Which supplier do you think will win the business?

b. Managers at Supplier A have determined that if they increase the minimum order size to 80 liters, they can decrease their costs to $18 per liter. Should they do it? Explain your logic.

Minimum order size of 50 liters Performance 2 days $20 per liter 99.9% pure 3 days Minimum order size of 100 liters Qualifier level (minimum requirements) 99% pure $30 per liter 98% pure Order qualifiers Order winners Conformance Delivery speed Flexibility Supplier A Cost quality How quickly How much do the chemicals Can we can the chemicals be delivered? place small orders for the chemicals? Are the = Supplier B %3D chemicals pure? cost?