. What is Latin Square Design? II. According to you, was John’s decision correct? Justify your answer. III. Is there any other method for addressing John’s issue? Explain. IV. How do you ensure that this is the correct method? V. What are the pros and cons of Latin Square Design
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
City Couriers is a Hyderabad-based courier company. Within a few months of its inception, the
company witnessed a significant growth. Though there are a lot of companies in the industry
including regional, national and multinational companies, City Couriers gained a huge market share.
Analysts and industry experts opined that its fast delivery, reasonable cost and customer service
contributed to its success. City Couriers is a family-owned company with lot of restrictions.
However, John Britto (Britto), operations manager (who is an outsider) was well respected within
the company for his performance and judgement. He used his past experience to contribute to the
growth of the company.
City Couriers operates its own vans in Andhra Pradesh, Karnataka, Kerala and Tamil Nadu to
transport the documents interconnecting all the destinations. The total operation is controlled and
supervised by Hubcentre in-charges. The operations are based on the ‘hub and spoke’ concept and
are aimed at offering cost effective and reliable services with the all important time advantage as the
key criterion.
The collection centre arranges to move all the shipments to the nearest central office for
consolidation of the consignments. The central office, after consolidation, will move the loads meant
for each destination by the most appropriate mode of despatch to the nearest Hubcentre that in turn
forwards the load to the final destination. Shipments may pass through more than one Hubcentre
before they arrive at the destination. Impressed with the success so far and understanding the latent
potential, the company CEO wanted to expand the business and globally. As a part of the initiative,
Britto was made responsible for the new initiative.
To start with, Britto wanted to increase the fleet services. He has to decide between five brands
(namely D,P,F,C and R) of vans for its next fleet. As the management is cost-conscious, he cannot
opt for expensive vans. All the five brands are comparable in purchase price. So he wants to carry
out a study that will enable him to compare the brands with respect to operating costs.
For this purpose, he selected five best drivers among the company’s employees. In addition he
wanted to carry out the study over a 5-week period.
Though he can assign each week a driver, he is not interested in that and wants to do it in a
systematic way. After discussions with his subordinates, he finally decided to use a Latin Square
Design. The average cost per mile is recorded at the end of each week and is tabulated (Exhibit I).
Exhibit I
Average Cost per Mile for Each Brand of Cars
Week
1 2 3 4 5
1 5.83 6.22 7.67 9.43 6.57
D P F C R
2 4.80 7.56 10.34 5.82 9.86
P D C R F
Drivers 3 7.43 11.29 7.01 10.48 9.27
F C R D P
4 6.60 9.54 11.11 10.84 15.05
R F D P C
5 11.24 6.34 11.30 12.58 16.04
C R P F D
Prepared by the author
Suggested Questions for Discussion
I. What is Latin Square Design?
II. According to you, was John’s decision correct? Justify your answer.
III. Is there any other method for addressing John’s issue? Explain.
IV. How do you ensure that this is the correct method?
V. What are the pros and cons of Latin Square Design?
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