QualSupport Corporation manufactures seats for automobiles, vans, trucks, and various
recreational vehicles. The company has a number of plants around the world, including the
Denver Cover Plant, which makes seat covers.
Ted Vosilo is the plant manager of the Denver Cover Plant but also serves as the regional
production manager for the company. His budget as the regional manager is charged to the
Denver Cover Plant.
Vosilo has just heard that QualSupport has received a bid from an outside vendor to supply
the equivalent of the entire annual output of the Denver Cover Plant for $35 million. Vosilo
was astonished at the low outside bid because the budget for the Denver Cover Plant’s
operating costs for the upcoming year was set at $52 million. If this bid is accepted, the
Denver Cover Plant will be closed down.