Price Estimation Model Using Factor Analysis in Procurement

Abstract

Procurement as a vital sector for cost efficient of a company must negotiate with vendors to get the best price for procuring assets and services for a company. Part of negotiation is creating price estimation by a purchaser. Price estimation factors are debatable for procurement experts. This research aims to determine dominant factors for price estimation in a procurement and creating a model based on the factor especially lease asset procuring. Leasing price estimation factor is never yet on the research. In addition, the research consider factors from previous research on price estimation and add novelty factors as a consideration such as vendor performance rating, quantity order, and tenancy of assets . A confirmatory factor analysis is conducted in this study, because some factors taken from research previously and additional factors from some researchers but not yet be determinant of estimation factor. This confirmatory factor analysis need to test what indicators have been grouped according to latent variables and find dominant factors can be considered for the price estimation model. The confirmatory factor analysis results shows that in price estimation model in leasing are location, amount of competitor, and quantity order grouped as one model factor predictor.