60.1K

Verified Solution

Link Copied!

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

Answer & Explanation Solved by verified expert

See Answer