REID'S RAISIN COMPANY adopted from the case study in Powell 8 Boder (2016) "Dusiness Analytics: the Art of Modeling with Spreodiheets" Reid's Raisin Company (RRC) is a food-processing firm that purchases surplus grapes from grape growers, dries them into raisins, applies a layer of sugar, and sells the sugar-coated rassins to major cereal and candy companies. At the beginning of the grape-growing season, RRC has two decisions to make. First, the quantity of grapes to buy under contract must be determined, Second, adopt a price for the sugar-coated raisins it sells. In the spring season, RAC typically contracts with a grower who will supply a given amount of grapes in the autumn at a fixed cost of $0.25 per pound. The balance between RRC's grape requirements and those supplied by the grower must be purchased in the autumn, on the open market. The open market price could vary from a historical low of $0.20 per pound to a high of $0.35 per pound. (RRC cannot, however, seli grapes on the open market in the autumn if it has a surplus in inventory, because it has no distribution system for such purposes.) As regards the price to charge for sugar-coated raisins, RRC has several customers who buy RRC's output in price-dependent quantities. RRC negotiates with these processors as a group to arrive at a price for the sugar-coated raisins and the quantity to be bought at that price. The negotiations take place in the spring, long before the open market price of grapes is known. Based on prior years' expericfice Mary jo Reid, RRC's general manager, believes that if RRC prices the sugar-coated raisins at $2.20 per pound, the processors' orders will total 750,000 pounds of sugar-coated raisins. Furthermore, this total will increase by 15,000 pounds for each penny reduction in sugar-coated raisin price below $2.20. The same relationship holds in the other direction: demand will drop by 15,000 for each penny increase. The price of $2.20 is a tentative starting point in the negotiations. sugar-coated raisins are made by washing and drying grapes into raisins, followed by spraying the raisins with a sugar coating that ARC buys for 50.55 per pound. it takes 2.5 pounds of grapes plus 0.05 pound of coating to make one pound of sugar-casted raisins, the balance being water that evaporates during grape devine. In addition to the raw materials cost for the grapes and the coating, fac's processing plant incurs a variable cost of 50.20 to process one pound of grapes into raisins, up to in capacity of 1,500,000 pounds of grapes. For volumes above 1,500,000 pounds of grapes, ABC outsources grape processing to another focd processor which charges ARC $0.45 per pound. This price includes just the processing cost, as RRC supplies both the erapes and the coating required. AAC also incurs fixed (overhead) costs in its grnpe processing plant of $200,000 per year. Mary loe asked you to analyze the situation in order to gulde her in the upcoming negotiations. Her gaal is to examine the eflect of vaieus "what-if" scenarios on fRC's profis. As a basis for the analysts, she suggests using a contract purchase price of 50.25 , with a supply quantity of 1 miltion pounds from the grower, alore with a seling price of $2.20 for sugar coated REID'S RAISIN COMPANY adopted from the case study in Powell 8 Boder (2016) "Dusiness Analytics: the Art of Modeling with Spreodiheets" Reid's Raisin Company (RRC) is a food-processing firm that purchases surplus grapes from grape growers, dries them into raisins, applies a layer of sugar, and sells the sugar-coated rassins to major cereal and candy companies. At the beginning of the grape-growing season, RRC has two decisions to make. First, the quantity of grapes to buy under contract must be determined, Second, adopt a price for the sugar-coated raisins it sells. In the spring season, RAC typically contracts with a grower who will supply a given amount of grapes in the autumn at a fixed cost of $0.25 per pound. The balance between RRC's grape requirements and those supplied by the grower must be purchased in the autumn, on the open market. The open market price could vary from a historical low of $0.20 per pound to a high of $0.35 per pound. (RRC cannot, however, seli grapes on the open market in the autumn if it has a surplus in inventory, because it has no distribution system for such purposes.) As regards the price to charge for sugar-coated raisins, RRC has several customers who buy RRC's output in price-dependent quantities. RRC negotiates with these processors as a group to arrive at a price for the sugar-coated raisins and the quantity to be bought at that price. The negotiations take place in the spring, long before the open market price of grapes is known. Based on prior years' expericfice Mary jo Reid, RRC's general manager, believes that if RRC prices the sugar-coated raisins at $2.20 per pound, the processors' orders will total 750,000 pounds of sugar-coated raisins. Furthermore, this total will increase by 15,000 pounds for each penny reduction in sugar-coated raisin price below $2.20. The same relationship holds in the other direction: demand will drop by 15,000 for each penny increase. The price of $2.20 is a tentative starting point in the negotiations. sugar-coated raisins are made by washing and drying grapes into raisins, followed by spraying the raisins with a sugar coating that ARC buys for 50.55 per pound. it takes 2.5 pounds of grapes plus 0.05 pound of coating to make one pound of sugar-casted raisins, the balance being water that evaporates during grape devine. In addition to the raw materials cost for the grapes and the coating, fac's processing plant incurs a variable cost of 50.20 to process one pound of grapes into raisins, up to in capacity of 1,500,000 pounds of grapes. For volumes above 1,500,000 pounds of grapes, ABC outsources grape processing to another focd processor which charges ARC $0.45 per pound. This price includes just the processing cost, as RRC supplies both the erapes and the coating required. AAC also incurs fixed (overhead) costs in its grnpe processing plant of $200,000 per year. Mary loe asked you to analyze the situation in order to gulde her in the upcoming negotiations. Her gaal is to examine the eflect of vaieus "what-if" scenarios on fRC's profis. As a basis for the analysts, she suggests using a contract purchase price of 50.25 , with a supply quantity of 1 miltion pounds from the grower, alore with a seling price of $2.20 for sugar coated