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nancy, a procurement analyst for General Motors has a number of procurement actions and projects on her desk. Help her complete some of the following analyses regarding cost and pricing.

In the first scenario, Nancy is trying to determine which sort of pricing model the supplier is using for a tail light assembly for a Special Edition Corvette. The quoted suppliers price is $1,615.99 per unit. She suspects that the supplier is most likely using a markup of 18%. Breaking down the supplier quote provides the following information:

Direct Materials $322.00 per unit

Direct Labor $142.00 per unit

Indirect production costs 130% of direct production costs

SG&A 25% of total production costs

1. (2 Points) Using a cost markup pricing model over total costs, what would be the suggested price? Round your answer to the nearest cent.

2. (2 Points) Using a margin pricing model, what would be the suggested price? Round your answer to the nearest cent.

3. (2 Points) Using a rate of return pricing model, and given a total investment by the supplier of $6,750,000 over a one year period with a projected production run of 7000 units, what would be the suggested price? Round your answer to the nearest cent.

4. (1 Point) If Nancy is correct, which pricing model best fits the suppliers quoted price?

In another procurement action, Nancy is deciding on how best to purchase aluminum casings used in maintaining the hydraulic systems that tow Chevrolet Cruz automobiles through the Lordstown manufacturing site. The site historically uses 700 casings annually. The annual inventory carrying cost is $26 per unit and the inventory ordering cost is $175.

A vendor has offered to provide aluminum casings according to the following pricing schedule:

1 to 249 casings $265 each

250 to 499 casings $259 each

500 casings and above $256 each

5. (3 Points) Using the EOQ Quantity Discount methodology, what amount of casings should Nancy order?

You must show your work!

A subsidiary of General Motors buys copper ingots which it then makes into specialty tubing for engine cooling systems. Nancy has received the following quote from a supplier of copper ingots used in the production of copper pipes and tubing within your firm:

Number of Units per Order	1	2	5	10	15
Quoted Price/Unit	$2300	$1900	$1600	$1300	$1225

Perform a Quantity Discount Analysis.

6. (2 Points) Perform the necessary calculations necessary to complete a QDA table. ( Im looking for your table here).

7. (3 Points) What is the highest number of units to order if Nancy wants to receive the lowest incremental cost between quantities?

8. (3 Points) Nancy will purchase ingots in lots of 15 ingots if she can get the price/unit for each additional ingot over 10 (the incremental cost) to be no more than $950 per ingot. What would she have to negotiate the price point to be to achieve that?

GM has another vendor that is just starting to make a new variety of fastener for undercarriage components. Nancy placed an initial order with that vendor for 100 pieces. Here is the cost data:

Direct Material Costs $100/unit

Direct Labor Costs $50/unit (5 hours/unit at $10/hour labor rate)

Overhead Costs 150% of direct labor

Total Cost of Goods Sold/unit ?

Vendors Profit (20% of total)/unit ?

9. (2 Points) Calculate the current Total Quoted price per unit.

Nancy believes the vendors workforce will become more efficient as they gain experience and the vendor takes on more volume. Shed like to ask for a price reduction.

10. (2 Points) Calculate how many labor hours (total labor hours) would be required for a volume of 200 units assuming a learning curve of 85%.

11. (2 Points) Calculate how many labor hours (total labor hours) would be required for volumes of 400 and 800 units respectively assuming a learning curve of 85%. Do not round numbers in your calculation.

12. (3 Points) Nancy wants to place an order for an additional 700 pieces (bringing the total order to 800 units). What is the labor dollar cost per unit for these next 700 pieces? Round your final answer to the closest cent.

13. (3 Points) What is the new total price per unit for the next 700 pieces assuming this learning curve is met? Round your final answer to the closest cent.

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