What revenue management opportunities are available to a trucking firm? How can it take advantage of these opportunities?
For a trucking business, being able to meet the needs of the consumer as well as being able to ensure that they are in business is a hugely beneficial thing. To do this they need to have multiple revenue streams that are clearly defined so that whenever business is inappropriate for they can still stay afloat. For the trucking business, they can adopt a revenue stream that involves two-tier pricing where the small customers of the firm are charged a higher price while those who are the large customers of the company pay a relative lower price. The reasoning behind this is that the larger consumers consume and use more of the trucking firm fleet. The other reasoning is that the larger clients provide the firm with a higher demand for their services as well as buying in bulk that attracts larger economies of scale. In the pricing mode, the smaller consumers should be required to pay cash promptly while the larger consumers are given huger discounts.
2) In the 1980s, paint was sold by color and size in paint stores. Today, paint is mixed at the paint store according to the color requested. Discuss what, if any, impact this change has on safety inventories in the supply chain.
The second scenario involves safety inventories as far as supply chain is concerned. When one makes a request for the paint ad pays for it and has an inventory of the stock, the total cost of the stock, drives the manufacturer to sell faster. The total cost of the stock may involve costs such as the overhead costs, interest, and cost of storage in the warehouse among other costs. The implication of the faster sale means that the total stock that is held will be ultimately reduced which will mean more profit for the manufacturer over a short period.
3) A publisher sells books to Barnes at $12 each. The marginal production cost of the book to the publisher is $1 per book. Barnes prices the books to its customers at $24, and expects demand over the next two months to be normally distributed with a mean of 20,000, and a standard deviation of 5,000. Barnes places a single order for delivery at the beginning of the two- month period. Currently Barnes discounts any books unsold at the end of the season down to $3, and any unsold books that did not sell at full price sell at this price
The third scenario involves Barnes and a publisher as well as calculation on the amount of profit that he wants to generate.
Publisher sells to Barnes at $ 12 each.
Marginal cost of production that is incurred by the publisher is $1
Barnes pricing to their clients is $24
Expected demand for books is 20,000 with a standard deviation of 5,000.
Barnes should order roughly 18,000 books. This will make him not overbook the number of books that the need as well as his target sales. It will also ensure he avoids a whopping shortfall in terms of the demand, and when the books are not purchased, Barnes will not suffer immense pitfalls occasioned by the large discounts that will have to offer. It will also safeguard Barnes from costs that will be incurred in the deal between them and the publisher. The estimated sold books would be 15523 @ 24, which will amount to $ 372,552 the expected profit from the sales was 18,000@12, which amounted to $ 216,000. The profit was thus $ 156,552. Then add the 2477 @ $3 74113 which is 163,983.4118@ $5 amounts to $ 20,590 which when added to 156,552 amounts to $ 177,142 in profits. This was higher as the earlier profits had been lower due to a lower refund price that was offered by the publisher. However, when the new deal came into place, it meant that Barnes got better compensation for the books not sold.
What should the publisher do? Stay with the current plan or adopt the proposed plan?
There are two scenarios for the publisher. When they adopt the current plan, it means that they will pay less and safeguard their revenue. However, once they adopt the proposed plan, they can renegotiate with Barnes and come up with a longer period for the books other than the two months.
4) How can design collaboration with suppliers help a PC manufacturer improve performance?
The PC manufacturer can adopt dynamic pricing through the suppliers. This will ensure that reap many returns from their products and suppliers can recommend the product majorly due to its cheap pricing. Dynamic pricing is a strategy that is normally applied to ensure that the products of a firm compete relatively well with price being the main determinant of the sale of the products. The suppliers will therefore have a huge bargaining cheap with the buyers.
