Case 7-1: Case Study Paper
On:
Great Western Bank
I. PROBLEM STATEMENT:
The Great Western Bank of San Diego placed an order of 12 special purpose accounting machines with the Data Max Corporation of Cincinnati, OH. Great Western Bank and Data Max, both agreed to a firm-fixed price of $9,500 per unit and FOB the shipping point. The purchasing manager of the bank designated a particular carrier (yellow freight) and Data Max returned the signed acknowledgement without making any changes to the terms and conditions.
Great Western Bank paid the invoice in full on the order completion to avail 2% discount. The Bank did check the invoice but did not pay attention on the shipping details since they assumed that Data
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But in my opinion that is not a valid reason. Data Max never wanted discount or wanted to negotiate on the order amount. It was Data Max who first sent the invoice to the Bank and offered them 2% discount. The bank paid the invoice thinking it is 2% discount for paying early and not because of changed shipping carrier.
The primary objectives of the buyer (Great Western Bank) are to get a refund for the loss. Right now the bank has paid for the machines and will never get to use it since they are all damaged. So it is important for the bank to get refund for the money which they paid. Filing a claim is also required by the bank to get back the money or the machines.
Data Max knows that they are wrong but still they are not ready to accept that they are at a fault. They still want Great Western Bank to file a claim with the truck line.
IV. ALTERNATIVES:
As a staff analyst, I think that there are many alternatives present which can save the Bank from a huge loss. Actually in this dispute I feel that Bank is right because they made it clear in the purchase order that the machines needs to be shipped through Yellow Freight and also paid the invoice before time as per their custom. But still the carrier was changed by Data Max without asking or informing the bank.
In my opinion, the alternatives which the bank can pursue include, firstly, filing a claim with
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