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Financial Statement Analysis Project- a Comparative Analysi of the the Hershey Company & Tootsie Roll Industries

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Submitted By tgstevens131
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Three Case Study Questions

Trina G. Stevens

trinagstevens@bellsouth.net

Part III of the Course Project for PM598 Nov10 Contract and Project Management

Presented to Instructor Robert Davy of DeVry University

December 5, 2010

RUHLING MANUFACTURING COMPANY QUESTIONS

Question # 1:

Why might negotiation be favored over competitive bidding in certain procurement situations?

A buyer or a procurement section of an organization, or business might choose negotiation over competitive bidding when a project is small, not planned, or an emergency. There are some situations in which a buyer would favor negotiation rather than competitive bidding. For example, when the buyer is contracting for part of the seller’s services rather than a product. Also when there are ambiguities involved with the project. Another reason to use negotiation is when cost and risk cannot be correctly identified early within the project. Negotiation is used a lot when there are new, or unexpected ideas introduced to solve a problem within the project. Negotiation is usually cheaper and quicker than competitive bidding.

Question # 2a:

Considerations of Epsilon's alternative proposal:

a. What is the applicability of a requirements contract from Ruhling’s point of view?

- Assume that Epsilon will still make a profit resulting from economics of long runs and learning curves

The applicability of a requirement contract from Ruhling’s point of view is that they would agree to purchase all its requirements for the specific size motor from Epsilon for twelve months. Also Ruhling could release delivery quantities whenever they decided to and Epsilon would guarantee to meet them in seventy-two hours. Epsilon would also carry ninety days of normal inventory which is 24,000 motors. This all would be done if Epsilon reduced their bid to the lowest one offered.

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