1 / 8

Tutorial: Zone of Negotiation

Tutorial: Zone of Negotiation. How to set the upper and lower limits!!. Situation. Parka value in NYC = $100 Manufacturing Cost in Chicago = $35 Transportation Fixed Cost = $10 Transportation Variable Cost = $20 Full Capacity. Excess Capacity. Situation. Parka value in NYC = $100

Download Presentation

Tutorial: Zone of Negotiation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Tutorial:Zone of Negotiation How to set the upper and lower limits!!

  2. Situation • Parka value in NYC = $100 • Manufacturing Cost in Chicago = $35 • Transportation Fixed Cost = $10 • Transportation Variable Cost = $20 • Full Capacity • Excess Capacity

  3. Situation • Parka value in NYC = $100 • Manufacturing Cost in Chicago = $35 • Transportation Fixed Cost = $10 • Transportation Variable Cost = $20 • Full Capacity • Excess Capacity Shipper Max So, most shipper can pay and still make a profit. Value – Mfg Cost = Max Trans Cost $100 - $35 = $65 is Max Trans Cost

  4. Situation • Parka value in NYC = $100 • Manufacturing Cost in Chicago = $35 • Transportation Fixed Cost = $10 • Transportation Variable Cost = $20 • Full Capacity • Excess Capacity 100-35=$65 $65 Note: The top is the same regardless of the carrier’s capacity.

  5. Situation • Parka value in NYC = $100 • Manufacturing Cost in Chicago = $35 • Transportation Fixed Cost = $10 • Transportation Variable Cost = $20 • Full Capacity • Excess Capacity Carrier Min This changes based on capacity Full Capacity = Total Cost (VC+FC) Excess Capacity = Variable Cost only

  6. Situation • Parka value in NYC = $100 • Manufacturing Cost in Chicago = $35 • Transportation Fixed Cost = $10 • Transportation Variable Cost = $20 • Full Capacity • Excess Capacity Carrier Min TC = VC+FC 10+20=$30 VC $20

  7. Situation • Parka value in NYC = $100 • Manufacturing Cost in Chicago = $35 • Transportation Fixed Cost = $10 • Transportation Variable Cost = $20 • Full Capacity • Excess Capacity $65 100-35=$65 TC = VC+FC 10+20=$30 VC $20

  8. Situation • Parka value in NYC = $100 • Manufacturing Cost in Chicago = $35 • Transportation Fixed Cost = $10 • Transportation Variable Cost = $20 • Backhaul???? $65 Cost does matter in Negotiation +$0

More Related