230 Ch 6: Can You Manage This?

Student Activity Workbook activities


         

       

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A red asterisk (*) indicates required questions.

  1. Can You Manage This? (scenario)

    Pablo de Cortez is a buyer for San Miguel's, a gift and novelty store specializing in goods imported from Mexico and Latin and South America. San Miguel's is a nationwhide chain with corporate offices in Houston, Texas. In the last ten years, Pablo has worked his way up within the company. He started work there as a stock clerk. Then be became a salesperson, a store manager, and a branch manager. Most recently he has been a buyer for six months.
    Pablo buys for a region that is somewhat unfamiliar to him. His territory covers Washington State, Oregon, Idaho, Montana, Wyoming, and North and South Dakota. Pablo grew up, went to college, and began working for San Miguel's in Florida. He was a branch manager there for the southwest region for six months before his promotion to buyer.
    Pablo works with an annual budget of $500,000 for the eight stores in his territory. He spent $250,000 on rattan furniture, $100,000 for pottery items, $75,000 for blankets and other textiles, and $75,000 on miscellaneous items, such as jewelry. He bought the same quantity for each store. In his experience, the furniture is the best selling merchandise, and it has a healthy profit margin.
    However, the store managers for Oregon and Washington are not happy with his choices. The rattan furniture he selected does not hold up well in their rainy climate, and they don't get enough pottery or jewelry in stock. The other store managers in his region say the rattan furniture only sells well in the spring and summer months. They also run out of pottery as well as the blankets and textiles. As a result, sales are off throughout his territory.

    What is the opportunity cost of paying $250,000 for rattan furniture?*


  1. Do you think Pablo should have relied on past experience for his buying decisions? Give your reasons.*


  1. What can Pablo do now to minimize lost revenue?*





Ed Mondragon
CTE Coordinator
Granite CTE Department
Salt Lake City, UT