SALES
FINAL EXAMINATION
PROFESSOR JANICE KOSEL
FALL 2002

1. This is an open book exam. You may consult any materials you wish including but not limited to the UCC, textbook, class notes, course outlines, and treatises.

2. You have two (2) hours to complete this exam.

3. There is one (1) question on this exam. If you believe you require any additional factual information to answer the question, please specify what that information is and how it would affect your answer.

4. Remember to read, think, analyze, and organize your answer before you begin to write.

5. Write your exam number on your exam envelope, at the top of this exam question packet and on all used blue books. Do not use your student ID number, or Social Security Number on any exam materials.

6. At the conclusion of the exam, return all test materials, including blue books, scratch paper, and this exam question packet to the envelope and submit it to the proctor.

Have a happy holiday!


Randy decided to open a new restaurant serving breakfast, lunch, and dinner. He entered a written contract with Barbara, the baker next door, to sell him all the breakfast pastries he required at a price of 50 cents each. For the first three months of the contract, Randy purchased 100 pastries a day from Barbara. Then he had a talk with his accountant.

Randy's menu gave the customer a choice of toast or breakfast pastry with a complete breakfast. Randy's costs for pastries were 50 cents each while toast cost only 12 cents. As Randy's accountant pointed out, the pastries were quickly eating into his profits.

So Randy reviewed his menu. Toast became the only choice with a complete breakfast. Pastries were served only as a side order for $1 each. Randy's requirements of pastries quickly dropped to two dozen a day.

When Barbara complained about the reduced orders, there was a real shouting match. To end it, Randy grudgingly agreed to buy his desserts, including cakes and pies, from Barbara as well.

Unfortunately, the cakes and pies were just not as tasty as Barbara's breakfast pastries. So Randy was selling only ten a day - none to repeat customers. Randy notified Barbara that in the future he would purchase his baked desserts elsewhere. And, given the expansion of his breakfast menu to include bagels and donuts, his daily order of breakfast pastries would be reduced to ten.

Barbara threatened to sue. Then she made an appointment with you. Advise Barbara. If she had consulted you earlier, how would your advice have changed?


END OF EXAM