Merchandising issues associated with product pricing in JMS design

Abstract

The ready-made garments (RMG) sector of Bangladesh has got a greater success than any other sector in terms of growth and foreign exchange earnings. Bangladesh is currently leading the second position in worlds apparel industry. The merchandising department is the most important part of an export oriented readymade garments. The merchandiser has the ultimate responsibility to deal with buyers and suppliers. His job starts before taking an order and it lasts until the order is completed. Through this project work I have tried to show the workflow of a merchandiser and illustrate his responsibilities towards different parties such as buyers, suppliers and internal departments. Setting the product price and negotiating with buyers is one of the most important jobs of a merchandiser. Therefore, he needs to face many challenges because too high price may prevent buyers from ordering whereas lower demand can be a loss project for the company. Here, in JMS Design, they followed the traditional costing method to set the price and allocate the overheads. But during reviewing few related literatures, I get to know that the companies those who deals with multiple product lines, should follow the activity-based costing. Otherwise, small batches production will underestimate the per unit overhead cost and large batches production will show the overestimated one. I have proved this statement with an example math. This research work also focuses on the cost volume profit analysis where I have calculated the breakeven point for JMS Design. At the end of this project work, I have tried to find out the factors those are responsible for attracting foreign buyers. Rather than having cheap labor price Bangladesh is blessed with other resources such as raw materials, skilled labor force, duty free entry access, technology adoption etc. In short, I can say this report will provide an overall knowledge regarding the merchandising works and also their costing methods.