The Denim Finishing Company provides laundering and special finishing of denim pants for the original manufacturer. Their specialty is converting unwashed denim jeans and other denim products a variety of finishes including bleached, stonewashed, rinsed, and other finishes. The factory utilizes six machines with differing technical specifications per product. Only one machine can accomplish the “stonewash finish” using pumice stones in the machine, and running at capacity, is not able to fulfill the entire current customer demand for this product. It currently is running at maximum capacity on three shifts. Denim Finishing Company’s new Marketing Manager in the case, Diane, proposed accepting a new customer contract from Guess Who Jeans for a proprietary custom finish that would yield gross revenue of $7.00 per garment for 100 shipments of 500 garments per shipment. They would require finishing on the Unit 4 machine, after a changeover process on the machine converting it from stonewash finishing to the Guess Who “distressed” finishing. This revenue per garment is much higher than current revenue per garment for the stonewashed finish. Most of the company’s costs are overhead with respect to any one customer or
The Denim Finishing Company provides laundering and special finishing of denim pants for the original manufacturer. Their specialty is converting unwashed denim jeans and other denim products a variety of finishes including bleached, stonewashed, rinsed, and other finishes. The factory utilizes six machines with differing technical specifications per product. Only one machine can accomplish the “stonewash finish” using pumice stones in the machine, and running at capacity, is not able to fulfill the entire current customer demand for this product. It currently is running at maximum capacity on three shifts. Denim Finishing Company’s new Marketing Manager in the case, Diane, proposed accepting a new customer contract from Guess Who Jeans for a proprietary custom finish that would yield gross revenue of $7.00 per garment for 100 shipments of 500 garments per shipment. They would require finishing on the Unit 4 machine, after a changeover process on the machine converting it from stonewash finishing to the Guess Who “distressed” finishing. This revenue per garment is much higher than current revenue per garment for the stonewashed finish. Most of the company’s costs are overhead with respect to any one customer or