Sprinker

• Sprinker considers the development and printing of the new first-grade textbooks economically viable if a profit is made in the first year, despite the fact that they would have to rent a new production facility and invest in new machinery to do so.
• Participation in the closed tender is free of charge.

• First-graders are 7 years old.
• The US population is 350m.
• Over the last 7 years, the US population has grown by 4%.
• 10% of students attend private schools.
• The life expectancy in the US is 75 years.
• Each first-grader has one textbook.
• The price of the textbook is $25.

• The manufacturing costs per book are $5.
• The rental costs are $1m per year.
• The investments in new machinery are $2m.

Considering the current volume, writer 3 appears to be the most cost-effective option. However, over the long term, a writer's royalty payments constitute the largest part of total personnel costs.

Therefore, if Sprinker seeks to establish a long-term relationship with the writer, they should opt for writer 1, who offers the lowest royalty payments per book.

• First of all, I would advise Sprinker to participate in the closed tender as it is economically viable, based on the calculations provided.
• In doing so, the client should opt for writer 1, who offers the lowest royalty payments per book. This choice will be beneficial for establishing a long-term relationship with the writer and minimizing royalty costs over time.
• Moreover, the client should run the marketing campaign for $1m as expected profits with the marketing campaign are higher than without, amounting to $2.78m.
• As next steps, Sprinker should start by preparing a comprehensive proposal for the closed tender, outlining the benefits of their educational materials and expertise. Afterward, the client should develop and execute the $1m marketing campaign to increase their chances of winning the tender. Once the campaign is in motion, Sprinker can engage in negotiations with writer 1 to finalize the contract terms and establish a long-term partnership. Finally, the client should allocate resources for the rental of the new production facility and the acquisition of new machinery.