Instructions for Using the Simulations


There are five simulations. For each one the steps are as follows:

1. Choose a negotiating partner.

2. Choose who will take the part of the buyer. Give a copy of the general information and a copy of the buyer confidential information to the person playing the role of the buyer.

3. Choose who will take the part of the seller. Give a copy of the general information and a copy of the seller confidential information to the person playing the role of the seller.

4. Conduct the negotiation.

5. Deadlock is an allowed outcome if you find that you cannot reach agreement.

6. When you are finished, give your partner a copy of your confidential information and you may now read their confidential information.

7. Debrief the negotiation using the Debriefing Instructions.

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Simulation Number 1

General Information Available to All Parties


Barstow Metals operates a mill that produces high nickel alloy ingots. Each year, the mill purchases approximately $500,000 worth of the following items.

∙ Bar conditioning wheels
∙ Scotch Brite wheels
∙ Grinding belts
∙ Cutoff wheels
∙ Steel shot and grit
∙ MRO products
∙ Products for the mill’s laboratories

General Grinding and Cutting Supply (GGCS) has approximately $30 million in total revenue and has been doing business with Barstow for over 25 years. Last year its sales to Barstow of the above items equaled $150,000, or approximately 30% of Barstow’s total purchases. Barstow purchases these items in large quantities several times each year, and then inventories the products until it is necessary to reorder them.

GGCS has made a proposal to supply 100% of Barstow’s needs for the above items as follows:

∙ Inventory - GGCS will be totally responsible for managing Barstow’s inventory of all the above items.

∙ Consignment - GGCS will, at its expense, obtain all the above items and keep them in stock with sufficient buffer stock to assure JIT availability to Barstow. Barstow will be billed on a bi-weekly basis only as items are actually utilized.

∙ Safety Seminars - GGCS will supply Barstow with OSHA-certified safety seminars on appropriate topics to be mutually agreed upon.

∙ Product Testing - GGCS will keep Barstow on the cutting edge and will regularly make available to Barstow new and improved products for testing and evaluation.

∙ Emergency Delivery - 24 hour emergency delivery

∙ Billing - Billing will be on a single biweekly invoice for all items drawn from consignment. Special orders under $2,000 will be paid through a credit card arrangement that GGCS will establish for Barstow, and therefore no purchase order need be generated for those purchases.

GGCS has offered to provide all of the above products and services at actual manufacturer’s cost plus 24%. Cost is defined as the manufacturer’s actual billed price to GGCS and is subject to Barstow’s audit. Barstow has indicated an interest in discussing this proposal further but has also indicated that the price of cost plus 24% seems quite high. Both parties will be meeting shortly to discuss the possibility of entering into a contract.