Reference no: EM132638779

Mr. Sivakumar is a sales and marketing manager for Chennai at Infrawarehousing ltd. SKU for the company is cubmicmeterdays. Customers are charged on the product of no. of days * cubic meter of space taken per day. Company has an installed capacity of 1,00,000 cubicmeterdays per year. Its variable costs for the year is Rs. 75,00,000 and it can be assumed to be variable with the SKU. Its fixed costs are approximated to Rs. 50,00,000 per year. The company wants a minimum profit of Rs. 50 per cubicmeterday. So, it fixed the minimum price below which he cannot bid (Rs. 175 per cubicmeterday). During the year 2019-20, the company had firm orders for 55,000 cubicmeter days at Rs. 180 per cubmic meter day. Market is sluggish and there is recession. Mr. Sivakumar has got a new customer. The new customer is a tough negotiator. The new customer is ready to give a firm order for 25,000 cubicmeterdays, only if he gets a final price of Rs. 100 per cubicmeterday.

Problem a. Advise Mr. Sivakumar as to what to do/ recommend to the management?

Problem b. How should Mr. Sivakumar put up the note to the management to justify his recommendation?

Problem c. What are the concepts learnt in the course which can be used here?