Emerald City Wear, Inc. (ECW, Inc.)^¨

Two alums of the UW Foster School of Business founded Emerald City Wear (ECW), a clothing manufacturer located in Seattle. Their strategy is to produce lightweight, warm, water-resistant garments suited to the Pacific Northwest’s mild and damp climate.

One of their garments is a reversible zip-front vest. While ECW can make up to 10,000 of these in a month with its current facilities, its normal production and sales activity level has regularly been 8,000 vests a month. Last November, the alums received an inquiry from the UW Bothell for 1,000 vests of various sizes with the UW Bothell School logo (shown above) embroidered on the front, to be distributed to faculty and donors. This was expected to be a one-time order and ECW would need to manufacture the vests in December to be ready by December 18 for distribution at the School’s holiday event.

According to ECW’s accounting system, the cost of producing and selling a single regular vest (without the special logo) at current activity level was as follows:

* determined at normal capacity and allocated according to direct labor hours

** allocated based on ‘ability to bear’.

The normal selling price for a regular vest is $30.

ECW does not have the necessary equipment to do the embroidering of the UW Bothell School logo, so that would need to be outsourced to another company for a flat fee of $1,000.

The owners of ECW are conscious of the fact that the UW Bothell has had other bids, and because they are loyal alums, they would like to keep their bid to $18 per vest. This order is not expected to affect ECW’s regular sales.

Questions: (treat each question below independently)

1.   If the order is accepted at a bid price of $18 per vest, by how much will ECW’s December profits change? That is, will profits go up or down as a result of the order, and by how much?

2. Now assume that ECW already has orders from regular customers for 10,000 vests for December. If it supplies the vests to UW Bothell at $18 per vest, what will be the effect on its December profits?

3. All the data for regular vests remains unchanged. Assume that the company now has 500 of them left over from last year. However, they are chartreuse (a bright yellow-green) and have not sold at regular prices. If these vests must be sold through regular channels but at reduced prices, what cost is relevant for establishing the minimum selling price for these vests? Why?

Subject: Innovation and technology management

Case 1: Use of Technology

Federal Express (FedEx) was founded about 50 years ago. It handles on an average of 3 million package-tracking requests on a daily basis. To remain ahead of its competitors, FedEx strives on customer service by keeping a comprehensive website, FedEx.com. It increases customer service and reduces costs. For example, each request for information which can be retrieved from the website rather than by the call centre help FedEx to save an estimated $1.87. The costs for FedEx have been reduced from more than $1.36 billion per year to $21.6 million per year by customers using the website instead of the call centre calculating each package-tracking request costs Federal Express 3 cents.

Another know-how that improved its customer service is Ship Manager, an application installed on customers’ sites so users can determine shipping charges, weigh packages, and print shipping labels. Customers can also tie their invoices, billing, accounting and inventory systems to the application, Ship Manager.

Nevertheless, Federal Express still spend almost $326 million annually on its call centre to reduce customers’ annoyance when the website is down or when customers have difficulty using it. It uses CRM software called Clarify in its call centres to ensure customer service representatives’ job easier and to speed up response time.

Answer the following questions:

a)     What is the importance of technology to ensure high-quality customer service?

b)    Can you estimate Federal Express’ annual savings from using information technology?

c)     Can you give a few examples of information technologies used by Federal Express?

d)    What is the role of the application ‘Ship Manager’?

e)    Your overall observations and learning from the above case study.

Case 1: Use of Technology

Federal Express (FedEx) was founded about 50 years ago. It handles on an average of 3 million package-tracking requests on a daily basis. To remain ahead of its competitors, FedEx strives on customer service by keeping a comprehensive website, FedEx.com. It increases customer service and reduces costs. For example, each request for information which can be retrieved from the website rather than by the call centre help FedEx to save an estimated $1.87. The costs for FedEx have been reduced from more than $1.36 billion per year to $21.6 million per year by customers using the website instead of the call centre calculating each package-tracking request costs Federal Express 3 cents.

Another know-how that improved its customer service is Ship Manager, an application installed on customers’ sites so users can determine shipping charges, weigh packages, and print shipping labels. Customers can also tie their invoices, billing, accounting and inventory systems to the application, Ship Manager.

Nevertheless, Federal Express still spend almost $326 million annually on its call centre to reduce customers’ annoyance when the website is down or when customers have difficulty using it. It uses CRM software called Clarify in its call centres to ensure customer service representatives’ job easier and to speed up response time.

Answer the following questions:

a)     What is the importance of technology to ensure high-quality customer service?

b)    Can you estimate Federal Express’ annual savings from using information technology?

c)     Can you give a few examples of information technologies used by Federal Express?

d)    What is the role of the application ‘Ship Manager’?

e)    Your overall observations and learning from the above case study.

Case 1: Use of Technology Federal Express (FedEx) was founded about 50 years ago. It handles on an average of 3 million package-tracking requests on a daily basis. To remain ahead of its competitors, FedEx strives on customer service by keeping a comprehensive website, FedEx.com. It increases customer service and reduces costs. For example, each request for information which can be retrieved from the website rather than by the call centre help FedEx to save an estimated $1.87. The costs for FedEx have been reduced from more than $1.36 billion per year to $21.6 million per year by customers using the website instead of the call centre calculating each package-tracking request costs Federal Express 3 cents. Another know-how that improved its customer service is Ship Manager, an application installed on customers’ sites so users can determine shipping charges, weigh packages, and print shipping labels. Customers can also tie their invoices, billing, accounting and inventory systems to the application, Ship Manager. Nevertheless, Federal Express still spend almost $326 million annually on its call centre to reduce customers’ annoyance when the website is down or when customers have difficulty using it. It uses CRM software called Clarify in its call centres to ensure customer service representatives’ job easier and to speed up response time. Answer the following questions: a) What is the importance of technology to ensure high-quality customer service? b) Can you estimate Federal Express’ annual savings from using information technology? c) Can you give a few examples of information technologies used by Federal Express? d) What is the role of the application ‘Ship Manager’? e) Your overall observations and learning from the above case study.

Calculate the future value of $9,000 in a. four years at an interest rate of 10% per year. b. eight years at an interest rate of 10% per year. c. four years at an interest rate 20% of per year. d. Why is the amount of interest earned in part ​(a​) less than half the amount of interest earned in part ​(b​)?

What do you pay taxes on? Suppose you earned $20,000 and paid 10% tax on the first $10,000 and 20% on all the money you earned above $10,000. What would by your total tax (as a dollar amount)? What would be your average tax (as a %)? What would be your marginal tax (tax on last dollar)?

For citizens domiciled in community property states, which of the following statements is correct?

A. Any income earned during marriage is deemed to be one-half earned by each spouse.

B. Commingled property does not lose identity.

C. Community property is owned 100% by each spouse.

D. Property owned separately cannot be kept separate.

If ending accounts receivable exceeds the beginning accounts receivable:

A. cash collections during-the period exceed the amount of revenue earned.
B. net Income for the period is less than the amount of cash basis income.
C. no cash was collected during the period.
D. cash collections during the year are less than the amount of revenue earned.

Calculate the future value of $ 9,000 in

a. 5 years at an interest rate of 5 % per year.

b. 10 years at an interest rate of 5 % per year.

c. 5 years at an interest rate of 10 % per year.

d. Why is the amount of interest earned in part ​(a​) less than half the amount of interest earned in part ​(b​)?