Interiors Inc., a privately held enterprise, has a subcontract to produce overhead storage bins for a Bombardier airplane. Although GL was a low bidder, Bombardier was reluctant to award the business to GL, a newcomer to this kind of activity. Consequently, GL assured Bombardier of its financial strength by submitting its audited financial statements. Moreover, GL agreed to a penalty clause of $5,000 per day to be paid by GL for each day of late delivery for whatever reason.
Leesa Martinson, the GL purchasing agent, is responsible for acquiring materials and parts in time to meet production schedules. She placed an order with a GL supplier for a critical manufactured component. The supplier, who had a reliable record for meeting schedules, gave Martinson an acceptable delivery date. Martinson checked up several times and was assured that the component would arrive at GL on schedule.
On the date specified by the supplier for shipment to GL, Martinson was informed that the component had been damaged during final inspection. It was delivered 10 days late. Martinson had allowed four extra days for possible delays, but GL was six days late in delivering to Boeing and so had to pay a penalty of $30,000.
What department should bear the penalty? Why?
