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RENSAN CASE STUDY: BOTTLED UP DISCOUNTS Freda Lopez had recently taken over as the Supply Manager for packaging at Muzita Corp. She was responsible for acquiring plastic bottles for the company. Freda reviewed the e-mail she received from Paul Page, the Account Manager, at Jett Containers. The company provided Muzita with bottles that were used to package several products. Jett's current 2-year contract was up for renewal. The contract allowed for 1-year extensions and she needed to finalize pricing for the coming year. Freda was aware that her predecessor, Maria Lee, had asked for cost data from Jett a few times, but was told that Jett did not share cost data with its customers. Email from Paul Page From: Page, Paul [mailto:[email protected]] To: Freda Lopez Subject: Re: Volumes for this year Dear Freda: Thank you for your e-mail with the new volumes for this year, while we have instituted price increases this year of 9.5% to our customers, I am pleased to let you know that Muzita's price will only increase by 4.8%, from $3.12 per unit to $3.27 per unit. We will need to make the necessary amendments in the contract addendum. I look forward to another year of continued service to Muzita. Regards, Paul The volumes Paul referred to in his e-mail came from the table below that Freda had sent him: Year 2016 New Volume Annual volume 4,200,000 4,536,000 Freda knew this warranted further evaluation. She determined that the Muzita contract accounted for about 4% of Jett's plastic business. She also found out Jett's NAICS code: 326160 (Plastic Bottle Manufacturing). From the Risk Management Association (RMA), Annual Statement Studies, & The Annual Survey of Manufacturers (ASM) Freda obtained the following for the Base Year-2016: RMA Data: NAICS: 326160 (Plastic Bottle Manufacturing) 100.0 Net sales Cost of Goods Sold 84.5 SG&A Profit Before Tax 11.0 4.5 RENSAN CASE STUDY: BOTTLED UP DISCOUNTS Freda Lopez had recently taken over as the Supply Manager for packaging at Muzita Corp. She was responsible for acquiring plastic bottles for the company. Freda reviewed the e-mail she received from Paul Page, the Account Manager, at Jett Containers. The company provided Muzita with bottles that were used to package several products. Jett's current 2-year contract was up for renewal. The contract allowed for 1-year extensions and she needed to finalize pricing for the coming year. Freda was aware that her predecessor, Maria Lee, had asked for cost data from Jett a few times, but was told that Jett did not share cost data with its customers. Email from Paul Page From: Page, Paul [mailto:[email protected]] To: Freda Lopez Subject: Re: Volumes for this year Dear Freda: Thank you for your e-mail with the new volumes for this year, while we have instituted price increases this year of 9.5% to our customers, I am pleased to let you know that Muzita's price will only increase by 4.8%, from $3.12 per unit to $3.27 per unit. We will need to make the necessary amendments in the contract addendum. I look forward to another year of continued service to Muzita. Regards, Paul The volumes Paul referred to in his e-mail came from the table below that Freda had sent him: Year 2016 New Volume Annual volume 4,200,000 4,536,000 Freda knew this warranted further evaluation. She determined that the Muzita contract accounted for about 4% of Jett's plastic business. She also found out Jett's NAICS code: 326160 (Plastic Bottle Manufacturing). From the Risk Management Association (RMA), Annual Statement Studies, & The Annual Survey of Manufacturers (ASM) Freda obtained the following for the Base Year-2016: RMA Data: NAICS: 326160 (Plastic Bottle Manufacturing) 100.0 Net sales Cost of Goods Sold 84.5 SG&A Profit Before Tax 11.0 4.5

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