1. What is your estimated cost for the gatherer chain?

What price do you think Deere should be paying

Saunders for this product?

The estimated cos for the gatherer chain is $22.67.

(24.12/13.12=1.38)
(1.38x12.33=$22.67).

Deere should be paying $20.10 to Saunders for Gatherer chain.

Estimated Cost to price ratio
13.12/24.12= 54%
Thus the profit margin will be 46%
Therefore earlier estimated cost to price ratio 54% + current cost price ratio 80%/2
(54+80)/2=67%
Thus price to be paid is
67%*30=20.10

2. How would you handle negotiations with Wayne Saunders? How would you use the cost data from
your analysis in the negotiation?

Both the parties need to have a transparent operations in order to avoid any suspicions, the cost margin
related data should be used for the negotiation so that the talks are done based on facts and both of them
know how much gains they are getting. I would directly show Saunders how much profit margin my
company is having right now and how this can negatively affect both the business. Then the desired rate
will be given to match the desired profit margin ratio and negotiations can be done to reach the final
outcome.