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PacWest Forest Products is a Seattle - based lumber producer that sells lumber to home builder across the country. When it sells to homebuilders in
PacWest Forest Products is a Seattlebased lumber producer that sells lumber to home builder across the country. When it sells to homebuilders in Georgia, where GeorgiaAtlantic Lumber is a major competitor, what pricing method should PacWest use, and why?
a FOB pricing since it can advertise a low price for lumber and the customer incurs the shipping costs.
b Uniform delivered pricing, since the Seattle and Georgia homebuilders are likely to be equally price sensitive to PacWests products.
c Freight absorption pricing, since the Georgia homebuilders are likely to be more price sensitive than Seattle homebuilders to PacWests products.
d FOB pricing, since the transportation costs are incurred by the homebuilders regardless of which lumber supplier they buy from
e They should select FOB pricing if GeorgiaAtlantic also uses that pricing method, so that PacWest is able to keep up with its marketplace competition.
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