Please help: Investing $2,000,000 in TQM\'s Channel Support Systems initiative w

ID: 2701167 • Letter: P

Question

Please help:

Investing $2,000,000 in TQM's Channel Support Systems initiative

will at a minimum increase demand for your products 1.7% in this

and in all future rounds. (Refer to the TQM Initiative worksheet in

the CompXM.xls Decisions menu.) Looking at the Round 0 Inquirer for

Andrews, last year's sales were $162,769,926. Assuming similar

sales next year, the 1.7% increase in demand will provide

$2,767,089 of additional

revenue. With the overall

contribution margin of 33.6%, after direct costs this revenue will

add $929,742 to the bottom line. For simplicity, assume that the

demand increase and margins will remain at last year's levels. How

long will it take to achieve payback on the initial $2,000,000 TQM

investment, rounded to the nearest month?

Select: 1

26 months

9 months

18 months

TQM investment will not have a significant financial

impact

9 months is answer