1. The supplier who provides the special polymer material for the chairs has introduced a proposal to ship the chairs to Schultz fully assembled for $50.00 per chair, which is less than the current manufacturing cost to Schultz of $52.50. All Schultz would have to do is send the chairs out to their customers. Should Schultz accept the offer? How much money will the company make or lose on this offer?
2. The marketing manager believes that the customer base for chairs is pretty strong and that a price increase to $80 per chair would only reduce demand by 2,000 chairs. Should Schultz implement a price increase? If the actual price per chair were increased to $80, how far could the annual demand for chairs decline before Schultz would be indifferent between the $75 price and the $80 price?