Unformatted text preview: $3,826 Fixed ($4,000) Loss in year one (174) Question could be: Impact beyond year one Benefit at the high end is #300[$54.13 – (.05)($700) $5,739 Fixed (4,000) Gain $1,739 This looks to be attractive. Of course the question arises as to the likelihood of securing the #200; which is the “Worst case”. If this is risky to management the $4,000 lump sum could be made conditional upon reaching a certain sales target. Other management issues would pertain to timing and scheduling of production. When will we know the demand. Since an increase in production of S1 would reduce production of the other products. The very nature of LP as a tool is to create a static plan based on a set of constraints, if the constraints are “moving” this makes planning more of a challenge....
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- Winter '08
- Sales, Swarthy Snow Industries, Snow Industries, Commission Sales person, Sauder marketing grad