02 Oct quantity discounts
Internet Challenge: Community Fund-Raiser (A) (All students will last names beginning with “A” through “H” respond to this case (Chapter 12).
Your nonprofit club holds a major fund-raiser for two weeks each year to support community improvement projects. The club sells packages of cookies throughout the community and donates the proceeds. The goal of the event is to raise at least $40,000 for the community. This year you are in charge of the fund-raising event. Your first step is to search the Internet and identify at least three potential suppliers of the cookies to be sold this year. At least one of the suppliers should be in the immediate vicinity of your town or city.
From past fund-raisers, the club believes that an acceptable price of the cookies to the customers does not allow for more than a $1 markup over the regular cost per package. However, if quantity discounts can be obtained, then the profit per package can exceed $1. It is believed that regardless of the cookies sold, demand will be 40,000 packages. If you decide to buy more than 40,000 packages, any leftover cookies will be donated to local shelters. Since you are a nonprofit organization, no tax advantage is gained.
For each of the potential suppliers, you need to identify the total cost associated with buying the packages of cookies. Be sure to consider transportation costs as well as any quantity discounts. Remember that your objective is to raise at least $40,000 for the community. It is also important to consider the logistics of your plan. Will all of the cookies arrive at one time or will deliveries be spread over the two-week fund-raiser? Find out how far in advance you need to place your order and when payment for the cookies is due. Explain how you can be sure the cookies will arrive on time. You need to put together a report for your next meeting comparing your three suppliers and make a recommendation as to which supplier should be used, the quantity of cookies to purchase, the expected profit to be donated, and the logistics for the fund-raiser.
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