Subject: Business    / Management    

Chester's product manager is considering lowering the price of the Cure product by $2.50 and wants to know what the impact will be on the product’s contribution margin. Assuming no inventory carry costs, what will Cure's contribution margin be if the price is lowered?

Coat is a product of the Chester company which is primarily in the Nano segment, but is also sold in another segment. Chester starts to create their sales forecast by assuming all policies (R&D, Marketing, and Production) for all competitors are equal this year over last. For this question assume that all 700 of units of Coat are sold in the Nano segment. If the competitive environment remains unchanged what will be the Coat product’s demand next year (in 000’s)

A productivity index of 110% means that a company’s labor costs would have been 10% higher if it had not made production improvements. Assume that Baldwin had a productivity index of 112% and that Chester had a productivity index of 103%. Now refer to the Income Statements in the Annual Report for Baldwin and Chester. Using the labor costs shown in the Income Statements, how much more did Baldwin save in direct labor costs compared to Chester by having a higher productivity index?

Investing $2,000,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 3.0% in this and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year's sales were $163,290,917. Assuming similar sales next year, the 3.0% increase in demand will provide $4,898,727 of additional revenue. With the overall contribution margin of 34.1%, after direct costs this revenue will add $1,670,466 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $2,000,000 TQM investment, rounded to the nearest month?

From a marginal analysis perspective, what is the inventory carry cost for Andrews if the company carries one additional unit of Adam in inventory at the end?

Brand managers know that increasing promotional budgets eventually result in diminishing returns. The first one million dollars typically results in a 26% increase in awareness, while the second million results in adding another 18% and the third million in a 5% increase. Andrews’s product Adam currently has an awareness level of 80% . While an important product for Andrews, Adam’s promotion budget will be reduced to one million dollars for the upcoming year. Assuming that Adam loses one-third of its awareness each year, what will Adam’s awareness level be next year?

Coat's product manager continues to perform well in the market. However, a competing product is coming on strong and is looking to take over as the market share leader in the segment. Without sacrificing contribution margin, what can the Coat product manager do in order to improve upon the buying criteria, and thus potentially increase demand?

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