Case 11 3 city of granston answers

Your budget must include a one page explanation on the importance of a materials supply budget and the impact of the budget on the supply organization. The contract had to be signed within a week. There had been a steady population increase over the past two decades.

Case 11 3 city of granston answers

Your budget must include a one page explanation on the importance of a materials supply budget and the impact of the budget on the supply organization.

Case 11 3 city of granston answers

The contract had to be signed within a week. There had been a steady population increase over the past two decades.

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The purchasing department consisted of three support staff, six buyers, and a manager. City budgets were usually adjusted annually to cover the cost of inflation. The local mineral aggregate sector consisted of three major extracting and processing companies—Lamoulin, Richmond, and Atlantic—and several smaller ones.

Lamoulin and Atlantic owned the two dominant concrete production facilities. The local aggregate industry was near capacity with major construction projects underway and increased demand in export markets.

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If the parties agreed, a two-year option was available, with prices being subject to inflation. Lamoulin and Richmond were the only two bidders and each received about half of the total contract with each bidder quoting for separate components of the total aggregates contract see Exhibit 1.

Both wanted an increase of 2 percent to cover the increased cost of doing business. This clause allowed the supplier an annual price increase based on the change in the CPI.

Because of a significant slump in the local construction industry, both suppliers had voluntarily lowered their prices by about 3 percent after year one of the contract. However, in the past few months the local economy had shown signs of revival. Thus, he developed a representative basket of city requirements for which the amount used appeared to vary little from year to year.

For this basket he asked his assistant to develop a price index, going back three years, starting with a base of Since a significant number of existing city contracts were also of the multiyear, extendable type, he believed his actions on the aggregate contract might have a bearing on how to deal with other requirements.

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Case 11 3 city of granston answers

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