Question: Two different suppliers have quoted different unit prices and payment windows for a commodity part used by an industrial company. The purchasing manager for the

 Two different suppliers have quoted different unit prices and payment windows

Two different suppliers have quoted different unit prices and payment windows for a commodity part used by an industrial company. The purchasing manager for the part will decide on which supplier to use based on a price analysis that adjusts for the difference in the payment windows, thereby reflecting the opportunity cost of making earlier payments. The relevant information is as follows: If the annual cost of capital for the company is 6.5%, which supplier is offering the better price given the opportunity cost required by making a payment earlier if Supplier A is chosen? The effective cost of purchasing from Supplier A is $ per unit. (Enter your response rounded to two decimal places.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!