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Scott, the salesman for Standard Machine, has just received a call from Joann, the purchasing agent for Occidental Aerospace. Occidental has been one of Standard's largest and most loyal accounts. Following Standard's fixed price policy, Scott submitted his bid at list price, $429K. Now Joann has called to inform Scott that his bid was not good enough. She told him that one other competitor had bid "under $390K" and another "a little over $400K". She tells Scott that to win this business; he needs to cut his price by an additional $22K. Although this bid is only for one piece of equipment, Joann reminds Scott that the company will be building two new plants over the next four years, representing "a lot of potential business." Scott has gone to his boss Tony, the sales manager, to ask for an exception to the fixed price policy.
Why do you think Standard Machine is in this difficult situation with what was previously a loyal customer? What has changed? What would you do?
What are the advantages and disadvantages of ABC relative to the step-down method of cost allocation?
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Complexities
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Explain how this law changes the game played between the bystanders. If you can, sketch and solve a version of the model incorporating the fine and the probability that a bystander is prosecuted.
Question about Leaders - How does one go from being a "New Dealer" to becoming a leading conservative force in American politics
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