Introduction
Sabor Inc. was a company located in Cleveland, Ohio and produced the best quality of heating units air-conditioning for both consumer and industrial use. In its late years, the company sold air filtration, which was just add-ons, and air humidification units. With the invention of marconil, air filtration became part of the major company sales. Marconil, however, started to decrease in mid-April and Ray Soles, vice president in the supply department, became concerned. Ray had to take time to look into the viability of signing the long-term contract as suggested by his suppliers.
Company Background
In the past decades Sabor produced air-filtration as add-ons which, could only gunner seven percent of the company’s total sales. The sale of air filtration had a significant increase when marconil came into place. Marconil had very interesting and unique features that attracted many industries. The larger population became sensitive to air quality, and as many people became vulnerable to asthma, Sabors’ new filters became very general. The effort to do sales forecasting organized by the marketing department was not impressive at all. For three consecutive years, the sales forecasted were inaccurate. Sabor Inc had three major suppliers of marconil; Bilt chemical was the first supplier. Even though Bilt was innovative and diversified producer of marconil, Roy felt insecure to have only one supplier. He then looked for Warton Inc. his second supplier who also had diversified production of marconil materials under license. Still Roy had to bring in the third supply, G.K. specialties, which was relatively smaller than the first two. The three suppliers proposed for long-term contracts claiming possible future shortage in marconil. Roy found out that three components for marconil were by products of a stable industry. He also had that cost efficient substitute of marconil was to emerge. The proposal for long-term commitments from his current suppliers may not be genuine.
