When tenders are invited for a store quotations were received as under...
Supplier Comparison
When evaluating suppliers A and B for the procurement of 5000 units monthly, we need to calculate the effective costs including discounts and transport charges.
Supplier A
- Rate: ₹2.00 per unit
- Trade Discount: 10%
- Cash Discount: 5% (if paid within 14 days)
- Transport Charges: ₹1 per 100 units
Calculations for Supplier A
- Initial Cost: 5000 units × ₹2.00 = ₹10,000
- Trade Discount: 10% of ₹10,000 = ₹1,000
- Cost after Trade Discount: ₹10,000 - ₹1,000 = ₹9,000
- Cash Discount: 5% of ₹9,000 = ₹450
- Final Cost after Discounts: ₹9,000 - ₹450 = ₹8,550
- Transport Charges: (5000 units / 100) × ₹1 = ₹50
- Total Cost: ₹8,550 + ₹50 = ₹8,600
Supplier B
- Rate: ₹1.80 for the first 2000 units; ₹1.60 for orders above 2000 units
- Transport Charges: ₹N/A (not specified)
Calculations for Supplier B
- Cost for 2000 units: 2000 units × ₹1.80 = ₹3,600
- Cost for remaining 3000 units: 3000 units × ₹1.60 = ₹4,800
- Total Cost: ₹3,600 + ₹4,800 = ₹8,400
Final Comparison
- Supplier A Total Cost: ₹8,600
- Supplier B Total Cost: ₹8,400
Recommendation
Based on the calculations, Supplier B offers a lower total cost for 5000 units. Therefore, it would be prudent to issue a purchase order to Supplier B, considering the effective rates and discounts.