BIDS

WEST PAPER
$430
COMPANY

EIRE PAPER $432

THOMPSON DIVISION
$480
 BIDS THOMPSON DIVISION $480
Thompson would probably buy its liner board and corrugating
Medium from Southern Division and complete the rest of the
work in its division

NORTHERN
SOUTHERN DIVISION THOMPSON DIVISION
DIVISION

Cost to Thompson: 70% of $400 + 30% $ 400 THOMPSON DIVISION

(liner and (Out of Selling Price $480.00
corrugating pocket cost
material from
southern
to THOMPSON: COSTS $120.00
Thompson)
division)
SOUTHERN: PRICE $280.00
COSTS (60%) $168.00
CONTRIBUTION $112.00
OUT OF THE POCKET COST TO BIRCH $288.00
 BIDS EIRE PAPER $432

Eire Paper bought its outside linerboard (from Southern Division)

with the special printing (from Thompson Division) from Birch but
supplied its own inside liner and corrugating medium

EIRE PAPER INC.

SELLING PRICE $432.00
THOMPSON PRICE $30.00
COSTS $25.00
CONTRIBUTION $5.00
SOUTHERN PRICE $90.00
COSTS (60%) $54.00
CONTRIBUTION $36.00

OUT OF THE POCKET COST FOR BIRCH $391.00

BIDS COMPARISION
SUPPLIERS
OUT OF THE POCKET COST TO: WEST PAPER EIRE PAPER INC. THOMPSON
COMPANY DIVISION

NORTHERN DIVISION $430.00 $432.00 $480.00

OVERALL COMPANY $430.00 $391.00 $288.00

As each division is judged independently on the basis of its profit and ROI, Northern Division would
Probably opt to obtain the box from West Paper company as it maximizes its profit