Purchasing Decision Exercise
In class we discussed how companies go about making decisions related to important purchases. One method of making an informed purchasing decision is total value sometimes call life-cycle costing.
You are a sales person for Sherwin-Williams and sell a full line of paints and painting equipment. Most contractors select paint based on cost per square foot of coverage, plus the cost of labor. However sometimes there is a special application and the contract calls in a Sherwin=Williams expert (missionary sales person).
Geoff Miller of Miller Construction has asked you to give him a quote for a very special job. It is an immunology research clinic requiring 7,200 square foot of walls to be painted. It must be low odor and must have anti-microbial properties. These new technology anti -microbial paints only last 3 to 5 years and then lose the anti-microbial properties and need to be recoated.
Below is a summary of the details of the three brands that Miller is considering. Using the concept of life cycle costing, Show that the Sherwin-Williams product is the best value for the final customer. Write a one page FORMAL business letter (NOT AN EMAIL–see below) to Mr. Miller with your recommendation and showing your calculations as to the most cost effective choice.
Sherwin Williams Harmony
Cost per gallon $36
Coverage 350 sq. ft. per gallon
Guaranteed 3 years on anti-microbial properties
Behr Ultra at Home Depot
Cost per gallon $36
Coverage 400 sq. ft. per gallon
Guaranteed 2 years on anti-microbial properties
Glidden DUO at Lowes
Cost per gallon $30
Coverage 250sq. ft. per gallon
Guaranteed 3 years on anti-microbial properties
To earn a grade:
•your letter must be FORMAL format business letter and sent as an attachment via email
•you must CLEARLY show your calculations comparing total costs of each product in a table or spreadsheet
•Misspellings and incorrect grammar will disqualify your letter from credit.