tutorial: zone of negotiation how to set the upper and lower limits!!
TRANSCRIPT
![Page 1: Tutorial: Zone of Negotiation How to set the upper and lower limits!!](https://reader035.vdocuments.site/reader035/viewer/2022062620/551a027a5503462e378b4996/html5/thumbnails/1.jpg)
Tutorial:Zone of Negotiation
How to set the upper and lower limits!!
![Page 2: Tutorial: Zone of Negotiation How to set the upper and lower limits!!](https://reader035.vdocuments.site/reader035/viewer/2022062620/551a027a5503462e378b4996/html5/thumbnails/2.jpg)
Situation• Parka value in NYC = $100• Manufacturing Cost in Chicago = $35• Transportation Fixed Cost = $10• Transportation Variable Cost = $20
• Full Capacity • Excess Capacity
![Page 3: Tutorial: Zone of Negotiation How to set the upper and lower limits!!](https://reader035.vdocuments.site/reader035/viewer/2022062620/551a027a5503462e378b4996/html5/thumbnails/3.jpg)
Situation• Parka value in NYC = $100• Manufacturing Cost in Chicago = $35• Transportation Fixed Cost = $10• Transportation Variable Cost = $20
• Full Capacity • Excess CapacityShipper Max
So, most shipper can pay and still make a profit.
Value – Mfg Cost = Max Trans Cost$100 - $35 = $65 is Max Trans Cost
![Page 4: Tutorial: Zone of Negotiation How to set the upper and lower limits!!](https://reader035.vdocuments.site/reader035/viewer/2022062620/551a027a5503462e378b4996/html5/thumbnails/4.jpg)
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.
![Page 5: Tutorial: Zone of Negotiation How to set the upper and lower limits!!](https://reader035.vdocuments.site/reader035/viewer/2022062620/551a027a5503462e378b4996/html5/thumbnails/5.jpg)
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 capacityFull Capacity = Total Cost (VC+FC)Excess Capacity = Variable Cost only
![Page 6: Tutorial: Zone of Negotiation How to set the upper and lower limits!!](https://reader035.vdocuments.site/reader035/viewer/2022062620/551a027a5503462e378b4996/html5/thumbnails/6.jpg)
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
![Page 7: Tutorial: Zone of Negotiation How to set the upper and lower limits!!](https://reader035.vdocuments.site/reader035/viewer/2022062620/551a027a5503462e378b4996/html5/thumbnails/7.jpg)
Situation• Parka value in NYC = $100• Manufacturing Cost in Chicago = $35• Transportation Fixed Cost = $10• Transportation Variable Cost = $20
• Full Capacity • Excess Capacity
TC = VC+FC 10+20=$30 VC $20
100-35=$65 $65
![Page 8: Tutorial: Zone of Negotiation How to set the upper and lower limits!!](https://reader035.vdocuments.site/reader035/viewer/2022062620/551a027a5503462e378b4996/html5/thumbnails/8.jpg)
Situation• Parka value in NYC = $100• Manufacturing Cost in Chicago = $35• Transportation Fixed Cost = $10• Transportation Variable Cost = $20
• Backhaul????
Cost does matter in Negotiation +$0
$65