Ingersoll Rand Distributor Margins

  Ingersoll Rand Distributor Margins Read Ingersoll article and answer the following questions This assignment is based on the Ingersoll Rand Case. 1) Use the data in Table A to calculate distributor margins ($). Assume Product gross margin is 10% and gross margin for installation parts and maintenance is 30%. a) Prepare a table that shows calculation of distributor margins. For an example of the table see below. b) What are the implications for Distributor motivations on selling 200 HP Reciprocal vs. Rotary vs. Centrifugal? Suggest any remedies / incentives if necessary. c) If Ingersoll Rand de-authorizes a distributor, how can the distributor replace the lost revenue? Which revenue is more replaceable? Product or service? What are the implications for Ingersoll Rand’s power over the channel? 2) What is the typical discount off list price offered by Distributors to end customers? (Hint: Assume gross margin on product is 10%. Also use other information on page 5) 3) Exhibit 3 and Exhibit 4 show that Air Centers show strong performance from 1980-1985. Based on this data can we conclude that Air Centers are a more effective channel compared to independent distributors? Hint: Think about alternative explanations for the superior performance. Assignment: NPV Analysis (10 Yrs) In $ Unless Indicated Otherwise Reciprocal 200 HP Rotary 200 HP Centrifugal 200 HP Total Ownership Costs A Distributor Margin on Product Sales B Distributor Margin on Installation C Distributor Sales Rep Salary & Commissions on Bookings (Product Sales + Install)** D Distributor Margin on Product Sales and Installation Net of Rep Comissions E Distributor Margin on Parts and Maintenance (10 Yrs Not Discounted) F Total Distributor Margin (=D+E) G Parts and Maintenance Margin as a % of Total Distributor Margins (=E/F) H NPV of Distributor Margins on Parts & Maintenance 4% Discount Rate I NPV of Total Distributor Margins (D+H) J % of NPV of Total distributor Margins from Parts & Maintenance (H/I) **See page 5 for data on commissions and salary. Please submit a hard copy of your answers in class. Please remember to clearly put your name on the submission. Also upload a pdf copy.