FinePrint Company Case Analysis by Da Zhang
Questions:
1. If FinePrint is currently operating at full capacity of 150,000 brochures per month, should the special order from Abbie Jenkins be accepted? [In answering, assume Ernest Bradley has not yet made his offer to handle 30,000 brochures.]
John should not take this special order because filling any special order at full capacity at reduced price will fail to satisfy customers who pay full price.
Computation of using 25,000 capacity to produce normal brochures:
Revenue-Cost=1500*17-22500=25500-22500=3000
Computation of using 25,000 capacity to produce special order:
Revenue-Cost=(1250*17+250*10)-(22500-250)=(21250+2500)-22250=1500
Apparently, the profit generated from special order is much less than from normal brochures, thus Fineprint should not take the offer.

2. Assume that Ernest Bradley has made his offer to handle 30,000 brochures. a. Assuming FinePrint is operating at capacity of 150,000 brochures and there is no special order opportunity from Abbie Jenkins, should FinePrint outsource 30,000 brochures to Ernest? Why or why not?
Fineprint should not outsource 30,000 brochures to Ernest because the cost that Fineprint produce 30,000 by itself is less than the cost of outsourcing when the revenues remain unchanged.
Cost of outsourcing 30,000 brochures=300*8=2400
Cost of self-production of 30,000 brochures=30,000*0.04+(30,000*0.01)*3=1200+900=2100
Apparently, variable cost $2100 is less than outsourcing cost $2400, thus Fineprint should not outsource in this situation. b. Would your answer change if there is the special order from Abbie for 25,000 brochures and FinePrint is operating at capacity of 150,000 brochures? Why or why not?
My answer won’t remain the same under this situation. The reason is that the profit will be
3000+ (10-8)*250=3000+500=3500 when Fineprint takes