Collier Company

The Collier Company is a large electrical manufacturer. Recently, a new division of the company

was started, and entirely new facilities were required. In equipping the new plant, it was decided

that for certain subassembly operations it would be desirable to have production employees

seated at high stools instead of standing at their work benches. Eight hundred and fifty employees

were to be so seated in the new plant.

After investigating many possible stool designs, the plant engineering department and the

personnel department agreed on a certain style of stool that was easily described to the trade as

"Carter's 816 or equal." Supply management requested bids from most major fabricators of this

type of item, and bids from nine suppliers were received more than ten days before the announced

closing date.

Several days before the final bid date these suppliers started to call the supply manager to

see how they ranked. The supply manager answered their questions honestly with phrases like:

"You are not low bidder, but you are fairly competitive."

"You are not low bidder. You are way out of line."

"You are presently low bidder, but others seem to be revising their bids."

By April 23, the day originally chosen to close bidding, every supplier except supplier C

had submitted at least one revised quotation. (See Exhibit 1.) In most cases, the prices quoted

were substantially below the initial bids.

EXHIBIT 1

UNIT PRICES QUOTED BY SUPPLIERS

Original bid

April 23 bid

May 7 bid

Supplier A $55.92 $41.10 $34.08

Supplier B 44.70 37.50 31.62

Supplier C 39.48 39.48 39.48

Supplier D 45.36 35.88 30.06

Supplier E 43.86 38.58 31.98

Supplier F 38.70* 37.92 29.88*

Supplier G 39.00 35.40* 30.60

Supplier H 42.78 39.60 31.50

Supplier I 48.60 41.34 33.18

*Indicates