Hi, There is a case on Yale case book, the answer says: "Our client will save $6,000/year in costs and suffer a maximum reduction of $1,500/year in profits. This is a net gain of $4,500/year". Just want to clarify this statement is wrong. The net gain should be 1500/year, not 4500/year.
Thanks
Freda
Hi Freda,
I disagree with your interpretation.
Look at both components individually:
If you save $6000 in costs, your net gain is $6k.
If you lose $1.5k in profits, your net loss is $1.5k.
Add both numbers and find the answer to be correct.
Best
Björn
Hi, thank you for this answer! I am actually also struggling to understand the solution of this case, and why the company would experience a "net gain" by shutting down one product segment that has a profit of $1,500/year and a cost of $6,000/year. When does it make sense to stop one product segment to reduce costs, when this specific product is still profitable? I guess it depends on the profit margin of the other products; any thoughts on that? — Marie am 26. Sep 2017 (editiert)
Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvant ... Ganzen Case öffnen
Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client? Ganzen Case öffnen
