NOTE: DO NOT SHOW THE FOLLOWING INFORMATION TO YOUR COUNTERPART

DURING THE NEGOTIATION

You represent a large national book wholesaler who is about to meet with a national book retailer

representative, representing $100$ retailers across North America, to negotiate the terms and conditions of

a book purchase. You would like to agree to the sale of a 'classic' book title, one that is considered essential

reading. As the wholesaler representative, you can earn a maximum commission of $$114,000,$ resulting

from the negotiated terms and conditions of the agreement. If you cannot get an agreement that would

yield at least $$60,000$ commission $($use the contract in Appendix A to record your points$),$ you will break

off your negotiations and pursue other similarly$-$sized retailers. All of the following issues are to be

negotiated.

PRICE OF BOOKS

As a wholesale sales representative, you are

responsible for obtaining a wholesale price for this

softcover book, with a retail list price of $29\mathrm{.}99,$ which

will help maximize the wholesaler's profitability. The

following table shows different purchase prices that

could be negotiated and the corresponding

commissions showing the importance placed on

each.

VOLUME DISCOUNT

When negotiating the sale of a book title, you

want to minimize the wholesaler's price

discount based on the number of books sold

for that title. The following table shows

different quantity discounts that could be

negotiated and the corresponding

commissions showing the importance placed

on each.

VOLUME

The wholesaler would like you to sell a quantity of books consistent

with the quantity it has sold to other similarly$-$sized retailers. The

following table shows different quantities of books that could be

sold over the life of this agreement that could be negotiated and the

corresponding commissions showing the importance placed on

each.

PRICE OF BOOKS COMMISSION $($$$)$

$48\%$ of the list price $30000$

$46\mathrm{.}5\%$ of the list price $22500$

$45\%$ of the list price $15000$

$43\mathrm{.}5\%$ of the list price $7500$

$42\%$ of the list price $0$

VOLUME DISCOUNT COMMISSION $($$$)$

$1\%$ for every $50,000$ units sold $24000$

$1\mathrm{.}5\%$ for every $50,000$ units sold $18000$

$2\%$ for every $50,000$ units sold $12000$

$2\mathrm{.}5\%$ for every $50,000$ units sold $6000$

$3\%$ for every $50,000$ units sold $0$

VOLUME COMMISSION $($$$)$

$250,00018000$

$225,00013500$

$200,0009000$

$175,0004500$

$150,0000$

BUYBACK PRICE OF UNSOLD

ITEMS

If the retailer has excess quantities of

unsold books, the wholesaler wants to

minimize its costs by buying these books

back from the retailer at a low price. The

following table shows different buyback

prices for unsold books and the

corresponding commissions showing the importance placed on each.

TRANSPORTATION COSTS

As a means to control costs, the wholesaler

prefers to pay as little as possible for the

delivery of the initial order of books,

preferring to pay zero transportation costs.

The following table shows different

percentages of transportation costs that could

be paid by the wholesaler and the

corresponding commissions showing the importance placed on each.

MAXIMUM BUYBACK QUANTITY

Although the demand for classic books can, at

times, be unpredictable, you want the retailer to sell

back as little of its excess inventory to the

wholesaler as possible. The following table shows

different maximum quantities that the wholesaler

could buy back from the retailer and the

corresponding commissions showing the

importance placed on each.

SHIPPING WINDOW

A shipping window is a timeframe

within which the wholesaler must ship

a book order from its warehouse to

each of the retailer's store locations. If

the books are not shipped within that

timeframe, the retailer has the option

of either canceling the entire order or

imposing financial penalties. The wholesaler typically prefers larger shipping windows, so it can save on

transportation costs by combining a variety of orders and shipping them simultaneously using full

truckloads. Fortunately, given the large number of books sold by the wholesaler, the wholesaler can

cheaply ship full truckloads of books directly to the retailer in a timely manner. This allows the wholesaler

to deliver these books in less time while still saving on transportation costs. The following table shows

the different shipping windows and the corresponding point totals showing the importance placed on each.

BUYBACK PRICE OF

UNSOLD ITEMS

COMMISSION $($$$)$

$5\%$ of the original sale price $15000$

$20\%$ of the original sale price $11250$

$35\%$ of the original sale price $7500$

$50\%$ of the original sale price $3750$

$65\%$ of the original sale price $0$

TRANSPORTATION COSTS COMMISSION $($$$)$

$0\%$ paid by the wholesaler $12000$

$25\%$ paid by the wholesaler $9000$

$50\%$ paid by the wholesaler $6000$

$75\%$ paid by the wholesaler $3000$

$100\%$ paid by the wholesaler $0$

MAXIMUM BUYBACK

QUANTITY

COMMISSION $($$$)$

$10\%$ of every order $9000$

$33\%$ of every order $6750$

$55\%$ of every order $4500$

$78\%$ of every order $2250$

$100\%$ of eve