Business
Business, 21.04.2021 01:00, traphard979

FirstPart is considering two suppliers, ABCPart and XYZPart, to purchase its MRO supplies. ABCPart sells all of its products with a 5% commission tacked on top of the price of the product (not including shipping). XYZPart's pricing is based on a subscription fee of $10 million that must be paid up front for a two-year period and a commission of 1% on each transaction's prodouct price. FirstPart spends about $150 million on MRO supplies each year. However, there is a 30% chance that spending will drop by 10%. The second year, there is a 50% chance that the spending level will stay where it was in the first year and a 50% chance that it will drop by another 15%. FirstPart uses a discount rate of 20%. Assume all costs are incurred at the beginning of each year (so Year 1 costs are incurred now and Year 2 costs are incurred in a year). FirstPart should buy from which suppliers for its parts

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FirstPart is considering two suppliers, ABCPart and XYZPart, to purchase its MRO supplies. ABCPart s...

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