CONCLUSION
This is precisely what happened in the case of Bill Simpson's situation earlier today. Total annual usage of the solenoid amounted to $120,000.The total usage of capacitors was $32,000. A new low-cost supplier, B&B, was selected to supply the solenoid component. Mike also agreed to add the capacitor requirements to the deal. The annual total for the combined purchase contract was $150,000 [$100,000 (solenoid) +$50,000 (capacitors)]. The company also will receive a 10 percent rebate at the end of the year.