CPT incorporated is a local manufacturer of conveyor systems. Last year, CPT sold over $2 million worth of conveyor systems that netted the company $100,000 in profits. Raw materials and labor are CPT's biggest expenses. Spending on structural steel alone amounted to over $500,000, or 25 percent of total sales. In an effort to reduce costs, CPT now uses an online procurement procedure that is best described as a first-price, sealed-bid auction. The bidders in these auctions utilize the steel for a wide variety of purposes, ranging from art to skyscrapers. This suggests that bidders value the steel independently, although it is perceived that bidder valuations are evenly distributed between $5,000 and $25,000. You are the purchasing manager at CPT and are bidding on three tons of six-inch hot-rolled channel steel against 6 other bidders. Your company values the three tons of channel steel at $21,000. What is your optimal bid?

CPT incorporated is a local manufacturer of conveyor systems. Last year, CPT sold over $2 million worth of conveyor systems that netted the company $100,000 in profits. Raw materials and labor are CPT's biggest expenses. Spending on structural steel alone amounted to over $500,000, or 25 percent of total sales. In an effort to reduce costs, CPT now uses an online procurement procedure that is best described as a first-price, sealed-bid auction. The bidders in these auctions utilize the steel for a wide variety of purposes, ranging from art to skyscrapers. This suggests that bidders value the steel independently, although it is perceived that bidder valuations are evenly distributed between $5,000 and $25,000. You are the purchasing manager at CPT and are bidding on three tons of six-inch hot-rolled channel steel against 6 other bidders. Your company values the three tons of channel steel at $21,000. What is your optimal bid?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter2: The Purchasing Process

Section: Chapter Questions

Problem 1GPE

See similar textbooks

Similar questions

Good morning please help me with this question When you read the above , it becomes clear a well-defined procurement strategy and good inventory management can deliver supply chain success and could ultimately lead to profitability and growth. In a report, you are required to critique the strategic importance of procurement and the roles of inventory in the supply chain (balancing supply and demand and Buffering against uncertainties) in relation to Apple. please add reference if you can thank you
What criteria should organizations use to choose mobile device vendors for procurement?
a) Explain five (5) ways in which electronic systems can be used in the sourcing process.b) Describe five (5) ways in which added value may be created for a buying organization through an effective sourcing process c) With examples, explain the various forms of unethical behavior practiced in the procurement profession.
The selection of a supplier establishes the crucial issues that will determine whether the organization's procurementprocess is successful or unsuccessful. Critically examine how Food Lovers (fresh fruit and vegetables, meat supermarket) will detect which supplier is able to supply its requirements satisfactorily, both strategically and operationally in the short and long term. Kindly use examples to explain answers more in detail
Evaluate the cost-effectiveness and potential benefits of implementing a Mobile Device as a Service (MDaaS) approach compared to traditional procurement methods, especially for large enterprises.
Consider the four stages of the development of the procurement function identified by Reck and Long. State, with reasons, the stage reached by procurement in your organisation.
When carrying out procurement activities, a number of things can influence the way you conduct your procurements. Enterprise Environmental factors are some of those things that can influence your procurement activities in varying degrees. Explain four of these factors that can affect your procurement process. Define “control procurements” and identify the process groups where this is part of.
What is the purpose of the conduct procurement process? Describe the procedure in detail.
What is Value for Money (VfM) in the context of procurement? Discuss five (5) of the key steps you will take to ensure the achievement of VfM for procurement in your organization.
Explain the increasing importance of the procurement function.
Maximizing the effectiveness of the procurement process is a major goal of an organization. What steps can be taken to help ensure that the process is maximized?
At the Clorox Company, many new products are developed in conjunction with supply partners. When the company wanted to develop a line of surface-protecting cleaning products, it partnered with specialty chemical companies to develop products that could protect surfaces as sensitive as Teﬂon. Discuss identification stage of procurement with reference to this scenario. Identification Stage of procurement: Identifying Goods or Services needed is the 1st stage of procurement. Before the company can have something procured, there ha Do you think the role of supply partners as Earlier Supplier Involvement (ESI)? Mention the keynotes from ESI that can be generalized to any buying organization.