Procurement options for Sulfa externally

Locally buying it Rs. 2400

Importing it Rs. 2496 28 X 75 X 1.16 + 60

Thus, maximum Division B would be willing to pay is Rs. 2,400 by buying it locally

If Division B makes an offer of Rs. 2,200 to Division A

Division B will clearly benefit to the extent of 300 Rs. Lakhs

What is the implication for Division A?

Contribution gain 675 Rs. Lakhs

Contribution loss -375 Rs. Lakhs

Net Gain for Division A 300 Rs. Lakhs

Clear Win-win for both divisions and the company as a whole !!