Red Brand Canner
RED BRAND CANNERS
On Monday, September 12, 1995, Mr. Mitchell Gordon, vice president of operations, asked the controller, the sales manager, and the production manager to meet with him to discuss the amount of tomato products to pack that season. The tomato crop, which had been purchased at planting, was beginning to arrive at the cannery, and packing operations would have to be started by the following Monday. Red Brand Canners was a medium-sized company which canned and distributed a variety of fruit and vegetable products under private brands in the western states. Mr. William Cooper, the controller, and Mr. Charles Myers, the sales manager, were the first to arrive in Mr. Gordon's office. Dan Tucker, the production manager, came in a few minutes later and said that he had picked up Produce Inspection's latest estimate of the quality of the incoming tomatoes. According to their report, about 20 percent of the crop was grade "A" quality and the remaining portion of the 3,000,000-pound crop was grade "B." Gordon asked Myers about the demand for tomato products for the coming year. Myers replied that for all practical purposes they could sell all the whole canned tomatoes they could produce. The expected demand for tomato juice and tomato paste, on the other hand, was limited. The sales manager then passed around the latest demand forecast, which is shown in Exhibit 1. He reminded the group that the selling prices had been set in light of the long-term marketing strategy of the company, and potential sales had been forecasted at these prices.
EXHIBIT 1 Demand Forecasts
SELLING PRICE DEMAND FORECAST PRODUCT PER CASE (CASES)
24-2 1/2 Whole Tomatoes $9.00 800,000
24-2 1/2 Choice Peach Halves $15.40 10,000
24-2 1/2 Peach Nectar $14.60 5,000
24-2 1/2 Tomato Juice $8.50 50,000
24-2 1/2 Cooking Apples $12.90 15,000
24-2 1/2 Tomato Paste $7.80 80,000
Bill Cooper, after looking at Myer's
On Monday, September 12, 1995, Mr. Mitchell Gordon, vice president of operations, asked the controller, the sales manager, and the production manager to meet with him to discuss the amount of tomato products to pack that season. The tomato crop, which had been purchased at planting, was beginning to arrive at the cannery, and packing operations would have to be started by the following Monday. Red Brand Canners was a medium-sized company which canned and distributed a variety of fruit and vegetable products under private brands in the western states. Mr. William Cooper, the controller, and Mr. Charles Myers, the sales manager, were the first to arrive in Mr. Gordon's office. Dan Tucker, the production manager, came in a few minutes later and said that he had picked up Produce Inspection's latest estimate of the quality of the incoming tomatoes. According to their report, about 20 percent of the crop was grade "A" quality and the remaining portion of the 3,000,000-pound crop was grade "B." Gordon asked Myers about the demand for tomato products for the coming year. Myers replied that for all practical purposes they could sell all the whole canned tomatoes they could produce. The expected demand for tomato juice and tomato paste, on the other hand, was limited. The sales manager then passed around the latest demand forecast, which is shown in Exhibit 1. He reminded the group that the selling prices had been set in light of the long-term marketing strategy of the company, and potential sales had been forecasted at these prices.
EXHIBIT 1 Demand Forecasts
SELLING PRICE DEMAND FORECAST PRODUCT PER CASE (CASES)
24-2 1/2 Whole Tomatoes $9.00 800,000
24-2 1/2 Choice Peach Halves $15.40 10,000
24-2 1/2 Peach Nectar $14.60 5,000
24-2 1/2 Tomato Juice $8.50 50,000
24-2 1/2 Cooking Apples $12.90 15,000
24-2 1/2 Tomato Paste $7.80 80,000
Bill Cooper, after looking at Myer's