Case: Carter Systems Canada, Inc.

Questions:

How does the cost breakdown of the previous orders and Mr. Travis’ estimate differ? What can be inferred about the nature of the new product from the cost breakdown estimation?

How can each item of a cost breakdown be interpreted in regard to each other and the quoted company? Of all the cost breakdown items, which items are more important and open to negotiation?

What factors might have caused the variance between D & G Technologies’ quotation and Mr. Travis’ estimate? Between D & G Technologies’ quotation and Bell Systems’ quotation? Between SOT and the two lowest quotes?

In light of your answer to the above question, what conclusions can you draw concerning (a) the reliability and usefulness of cost estimates made by the buyer, and (b) the value to be gained from the comparison of one supplier’s quotation with the others?