Thesis/Capstone
Publication Date
Authored by
Topic(s) Covered:
  • Case Study
  • Outsourcing
  • Product Development
  • Simulation
  • Sourcing
Abstract

As the recession and global competition threaten profitability, firms are increasingly turning to their procurement function of the supply chain to achieve significant cost reductions and maintain a competitive edge. When procuring unique, highly-engineered components, the price is often negotiated with suppliers. Our project explored ways to estimate a procured product’s price, or should-cost, to limit conflicts that arise between firms and their suppliers during price negotiations and to ensure a fair price. The procurement manager must maintain a delicate balance between pushing suppliers too much on pricing and maintaining a collaborative supply chain relationship. Most traditional costing techniques are expensive and time consuming. The tool we developed in our thesis uses aggregate industry data from the Census Bureau and our approach allows this simple data to be scaled to quickly estimate the should-cost of numerous products.

Authors: Clayton M. Mealer and Sung Hwan Park
Advisor: Dr. Shardul Phadnis