Aunt Connie's Cookie Simulation


Aunt Connie’s Cookies Simulation
Lauren Koffinas
University of Phoenix

Aunt Connie’s Cookie Simulation
      Aunt Connie’s Cookie Company is a successful business selling lemon crème and real mint cookies since 1986. The new COO needs to make decisions to maximize contribution margin and the company’s profits. The following details some of the decisions to help keep Aunt Connie’s Cookies a success (University of Phoenix, 2010).
Price and Advertising Changes
In September, the new COO takes over and begins to analyze data to make decisions about the price of the cookies, advertising budget, and price share to distributors. Looking at past data, the COO realizes the price of the cookies is increasing over the last several months, which is causing a decrease in volume of sales.
The first step is to determine a better price of the cookies to increase the volume of sales. Lemon crème is the top seller for the company. The COO wants to reduce the price per box from $2.00 to $1.93 for the lemon crème. The price decrease for the lemon crème results in an increase of sales from 725,000 packs of cookies or $1,450,000 in revenue to 992 packs of cookies or $1,915,000 in revenue giving an increase in revenue. The COO wants to lower the price real mint cookies price decrease from $1.80 to $1.72 per pack. This results in increase of sales from 822 packs of cookies or $1,480,000 in revenue to 968 packs of cookies or $1,665,000 in revenue. The decrease in price lowers the contribution margin, but the increase revenue offsets this affect (University of Phoenix, 2010).
The next step is to determine the amount of share to the distributors. Increasing the lemon crème share from $.06 to $0.10 will lower the contribution margin but the increase in revenue will help offset this affect. The COO did not change the share price for the real mint cookies, which does not give optimal profits (University of Phoenix, 2010).
The COO...