Question:
Sales volume has been dropping at Pinnacle Publishing Company. During this time, however, the Shipping Department manager has been under severe financial constraints. The manager knows that most of the Shipping Departments effort is related to pulling inventory from the warehouse for each order and performing the paperwork. The paperwork involves preparing shipping documents for each order. Thus, the pulling and paperwork effort associated with each sales order is essentially the same, regardless of the size of the order. The Shipping Department manager has discussed the financial situation with senior management. Senior management has responded by pointing out that sales volume has been dropping, so that the amount of work in the Shipping Department should be dropping. Thus, senior management told the Shipping Department manager that costs should be decreasing in the department.
The Shipping Department manager prepared the following information:
Given this information, how would you respond to seniormanagement?
Transcribed Image Text:
Sales Volume $500,000 460,000 440,000 400,000 380,000 370,000 360,000 350,000 Number of Customer Orders 1,400 1,440 1,460 1,500 1,570 1,650 1,700 1,750 Sales Volume per Order 250 230 220 200 190 185 180 175 Month January February March April May June July August