International Data Systems' information on revenue and costs is relevant only up to a sales volume of 120,000 units. After 120,000 units, the market becomes saturated and the price per unit falls from $8.00 to $5.80. Also, there are cost overruns at a production volume of over 120,000 units, and variable cost per unit goes up from $4.00 to $4.50. Fixed costs remain the same at $70,000. a. Compute operating income at 120,000 units. b. Compute operating income at 220,000 units.

International Data Systems' information on revenue and costs is relevant only up to a sales volume of 120,000 units. After 120,000 units, the market becomes saturated and the price per unit falls from $8.00 to $5.80. Also, there are cost overruns at a production volume of over 120,000 units, and variable cost per unit goes up from $4.00 to $4.50. Fixed costs remain the same at $70,000. a. Compute operating income at 120,000 units. b. Compute operating income at 220,000 units.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 5.1SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...

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Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?
Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
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John Ozment, director of special projects and analysis for Ozment’s Corporation, is responsible for preparing corporate financial analyses and monthly statements and reviewing and presenting the economic impacts of proposed strategies to upper management. Data for such financial analyses are obtained from operations and financial databases through direct queries of Ozment’s department staff. Reports and charts for presentations are then prepared by hand and typed. Multiple copies are prepared and distributed to various users. The pressure on Ozment’s group has intensified as demand for more and more current information increases. A solution to this reporting problem must be found.The systems department wants to develop a proprietary software package to produce the reports automatically. The project would require the company to make a considerable programming investment. Ozment is concerned about the accuracy, completeness, and currency of data isautomatically produced reports. He has…
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XYZ has one of the world’s largest mobile communications networks, with 83,900 employees serving over370 million customers across more than 30 countries. With 2,200 retail stores and a further 10,300branded franchises throughout the world. XYZ products include messaging services for businesses andconsumers, smartphones, mobile handsets and tablets. Its current strategy is aimed at increasing the‘average revenue per user’ through offering more and more added value mobile servicesMorris White, winner of the 2011 Procurement Leader Award, was brought in to be the Global SupplyChain Management Director and chief executive officer of the XYZ Procurement Company. His role was tonot only manage the complexity of the procurement and supply chains for both goods and services butalso fundamentally transform several fragmented supply chains into a single global function.The XYZ Procurement Company was set up in 2008 with its headquarters based in Luxembourg. Through‘lean’ procurement techniques…
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Some companies import and export flowers worldwide. It is one of the very competitive businesses in the world. “Fresh Phool” is an international flower company working in Pakistan. It has received a significant order inquiry for fresh Roses from Bangladesh. What incoterm will the Fresh Phool company be settling with the buyer? Expalin the reasons for selecting each incoterm.(Note: Select only one incoterm that you recommend is the most appropriate. Highlight the interest and concerns of various stakeholders while discussing that incoterm)
Arcontica Classic Furniture (ACF) manufactures a range of rustic chairs, lawn furniture, and interior furnishing including lamps, desks, and bed frames. ACF's customer base comprises both private customers and retail outlets. Consumer's sales are for cash or by credit card, but business customers are for cash or by credit card, but business customers are extended a line of credit. New business customers undergo a credit check before receiving a credit line. All sales are made online, by fax or mailed in hard copy order. When a credit order is received, the sales clerk verifies inventory availability, prepares a sales order, and sends the stock release copy to the warehouse clerk who picks the goods and arranges shipment. He then prepares the bills of lading and sends copies of the shipping notices to the billing department and inventory control. The billing department updates the sales journal and sends an invoice to the customer. The clerk then sends the shipping notice to the AR…
Imagine that JRP Computing Bhd. has saturated the large firm market for its products and competitors are undermining its technological advantage. JRP needs to look to new markets for revenue. The CEO has suggested that it starts selling its software down-market to middle-market companies and at the same time the company enters into the consulting and installation side of the business for this target market. Discuss the risks and opportunities of such a strategy.
Which of the following statements are true or false? 1.1 One of the objectives of purchasing and supply chain management is to maintain an optimum balance of inventory that would ensure the desired level of customer service while increasing costs. 1.2 Supply management has a major impact on the net income of the firm because it increases input costs and reduces sales revenue 1.3 The purchasing and supply function of a firm operates independently from the other enterprise functions. 1.4 Supply Management is the process of planning, organising, coordinating and controlling all the resources of the firm effectively and efficiently in order to attain the objectives of the firm as determined by management. 1.5 Strategic plans formulated at top management of purchasing and supply management are implemented or executed at top level management 1.6 In decentralized purchasing structures negotiating power is increased and volume discounts are made possible. 1.7 Steps of the strategic…