You are the marketing manager of the Business Unit (BU) that produces polystyrene (which is an input to making lightweight rigid foam). The current Demand/Supply balance, as measured by the ICIS price, is $800 per ton of polystyrene. The BU has 2 plants and can produce a total of 1800 tons. At full capacity utilization, the BU’s average variable cost equals $1300/t and its average total cost equals $1700/t.

Plant 1 has a capacity of 600 tons and a marginal cost of $900/t. Plant 2 has capacity of 1200 tons and a marginal cost of $1500/t. Due to exit of one competitor, you expect next year’s polystyrene ICIS price to increase to $1200.

1. How much volume of polystyrene do you expect to produce next year, ifany?

2.What is your expected contribution margin for nextyear?

3. What is your expected profit for nextyear?

You are the marketing manager of the Business Unit (BU) that produces polystyrene
(which is an input to making lightweight rigid foam). The current Demand/Supply
balance, as measured by the ICIS price, is $800 per ton of polystyrene. The BU has 2
plants and can produce a total of 1800 tons. At full capacity utilization, the BU’s average
variable cost equals $1300/t and its average total cost equals $1700/t.
Plant 1 has a capacity of 600 tons and a marginal cost of $900/t. Plant 2 has capacity of
1200 tons and a marginal cost of $1500/t. Due to exit of one competitor, you expect next
year’s polystyrene ICIS price to increase to $1200.
1. How much volume of polystyrene do you expect to produce next year, if any?
2. What is your expected contribution margin for next year?
3. What is your expected profit for next year?

Project No. 1 Write A letter

You are the marketing manager of a cold drink company. The company has around 25 main distributors country wide who are the main business providers and very good paymasters i.e. they are giving advance payments for the goods purchased. Lately four of these distributors have complained of not receiving timely supplies in season and some delay in claims which they have made. Now these distributors have written a letter to the company that this is the fourth time that this has happened with them and they are not very happy with it and if this problem is not resolved then they have threatened to stop business with us. The company after a thorough investigation found out that the problem was with their own supply chain. Now as a marketing manager of the company you have to write a letter to four of these distributors assuring them of continuous support and not providing any delays in future supplies.
Note: Inductive Approach has to be used in this letter.