Scenario Reliable Tool Company Manufactures Hubs and Axles for the Trailer

question 87

Essay

Scenario
Reliable Tool Company manufactures hubs and axles for the trailer and heavy truck industry.Though the customer base is small, monthly sales at Reliable are approximately $1 million."You might say we have all of our eggs in one basket," says owner Arthur Deetz.Reliable Tool has captured "a small piece of the pie" but is the sole supplier of hub and axle components to its customers; therefore, it is critical that a competent sales force be maintained in order to nurture those few but large accounts.Ninety-five percent of Reliable's customers are located in Michigan, Ohio, and Indiana.Travel time to all customers is short but, given the nature of the industry, time spent with each customer is essential.
What kind of sales promotions would Reliable Tool be likely to use?

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Definitions:

Implicit Cost

The opportunity costs that arise from using assets, resources, or funds in specific ways rather than the next best alternative.

Capital

The total value of assets owned by an individual or firm—physical assets plus financial assets.

Opportunity Cost

The cost of the next best alternative foregone as the result of making a decision.

Depreciation

The reduction in the value of an asset over time, often due to wear and tear or obsolescence.