Question

The number at the bottom right of each supplier’s box shows the portion of Boeing’s costs in thelast year that went to that supplier. The number at the bottom right of each customer’s boxshows the portion of the customer’s capital expenditure (money spent in high value purchases)in the last year that went to Boeing. For which company shown was Boeing the primary plansupplier in the last year?

Answer 1

Answer:

both

• United Continental with a capital expenditure of 60.68%
• Southwest Airlines with a capital expenditure of 51.38%

Explanation:

Since United Continental's purchases of Boeing planes represent over 60% of their capital expenditures, this means that Boeing had to be the primary plane supplier. Even if the company purchased planes form other manufacturer, their purchases would not even be 40% of the company's purchases.

The same applies to Southwest Airlines, even though the purchases from Boeing are a little lower, they are still over 51%. This means the company could not have spent more money on purchasing planes from another company. The maximum purchase from another airplane manufacturer would have been less than 49% at most.

Besides the previous analysis, you must also consider that the company spends money on things besides airplanes, e.g. new training facilities, equipment, computer software, other vehicles, etc.