Stephen Singer and Wayne Hull, owners and partners of Saints Landscaping, were busy during the Spring months planning for their holiday seasonal business in which Christmas Trees and wreaths are sold. Saints Landscaping has been selling Christmas Trees and wreaths in the Loudonville, New York, area since 2000 and has seen an increase in revenue in each of the past five seasons. Saints Landscaping relies heavily on the Christmas selling season to supplement the income of the business that is mostly generated during the Spring and Summer months. Saints Christmas Trees is a seasonal business of Saints Landscaping that sells Christmas trees and wreaths for one-month preceding Christmas. Orders for Christmas trees need to be placed with growers by July 4 in order to receive the quality and adequate supply desired. The trees for 2021 will be procured from growers in Canada with the delivered cost fixed at a contractually agreed price of $20 for the season. Steve and Wayne make their own wreaths from the trees they purchase. In planning for the upcoming season, Steve and Wayne need to generate a merchandise plan that will achieve their primary goal of maximizing profits. An integral component in attaining this objective will be decisions regarding the pricing of the Christmas Trees and wreaths.

1.Break-even Point

In order to provide service to consumers and produce the wreaths, Saints Christmas Trees employs four employees for four weeks at a weekly salary of $250 each. This amounts to fixed labour expenses of $4,000 for the month. There is a flat fee of $20 paid to the supplier for each Christmas Tree purchased. If the average retail prices of a Christmas tree is $37.71, what is the Break-even Point (BEP)?

2.Elasticity of Demand (2 points)

Explain price elasticity of demand. Why is this concept important for managers and marketers and how could the following scenarios impact Saints Christmas Trees?

o There is an additional competitor selling Christmas trees this year that is located 5 km from Saints Christmas Trees.

o There is a new technology this year enhancing the quality of artificial trees

o The unemployment rate in the Loudonville area is 8% this year compared to 5% last

3. Supply Chain (3 points)

Saints Christmas Trees typically sources their Christmas Trees from suppliers in Canada. Draw one image for each of the scenarios (A, B, and C) that depicts the supply chain for that scenario. Identify critical challenges and advantages for each of the supply chain scenarios presented.

A. Trees and wreaths arrive from one supplier via truck on estimated target date of November 25th

B. Trees and wreaths arrive from one supplier in two shipments, one on November 20th (5 days before business opens) and one on December 5th

C. Trees and wreaths purchased are from intermediary firm delivered via train to local warehouse on November 25