DOPE charges customers for extra activities based on the efforts involved in fulfilling phone and website orders. This helps pass customers to Customer As required. Alternatively, DOPE can impose a minimum order requirement available only through the website or ensure account receivables are no more than 30 days old. The main goal is to increase profitability.
One way to increase profitability is by implementing a proper cost accounting system to determine which products are profitable and which are not. Profit-making customers can be given additional services and charged accordingly. Alternatively, the company can adjust minimum requirements for orders and accoun
...t payables for unprofitable customers to reduce operational costs.
Analysis of Customer A and Customer B revealed that those placing large annuity orders and ordering online have the lowest overhead costs, while those placing fewer or smaller orders are the most costly. Customer A placed a total of 12 orders over the years, with half of them being online.
If Customer B places 100 orders by phone within the same year, the company needs to modify the ordering practices of such customers, encouraging them to adopt similar buying patterns as Customer A. Otherwise, the company should decrease customers like B and increase those like A, with the intention of boosting DOPE's profits.
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