A
CHIPS AHOY
Confidential Information
You represent Chips Ahoy, a manufacturer of semiconductors (also known as
computer chips). One of the major chips which you manufacture is the "9090" which is
used in a wide variety of personal computers including the "Future", which is made by
Faster Computers. The 9090 chip is also made by several other semiconductor
companies. The Future has been the surprise success story of the current sales
season and is rapidly becoming one of the best selling computers in the country.
Due to an error by your former vice president of manufacturing, Chips Ahoy,
which usually makes only enough chips to meet its current orders has 100,000 extra
9090s. The 9090 chips are filling up your warehouse space and are making it
impossible for you to keep up with your manufacturing of other specialized chips that
are now in heavy demand. The 9090s should begin to sell heavily again in six months,
but you are desperate to have them out of your warehouse as soon as possible. You
also do not want the computer industry to discover the error that was made.
You can easily manufacture up to 2,000 of the 9090 chips per week. By adding
a second work shift, at somewhat higher cost, you could double this production to 4,000
chips per week.
The current market price for 9090 chips, which are usually sold in lots of 100, is
in the $5.00 to $7.00 per chip range. Most firms that manufacture the chips have a cost
of $3.50-4.00 per chip, but, because of the large quantity you made, your cost for these
chips was only $3.00. The president of Chips Ahoy has said that you can sell the 9090
chips at any price, down to your cost of $3 per chip, because of the problems the chips
are creating in the warehouse. In view of your problems, the faster you can get the
chips out of the warehouse the better, but in any case you would like them all gone
within 6 weeks if possible. You would prefer to have the chips picked up at your
warehouse by the buyer, but, if necessary, you can have the chips packed and
delivered at a cost of 5 cents per chip.
Your company has been approached by Faster Computers, the manufacturer of
the Future computer, with an inquiry about the availability of 9090 chips. Neither you, nor
Chips Ahoy, have ever dealt with this company before. A meeting has been scheduled
between you and the representatives of Faster Computers to discuss their inquiry.
Created by James B. Boskey; modified by John Barkai
B
FASTER COMPUTERS
Confidential Information
You represent Faster Computers, the manufacturer of the "Future"
computer, which has been the hit new product of the current computer sales
season. The Future is based on the "9090" chip (a semiconductor computer
chip). You had hoped for a successful introduction of your new computer, but
sales have been beyond your wildest dreams.
Because sales have been higher than you anticipated, you do not have
enough chips to build all the computers that you can sell right now. If you could
get more chips, you could sell more computers right now. You had planned to
purchase the 9090 chips from any of several manufacturers. The general market
price for the 9090 chips when bought in quantities of 100 or more is $5 to $7 per
chip. There is, however, currently a severe shortage of chips, and, while the
price has not risen, your usual suppliers cannot provide you with more than 1000
chips per month. American Semiconductor, from whom you have purchased in
the past, tells you they can increase production to supply you with as many chips
as you want, but that they cannot increase their production for at least six
months.
You have an immediate need for 60,000 chips for current orders. You
could, even purchase up to 100,000 chips which would allow you 40,000 for
future computers. You would keep the remaining 40,000 in temporary storage
until they are used (in about 4 months). You expect that you will continue to use
the 9090 chip in the Future at this rate for at least two years.
You are aware that the cost of manufacturing the 9090 chip is usually
about $3.50 to $4.00 per chip. Because of the immediate need for 9090 chips,
the president of Faster Computers has agreed to pay up to $10 per chip. Of
course your company would like to pay as little as possible for the chips. You
would like to have the chips packed and shipped by the seller, but, if necessary,
you can arrange to pick them up. You would like delivery to be as soon as
possible, but you want 60,000 chips no later than two weeks from today.
You have approached Chips Ahoy, who manufactures the 9090 chip, to try
to buy 9090 chips from them. You have never dealt with them before, but you
know that they are one of the larger chip manufacturers in the country. A meeting
has been arranged to discuss a possible deal.
Created by James B. Boskey; modified by John Barkai
Created by James B. Boskey; modified by John Barkai