Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

The Fresh Connection sells cases of PET bottles to sports camps at an price of $15.41 and the materials cost an average of $4.21 per

image text in transcribed

The Fresh Connection sells cases of PET bottles to sports camps at an price of $15.41 and the materials cost an average of $4.21 per case. They make 6,299 cases per week. They sell 5,630 cases in a particular week, leaving them with excess that must be discarded. Now, however, you have suggested a change in the process where the camps submit an order in advance for a specific number of cases. The result will be a decrease in sales of 18% because customers don't want to make this commitment in conjunction with a proposed price increase. You are proposing an increase in price of 12% because they are guaranteed to receive exactly what they order each week and you want to offset some of the lost sales. An added advantage is that The Fresh Connection only has to produce exactly the number of cases that are ordered. (Unsold juice no salvage value in this scenario) How much better or worse off would The Fresh Connection be if they implemented your suggestion? Start with the profit (revenue - cost) for the current process. Then determine the profit (revenue cost) for the proposed system. Then subtract proposed system profit - current system profit. Do not round anything until you get to the end of the problem and then round to two (2) decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions