Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

Choosing suppliers for JIT purchasing

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21.16 Choosing suppliers for JIT purchasing
. (30 min)
1
Solution Exhibit 21.16 presents the costs to Manraj if he purchases the paper from Papyrus and if he purchases the paper from Suffolk Leaves. On the basis of the financial numbers, it costs Manraj €44,850 less to purchase the paper from Papyrus.
2
Other factors that Manraj should consider before choosing a supplier are
a
The supplier’s flexibility to supply different types of paper that Manraj may need from time to time.
b
The supplier’s ability to deliver printing paper at short notice if Manraj needs supplies urgently.

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
c
The emphasis that the supplier places on continuous improvement in costs, quality and delivery.
d
Manraj’s confidence in building a long-run relationship with the supplier based on trust and the willingness to share confidential information with each other.
e
Manraj’s confidence in his own estimates and the need to perform sensitivity analysis.

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