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CHEEZY WHEEZY

Starting as a small retail store in New Glarus, Wisconsin, the Cheezy Wheezy firm had slowly grown into a chain of nine retail shops located in southern Wisconsin and northern Illinois. In recent years nearly all of its competitors had begun issuing catalogs, widely distributed in late October, advertising gift packages of cheese, jam, jellies, and other fancy food items. HenryWilson, son of the firm's founder, had convinced his father that Cheezy Wheezy should also issue a catalog.
It was then March, and the last snows were melting. Henry Wilson had called his third staff meeting in as many weeks to discuss the catalog project. Present were Henry (whose title happened to be vice president); Susan Moore, the sales manager; Jeff Bell, the inventory manager; and RobertWalker, the traffic manager. Also present was Robert Caldwell, from a Milwaukee-based ad agency that was handling many aspects of the catalog project. Moore and Caldwell had just finished describing the catalog's tentative design and the allocation of catalog pages to various product lines. Caldwell then said, "We are up to the point where we must design the order form, which will be stapled insidethe center pages. It will be a single 8&- by 11-inch sheet. The customer will remove it from the catalog, complete it, fold it into the envelope shape, lick the gummed lines, and mail it in. The order form will be on only one side of the sheet. On the reverse will be the instructions for folding and Cheezy Wheezy's mailing address in New Glarus; the remainder of the space will be ads for someimpulse items. Right now we're thinking of a Santa Glaus-shaped figure molded out of cheese."
"Enough of that/' said Wilson, "this group isn't here to discuss Santa dolls. We're here to design the order form. We may also have to talk a little about selling terms. Susan?"
Responding to her cue, Moore said, "Our biggest problem is how to handle the transportation and shipping costs. We've studied allof our competitors' catalogs. Some absorb the costs into the product's price, some charge by weight of the order, some charge by money value of order, and some ship COD."
"How important are shipping costs, Susan?" asked Bell.
"Plenty," was her response. "They run $2 to $3 for a one- or two-pound package. If you take a pound of cheese that we sell in our retail stores for $2, here are our costsif it goes by catalog: our cost of goods, $1; order processing, 50 cents; overhead including inventory carrying costs, 50 cents; packaging for shipment, 50 cents; and transportation costs to any point in the United States ranging between $1.75 and $3.20. If, however, we're dealing with bigger shipments, the relative costs vary."
"I'm not following you," said Wilson.
"It's like this," respondedMoore: "The wholesale cost of cheese to us is the same per pound, no matter how much is sold. Order-processing costs are approximately the same for each order we'll be receiving by mail. Overhead and inventory carrying costs are always present but may be allocated in a variety of ways. Packaging costs are also about the same per order. They go up only a few cents as we move to larger cartons.Transportation costs are hard to describe because of their tapers. Right now our whole catalog project is bogged down with the problem of transportation cost tapers."
"Tapers?" said Wilson, turning to Walker. "You've never told me about tapers before. It sounds like some kind of animal."
"That's tapir, t-a-p-i-r," said Walker. "We're talking about tapers, t-a-p-e-r-s."
"Oh," said Wilson. "What arethey?"
"When one ships small packages of cheese," said Walker, "rates are based on two factors, the weight being shipped and the distance. As weight or distance increases (or both), the rates go up, but not as quickly. This is called the tapering principle. To ship two pounds of cheese from New Glarus to St. Louis costs $2.40; three pounds cost $3.30; five pounds cost $4.60; and so on. A hundred...