Question: Required information Skip to question This case is important because you must be able to develop appropriate purchasing strategies for key categories and evaluate risks. Read the Suman Corporation case and answer the questions that follow. Suman Corporation In mid$-$April, Mike Bradie, vice president of supply chain management at Suman Corporation $($Suman$),$ had

Required information Skip to question This case is important because you must be able to develop appropriate purchasing strategies for key categories and evaluate risks. Read the Suman Corporation case and answer the questions that follow. Suman Corporation In mid$-$April, Mike Bradie, vice president of supply chain management at Suman Corporation $($Suman$),$ had become increasingly concerned about the potential shortage of supply of barac, a new high$-$tech raw material for air filtration. During the last two weeks, Suman$$s three suppliers had advised Mike Bradie to sign long$-$term contracts, and he was trying to assess the advisability of such commitments. SUMAN Suman Corporation of Pittsburg, Pennsylvania, produced high$-$quality consumer and industrial air$-$conditioning and heating units. An extensive network of independent and company$-$owned installation and sales centers serviced customers throughout the North American market. Company sales last year totaled $$1$ billion. AIR FILTRATION AND BARAC For decades, Suman had sold air humidification and air filtration units along with its prime units in air heating and cooling. Until three years ago, air filtration had accounted for about $7$ percent of total corporate sales and had been sold primarily as add$-$ons to a new air cooling and heating systems. However, with the advent of barac, air filtration had started to increase significantly as a percentage of total sales. Barac, a new high$-$tech product developed as part of the U$.$S$.$ space effort, had a range of unique properties of high interest to a variety of industries. In the case of air filtration, Suman developed and patented a process where barac could be transformed into a thin, very light, and extremely fine, mesh$-$like sponge material capable of filtering extremely small particles. The manufacturing cost of a barac filter amounted to about $28$ percent of its selling price. Given the population$$s sensitivity to air quality and the increasing number of people with asthma and allergies, the new Suman filters became popular, not only with new Suman air system installations but also as retrofits in older air$-$conditioning and heating systems. Moreover, compared to electronic air cleaners, which cost about three times as much to install and required monthly cleaning, barac filters had to be replaced every six months, guaranteeing a continued sales volume of filters for years to come. When combined with an ultraviolet light unit, which killed airborne bacteria, a barac air cleaning system was considered a huge leap forward in air treatment. AIR FILTRATION SALES Along with the barac filtration system introduction three years ago, Suman$$s marketing department had initiated a significant promotional campaign directed at both the industrial and consumer sectors$.$ Marketing$$s ability to forecast sales accurately had not been impressive, according to Mike Bradie. For the first year, marketing had forecasted barac filter sales at $$2$ million when in reality they sold $$13$ million. In the second year, the forecast was for $$18$ million and actual sales were $$35$ million. In the third year, a forecast of $$48$ million turned into actual sales of $$87$ million. The marketing department expected sales growth to level off over the next three years to a rate of $20$ percent per year. BARAC SUPPLY Suman$$s first barac supplier was Levy Chemical, a longtime supplier of paints and adhesives to Suman and a large, diversified innovative chemical producer that held the patent on barac. Mike did not like the idea of single sourcing and, therefore, when barac requirements rose significantly in the second year, he brought in a second supplier, Vasey Incorporated, which not only produced the barac raw materials $($under license from Levy Chemical$),$ but also manufactured a variety of barac products in the textile and automotive fields. In the third year, Mike had secured a third supplier, T$.$R$.$ Specialties, a much smaller company than Levy Chemical and Vasey Incorporated, which also produced barac under license for its own applications in aerospace and the military, but had some excess capacity that it sold on the open market. All three suppliers sold barac at identical prices, which had increased over the past three years. Actual volumes purchased by Suman from each of the three suppliers were