Vesta Corporation

7 Pages Posted: 1 Jun 2017

See all articles by Phillip E. Pfeifer

Phillip E. Pfeifer

University of Virginia - Darden School of Business

Michael Balok

affiliation not provided to SSRN

Abstract

This case examines Vesta Corporation's bidding procedures for contracts to produce expanded polystyrene packaging materials. One of the important uncertainties in the bidding process is the amount of machine time each job would require. Historical data are provided to allow an analysis of the relationship among machine times and the physical characteristics of the job. Students are asked to bid on 10 potential new jobs.

Excerpt

UVA-QA-0516

Rev. Mar. 27, 2013

VESTA CORPORATION

The gloomy sky as he drove home from his office reminded Wilbur Warner of his problem. Recently promoted to vice president of sales for VESTA Corporation, he was responsible for securing contracts that were awarded on a bid basis. In the past, a simple method of estimating costs had been sufficient to guarantee a satisfactory return on all items his company produced under contract, but recently improper pricing of his company's products had been having a serious effect on profitability. A more accurate method for estimating production costs was quickly becoming essential for competitive and profitable pricing.

Background

VESTA produced expanded polystyrene (EPS) shapes for a wide variety of customers. Expanded polystyrene was a moldable plastic material first commercialized in the mid-l950s. In its raw form, beads of EPS resembled small grains of white sand. When subjected to high-pressure steam, the beads expanded up to 50 times their original size and fused together. The expansion and fusion was conducted in specially made molds or “steam chests.”

. . .

Keywords: bargaining/bidding, pricing, relevant costs, uncertainty

Suggested Citation

Pfeifer, Phillip E. and Balok, Michael, Vesta Corporation. Darden Case No. UVA-QA-0516, Available at SSRN: https://ssrn.com/abstract=2975098

Phillip E. Pfeifer (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4803 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/Pfeifer.htm

Michael Balok

affiliation not provided to SSRN

No Address Available

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