BACKGROUND Mr.Travis, the supply manager at Carter Systems Canada, was responsible for the purchase of the GMT-680 housing assembly. The GM-680 housing assembly was the major component part for automobile seat warmers for the GM luxury product line. Seat and steering wheel warming technology is complex and the manufacturing process is wrought with quality problems. It is not unusual to receive a sourcing shipment with a yield of 70 percent good housing assemblies The source of the quality variation was traced to the numerous engineering changes that were sub by the auto manufacturers. In other words, each new housing assembly pur ed chase represented a new design. Mr Travis found it useful, therefore, whenever he was required to issue a request for quote(RFO) for housing assemblies, to make an estimate of the probable cost of the item from historical costs of similar equipment and from his experience with previous cost-adjusted engineering changes He would estimate the new housings by adjusting the previous housing assertibly ci with the new design estimated costs. This analytical approach required Mr Travis to use his engineering and business school skills. This way he was well prepared to better evaluate the supplier quotes This approach could also will result in more ef fective negotuation sessions with successful suppliers Mr Travis determued the change in materals costs by analyzing the engineering changes see Table C9.1.