CPT incorporated is a local manufacturer of conveyor systems. Last year, CPT sold over $2 million worth of conveyor systems that netted the company $100,000 in profits. Raw materials and labor are CPT's biggest expenses. Spending on structural steel alone amounted to over $500,000, or 25 percent of total sales. In an effort to reduce costs, CPT now uses an online procurement procedure that is best described as a first-price, sealed-bid auction. The bidders in these auctions utilize the steel for a wide variety of purposes, ranging from art to skyscrapers. This suggests that bidders value the steel independently, although it is perceived that bidder valuations are evenly distributed between $5,000 and $25,000. You are the purchasing manager at CPT and are bidding on three tons of six-inch hot-rolled channel steel against 6 other bidders. Your company values the three tons of channel steel at $21,000. What is your optimal bid?
CPT incorporated is a local manufacturer of conveyor systems. Last year, CPT sold over $2 million worth of conveyor systems that netted the company $100,000 in profits. Raw materials and labor are CPT's biggest expenses. Spending on structural steel alone amounted to over $500,000, or 25 percent of total sales. In an effort to reduce costs, CPT now uses an online procurement procedure that is best described as a first-price, sealed-bid auction. The bidders in these auctions utilize the steel for a wide variety of purposes, ranging from art to skyscrapers. This suggests that bidders value the steel independently, although it is perceived that bidder valuations are evenly distributed between $5,000 and $25,000. You are the purchasing manager at CPT and are bidding on three tons of six-inch hot-rolled channel steel against 6 other bidders. Your company values the three tons of channel steel at $21,000. What is your optimal bid?
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter2: The Purchasing Process
Section: Chapter Questions
Problem 1GPE
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![CPT incorporated is a local manufacturer of conveyor systems. Last year, CPT sold over $2 million worth of conveyor systems that
netted the company $100,000 in profits. Raw materials and labor are CPT's biggest expenses. Spending on structural steel alone
amounted to over $500,000, or 25 percent of total sales. In an effort to reduce costs, CPT now uses an online procurement procedure
that is best described as a first-price, sealed-bid auction. The bidders in these auctions utilize the steel for a wide variety of purposes,
ranging from art to skyscrapers. This suggests that bidders value the steel independently, although it is perceived that bidder
valuations are evenly distributed between $5,000 and $25,000.
You are the purchasing manager at CPT and are bidding on three tons of six-inch hot-rolled channel steel against 6 other bidders. Your
company values the three tons of channel steel at $21,000. What is your optimal bid?
Instructions: Enter your response rounded to the nearest penny (two decimal places).
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fada6dc06-ec53-48ce-8e70-8087b4c6a6e1%2F8bf0cc93-9230-46b6-8d54-4e046c879ce8%2F4tc8mji_processed.jpeg&w=3840&q=75)
Transcribed Image Text:CPT incorporated is a local manufacturer of conveyor systems. Last year, CPT sold over $2 million worth of conveyor systems that
netted the company $100,000 in profits. Raw materials and labor are CPT's biggest expenses. Spending on structural steel alone
amounted to over $500,000, or 25 percent of total sales. In an effort to reduce costs, CPT now uses an online procurement procedure
that is best described as a first-price, sealed-bid auction. The bidders in these auctions utilize the steel for a wide variety of purposes,
ranging from art to skyscrapers. This suggests that bidders value the steel independently, although it is perceived that bidder
valuations are evenly distributed between $5,000 and $25,000.
You are the purchasing manager at CPT and are bidding on three tons of six-inch hot-rolled channel steel against 6 other bidders. Your
company values the three tons of channel steel at $21,000. What is your optimal bid?
Instructions: Enter your response rounded to the nearest penny (two decimal places).
$
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