GILAD PUBLISHING COMPANY Annette Gilad, general manager of Gilad Publishing Company (GPC), is faced with a decision point in the life of the company. Recently, an expansion in GPC publications h necessitated the purchase of new equipment and perhaps the addition of new personnel nnette's decisions will significantly impact the risk and profitability prospects for GPCs future. BACKGROUND Gilad Publishing Company (GPC) is a small publisher located in Memphis, Tennessee GPC serves a growing market for publishing soft and hard-bound books and periodicals. GPC inly serves the market for specialty educational books, small-run company publications (such as catalogs), and books that are not expected to sell large quantities in bookstores (called "specialties"). The firm has the reputation of being a small company that has achieved mpetitiveness in both the pricing of specific jobs and in the effective marketing of specialty publications. The company has limited its publishing to physical book production and marketing. The virtual (electronic) publishing arena appears to be beyond GPC's capabilities and is not an area involving their competitive advantages. GPC also has avoided trying to compete with large publishers because of pricing disadvantages and higher per-unit costs Fortunately, these large publishers are not particularly interested in smaller jobs that GPC can easily handle. desiring to either market their product themselves or who seek and boo marku GPC deals with customers in two distinct ways. For 'custom publishing' customers GPC's services for printing kbinding, the firm will submit bids based on cost coverage plus an acceptable up. ,Other customers approach GPC for the purpose of manuscript evaluation, and upon acceptance, marketing of their works (acquisitions). The manner with which GPC deals with each scenario is very different. Lewis Alcorn is associate manager in charge of the acquisitions division. He decid y of publication and marketing, and oversees the process from tion to delivery (to book retailers). Lewis considers himself an underwriter of sorts since the company takes the risk (concerning fiuture sales) resulting from his decisions about which manuscripts are worth