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Consider"Interest earned during credit period" during "Weiging and Ranking"

Dear SRM Experts,

In "Weighting and Ranking", for the comparison of bids,

suppose if we have to consider the interest gained during the credit period given by the supplier, could there be any solution?

Example:

If the supplier1 has quoted 100600 INR with u201C15 days credit as payment terms", then effective price would be 100393.29

If the supplier2 has quoted 100700 INR with "30 days credit as payment terms", then effective price would be 100286.16

Calculation Details:

Assumed Bank Interest, which purchaser's company would gain by the deiayed payment due to credit period offered by the supplier is 5%

Supplier1

Quoted Price 100,600.00

Credit Period in Payment Terms 15.00

Interest earned per day 13.78

Interest earned in Credit Period 206.71

Effective Price Considering the Interest 100,393.29

Supplier2

Quoted Price 100,700.00

Credit Period in Payment Terms 30.00

Interest earned per day 13.79

Interest earned in Credit Period 413.84

Effective Price Considering the Interest 100,286.16

Conclusion: Supplier2 is better though he has quoted more!

With Thanks and Regards,

Ganapathi

Former Member

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