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Essay text:
The following is an analysis about weather the proposed incentive compensation plan for Purity Steel Corporation's Warehouse Sales Division is the correct method of rewarding the branch managers. This is brought to attention when a branch manager wonders whether his new warehouse should be leased to alleviate the impact on return on investment (ROI).
Background
The Warehouse Sales Division (WSD) is an autonomous unit of the Purity Steel Corporation, an incorporated steel producer. The unit operates 21 field warehouses throughout the United States. In 1995 sales totalled approximately $225 million, half of the products sold were purchased from Purity Steel's Mill Products Division, using a market-based transfer price...
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