Star Manufacturing makes a component called V2. Its customers are manufacturing firms. It offers

a volume discount to some customers and currently, its salespeople decide whether an order is

large enough to qualify for the discount. If the component needs to be exchanged or repaired,

customers can come back within 10 days for free exchange or repair.

Information about Star's four biggest customers follows:

Please note:

Order taking costs may include: receipts of inquiries, preparing quotations and processing

orders. Product handling costs may include: stock maintenance, warehousing, and orders

dispatch.

Required:

1. What is the profitability profile of each customer? (2 marks)

2. Based on your customer profitability profiles, should Star make any changes to the

ways they allow customers A, B and C use their resources. If yes, what changes

should Star implement, if not why not? (8 marks)

3. Should Star discontinue supplying to customer D? Why or why not? (4 marks)

4. Is Star's discount policy appropriate? Why or why not? (3 marks)