Problem
Midtown Meats has gathered the following information to assist them in evaluating two of their customers; Downtown Diner and Eddy's Eats.
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Customer Data
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Cost Description
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Annual Cost
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Cost Measure
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Annual Quantity
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Downtown Diner
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Eddy's Eats
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Internet Orders
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$ 1,000,000
|
Order
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500,000
|
500
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0
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Phone Orders
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$ 2,000,000
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Order
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400,000
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0
|
1,000
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Inventory Picking
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$ 3,000,000
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Product
|
1,000,000
|
800
|
1,800
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Packaging of orders
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$ 1,500,000
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Item
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50,000,000
|
1,000,000
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1,000,000
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|
Returns
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$ 3,000,000
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Return
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50,000
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2
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200
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a. Calculate the profitability, or lack thereof, of each
b. What are your recommendations for Midtown Meats?