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Case
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Reference no. 504-137-1
Subject category: Marketing
Published by: INSEAD
Originally published in: 2004
Version: 10.2004

Abstract

Shiva Plastics Corp has been invited to submit bids for the production of a number of different injection moulding parts. In the past, the company used a simple 'cost-plus' pricing strategy based on the raw material cost of a part to determine its bids. However, overall manufacturing costs are uncertain and this pricing strategy has resulted in unexpected losses. With a more sophisticated cost estimation approach the company hopes to do better.

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Abstract

Shiva Plastics Corp has been invited to submit bids for the production of a number of different injection moulding parts. In the past, the company used a simple 'cost-plus' pricing strategy based on the raw material cost of a part to determine its bids. However, overall manufacturing costs are uncertain and this pricing strategy has resulted in unexpected losses. With a more sophisticated cost estimation approach the company hopes to do better.

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