Terrapin Resources

## Decision Level 3

### Situation

• Evaluate your decisions. Study your Company Report. Were you able to balance your sales and orders? How can you tell? Did you have inventory left? How many caps do you have to sell this week?

• Study the competition. Are other companies earning higher profits than your company? What does your company need to do to be more competitive? Explain.

To be successful your company must tell as many customers as possible about the caps it sells. Most custom cap companies print catalogs to send to schools, clubs and businesses. If you want to sell more caps, it is often a good idea to mail out more catalogs or print a catalog that is more eye-catching or attractive. Both of these strategies cost money, but they can result in greater sales!

In previous weeks you spent \$75 to promote your caps. If you are selling all the caps you order, you may not need to increase your promotion budget. On the other hand, if you always have some caps left over at the end of the week, you may want to increase demand for your caps by spending more on promotion.

### Calculation

This week you will make decisions on price, orders and promotion. All three decisions should work together to accomplish your goals. For example, if you increase your promotion budget, you may need to order more caps.

You can never be sure how many additional orders your promotions expenditures will bring. The following calculation shows how many additional caps you will have to sell to pay for your promotion budget. This can help you decide if the amount you are considering is reasonable. Remember to coordinate your promotion budget with your price and orders decision.

1. What was your profit last week?
2. How many caps did you sell? ÷
3. Profit divided by caps sold = profit/cap
4. How much more do you want to spend on promotion?
5. Divide promotion increase by profit/cap ÷
6. Additional sales required to pay for increase in promotion =