Question
CEG Ski Corporation has two main business segments: Ski boot production and wakeboard production. The wakeboard production division is currently considering purchasing the ski boots
CEG Ski Corporation has two main business segments: Ski boot production and wakeboard production. The wakeboard production division is currently considering purchasing the ski boots from an outside supplier for $45 per pair; however, they would like to see if they can negotiate a lower price with ski boot production line. The ski boot division sells boots at a price of $65 per pair and incurs variable costs of $30 per pair. Their total factory capacity is 5,000 pairs.
If the ski boot division is currently producing 5,000 pairs for outside customers, would the two divisions be able to negotiate a price that would be agreeable to both parties? Why or why not? Show the acceptable price range, if any.
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