Cumberland Metal Industries (CMI) should price their new cushioning pads at $900 to maximize profit. CMI should begin by targeting the customers that will find the greatest value in the product an pay the most. This allow the company to maximize unit contribution, and leave available options for dealing with future competition and sales challenges.
Customer
CMI estimates a potential customer base of 19,500 to 26,000 actively operating pile drivers in the United States. Currently the marketplace approaches cushion pads as an afterthought; pads are available for $2-$10 depending on size. The pads are produced by various local shops; CMI will be the first major industrial producer in the market.
The introduction of a new and more
…show more content…
Using manufacturing cost of $148.12 the product would have to sell for at least $207.
The option to invest $50,000 for permanent tooling Price of the substitute
Asbestos pads or a combination of aluminum and micarta are the substitute to CMI's cushion pads. Asbestos is cheap and readily available.
At this point two customer tests of the product have been conducted one by Corelick and another by Fazio Construction. These exercises served not only as product tests but produced a good comparison to asbestos pads. There are various factors to consider in determining the true cost of each pad:
The feet driven per hour using the pad (contractors are paid by the job, therefore the more feet per hour the better)
The amount of time a pad can be used (the longer a pad lasts, the less pads are used, less time is lost by stopping work to change pads)
The amount of time needed to change the pads (when pads are changed work must be stopped, shorting the amount of time needed to change is preferred)
The cost of the pads per set ($ cost per set)
Colerick (15,000 total feet.) Fazio Asbestos CMI Asbestos CMI
Feet driven per hour 150 200 160 200
Number of sets required 20 1 50 1
Number of pads per set 24 6 12 5
Time required to change per set 20 min. 4 min. 20 min. 4 min.
Cost per set $50 N/A $40 N/A
From this information we can draw several conclusions:
CMI Pads allow 30% more feet per hour than
It is used to determine the physician's work with time it took place to perform the services, technical skills, and physical effort, mental effort and judgement, and stress that has a potential
CMI was first manufacturer for CM pads, there was no direct competition and no available selling price in the market that CMI can take reference to. In view of that, CMI could use two test results of Kendrick and Corey to determine the economic value of CM pads. According to the Appendix I, the average economic value of CMI pad was 3,304. This value had taken into account of less CM pads required per job and the cost saving in equipment and labor . But the value to the customer should be higher due to some intangible advantage, for examples, lower accident claim as fewer set changes required for CM pads. Besides, lower health claim as CM pad contained non-toxic material. In order to gain the market share for this new product, we would recommend CMI to set the price of CMI pad around 85% of economic value, saying 2,805, promote to the market that it was much cheaper to use CM pads with superior performance and cost efficiency. Besides, different discounts can be granted to the customers depend on the length of the contracts signed and volume of the pads purchased, ranging from 10% to 25%.
Asbestos Hazard Emergency Response Act (AHERA) – DoDEA will need to include the future liability for non-friable and an estimated costs for any AHERA asbestos investigation and re-investigation completed for the buildings for every three years.
In this method CMI will price their products at a similar price to Asbestos pads. In the Colerick test the total number of sets of Asbestos pads used = 20 and cost per set = $50. The total cost of the job was $1000.00. In the Fazio Construction test the cost per set = $40 and number of sets used = 50. We can use this data to give us a range of how much the cushion pads should cost to be competitive.
We need more customer research to set our price between the minimum price, $251.4, and the maximum price $1,595. However, it should be much closer to the minimum price because of the price restrain factors such as the new market development, no reputation, high price elasticity, or psychological perception of the tens of times higher price. I recommend setting the price per pad at $415 from which we can expect 100% operating profit margin. It is very high profit margin, but it is still lower than one third of the expected value by a new pad. Although the cushion pad has not been seriously considered by any other companies, the potential market size for this product is very attractive. The potential US market size for CMI pads is about $85 million
③Third step is to estimate costs. Since the average number of CMI pads need per year is 204,750(question 2), the number of CMI pads per month is about 17,000. So, the additional capacity
2:What are the benefits and risks associated with using this material, and how common is its use?
Short term – this is where a service user may have been in hospital and have a loss of basic skills so to support them to re-learn these but ultimately for them to do it themselves.
When left untouched and undamaged asbestos is generally safe, significant health risks arise when the material the asbestos is
In my 18-years of being a shooter, I realized the benefit of having a great recoil pad. Having a recoil pad for both a wood or synthetic stock will increase a shooters precision, comfort and reduce pain. Replacing a recoil pad is a common job that may need to be installed or just slipped onto the buttstock. Depending on its thickness, a recoil pad may increase the shooters pull or modify the fitting. The overall goal should be to find a recoil pad that will allow the shooter ease of use, reduce the recoil and have compatibility with the rifle or shotgun if it’s not a universal pad.
hours, as well as accounting for the set up labor costs for every run. The material
Asbestos is a naturally occurring fibrous material that was popular from 1950s to 1990s. It was widely used because it is an insulator. Asbestos had a lot of strength and is resistant to chemical erosion. If you are exposed to asbestos for a long enough time, it can cause cancer of different forms. More than 107,000 people die each year because of asbestos. That is not just cancer but mesothelioma, and asbestosis. You are pretty much exchanging money for the lives of people that installed it and have it in there
There are several types of asbestos fibers, of which three have been used for commercial applications: (1) Chrysotile, or white
1. Processing time – prescriptions filled per unit of time. A major customer complaint was time –