Hotels
Marketing Omni Department, 300 W. First Street, Arlington, TX 76019 (817) 456-367 [e-mail] www.omnihotels.com
June 29, 2011 Mr. Richard Johnson Vice President, Operations 420 Decker Drive Irving, TX 75062 Dear Mr. Richard Johnson, By giving free apples to our guests, we are losing a lot of money. In the past years the cost of apples has risen by 50 percent. In 2009, we spent every week $2,500 for a box of 5,000 apples. Each apple was 50 cent. In 2010, we spent every week $5000 for a box of 5,000 apples. Each apple was raised from 50 cent to one dollar. In the table below, you will find the total cost of apples in the year 2009 and 2010:
2009 Amount of Apples Per Week Price per Apple Total Cost every Month Total Cost One Year (12 Months) 2010
5,000 50 $10000 $120,00 0
5,000 $1.00 $20000 $240,00 0
In order to save cost, I have been looking at other options. We should give free apples to our guests from 8 A.M. to 7 P.M. Having done research, I found out the most apples are taken between the 7 P.M. to 9P.M. By putting a time frame, it will reduce the amount of apples from 5,000 to 2,000. By the end of this year our cost for apples would look like this:
2011 Amount of Apples Per Week Price per Apple Total Cost every Month Total Cost One Year (12 Months)
2,000 $1.20 $9,600 $115,20 0
Also we can sell apples for the guests, who missed the opportunity to get free apples. One package that we can sell is two apples for $2.50. The second package is two apples and one fruit of the season for $5. We should promote these packages at the given prices but in the next year, these prices should increase. For each package the sold amount of cost saved, is shown in the diagram below:
2011 Cost of Two Apples (2*$1.20) Cost of Fruit of the Season (every 2 months) Total Cost Saved for Package One ($2.50) Total Cost Saved for Package Two ($5)
$2.4 0 $1.0 0 $0.1 0 $1.6 0
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Omni Hotels
Marketing Department, 300 W. First Street, Arlington, TX 76019 (817) 456-367 [e-mail] www.omnihotels.com
As you can see in table one and two, by putting a time frame (8:00 A.M. to 7:00P.M.) for free apples, we will save $124,800 (240,000- 115,200) at the end of 2011. Also another way to gain profit is shown in the last table. For package one, we save $0.10 for every package we sell. This means if we have a goal to sell 20,000 a year, we save $2,000. From the second package, we save $1.60. If our goal is to sell 10,000 of the second package a year, we save $16,000. We will make a total profit of $18,000 a year for selling the two packages. In this new procedure, everyone has the opportunity to get apples, either free or paid. My staff is looking forward to testing this new procedure, and doing market analysis. Please call me at Ext. 789 if you have any further questions. This new procedure is such a great cost opportunity that I have prepared a list for each season's fruit. Also, we don't need to buy more apples. We can use the extra ones that we aren't using due to the time frame. By agreeing to this new procedure before July 6, we will have the order of peaches (fruit of the season) by July 11. This quick action will also help us take the opportunity of the peach discount at Sam's Club. Sincerely, Tara Shoar Marketing Management
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