Question: We plan to negotiate with Supplier 2 for an additional capacity of 200,000 tons capacity for Granular A from the gravel pit. We are willing

  1. We plan to negotiate with Supplier 2 for an additional capacity of 200,000 tons capacity for Granular A from the gravel pit. We are willing to pay an additional 2% on the material cost to Supplier 2 for the additional capacity. That is, we still pay $9.37 for the 300,000-ton offering quoted by the supplier. Beyond 300,000 tons and up to 500,000 tons, we would pay an additional 2% on the material cost. If the supplier agrees with our proposal, how much can we save on the total cost.

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