Pacific Health Care

MAJOR FACTS:

With the death of Thurston Howell it left Barney Rubble in charge of the purchasing of supplies for Pacific Hospital and their subsidiaries. With this being an important responsibility, Mr. Rubble needs to make sure that he is making the right decisions regarding the suppliers of X-ray film. His main responsibility is to make sure that he is getting the best price for quality X-Ray film. Another major fact is that Kodak has been the sole supplier for Pacific Healthcare for a long time and this was due to Mr. Howell and the agreement in place. As the Director of Radiology it was with in his power to make this decision. The last major fact is that Kodak as part of their pricing deal agreed to maintain equipment and services at the discounted rate. They would not offer the same package if they were not the sole suppliers.

MAJOR PROBLEMS:

Mr. Howell being the sole authority in charge of making buying decisions is a major flaw. Yes he is the Director of the department, but that does not mean that he is the most knowledgeable regarding the best prices for X-ray film. In addition he should not have had the right to refuse the possibility of other suppliers. Reviewing the additional bids provided it appears that Kodak was the highest and cost the hospital additional dollars. As noted in the major facts that Kodak was willing to do the equipment maintenance and there was also the possibility that the other companies may have considered that also, but was never given the option. Kodak films are considerably more expensive than their competitors and this in turn can cost the hospital major dollars fi it is not rectified.

POSSIBLE SOLUTIONS:

a. With the death of Mr. Howell it left Mr. Rubble in charge to freely explore other options regarding the purchase of X-ray film. Reviewing the current contract he can determine whether or not the current contract is the most beneficial. Is what Kodak offering worth the price that they are presently paying? Mr. Rubble could attempt to negotiate a lower price since there is already a relationship in place and this could be an advantage. The downside is the price that Kodak would be currently offering would be more expensive than the competition.

b. Other options that can be explored is that Mr. Rubble can go with either Kodak or Agfa. They are offering cheaper prices per sheet and this can be an advantage and he cannot go wrong as long as they stay consistent with their pricing. The only way that this would be a disadvantage is if Mr. Rubble cannot get the same deal with either DuPont or Agfa that Mr. Howell had secured with Kodak. Kodak was more expensive, but when you add in the other options that Kodak was willing to offer it leveled out the expenses and this could be an advantage.

c. As an alternative option Mr. Rubble could open up the contract for bid. In the bidding statement he could include all the services that are presently being offered by Kodak. This includes maintenance, equipment and service at the most affordable price. The lowest bid with all the stipulations will get the contract.

d. Advantages speak for themselves. The winner of the contract secures a contract for the length of time specified. The disadvantage could be the length of time that it takes for the bidding process to be completed. In addition it would not have the input of Mr. Howell who has been in charge for some time and has had a reputation.

CHOICE AND RATIONALE:

The ideal situation would be option A. As Mr. Rubble I would stay with Kodak because there

are the industry standard and provide a great deal. Kodak also needs to be made aware that there

are other suppliers that could possibly offer the same. It should also be pointed out that the price

per sheet is also cheaper. Kodak has a long time relationship with Pacific Healthcare and if they

wish to maintain the relationship it may benefit Kodak to lower their prices to remain

competitive. Kodak should be willing to negotiate lower prices to compete in today's business

and make them competitive. Putting the contract up for competition

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