The current supplier or switch to the upstart rival

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Cornell Cookery Inc. (CCI) needs some metallic pan liners for its products. The current supplier accepts large orders but is only able to supply 5000 liners/day. The current supplier charges 0.47 $/liner. CCI plans an annual demand of 1,000,000 units. They are able to successfully produce this number of product during the 250 operating days. Whenever CCI places an order with any vendor, they typically incur a 128 $/order cost. Carrying cost is typically estimated at 4% of the liner unit cost per year. An upstart supplier is offering the liners to you at a substantial price discount at 0.445 $/liner with the caveat that the minimum order quantity be 100,000 liners with essentially no maximum limit. Due to a recent investment in new technology, they will be able to deliver up to 600,000 liners in a day if needed. Should CCI stay with the current supplier or switch to the upstart rival?

Reference no: EM132121779

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