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Despite recent losses, Salem Data Services (SDS) isn’t an unfixable problem for Salem Telephone Company (STC). In the last few months SDS was able to reduce its net loss. Although a net loss isn’t desirable, this shows the company is trending in the right direction. Variable costs are much less than fixed costs for the company. Flores should look at reducing fixed costs wherever possible for SDS without negatively affecting the company’s operations. Reducing fixed costs would help make SDS more profitable.
Additionally, as the previous simulation showed, increasing promotion resulted in more hours being sold and the company reporting a net gain rather than a net loss. In my opinion, Flores should not discontinue operation for SDS but should spend more to promote the company and its services.
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