Question #3 only please 5 p.m. on Saturday. And, they are considering offering seniors a 10% discounton all private pay prescriptions and front-end merchandise.Case Study: Dayton PharmacyBuzz and Sally Dayton own and operate Dayton Pharmacy. They metwhile they were in pharmacy school nearly 18 years ago, married, and decided toopen a community pharmacy. Since both were pharmacists, they felt that theycould share the workload and provide a more personalized service than wascurrently available in the area.Although they are worried about the effects of lower prices on theircarefully cultivated image, they believe that there is little choice but to becomemore price-competitive with the chain pharmacies.troublesome if they stay open longer because their operating costs will increaseby about 4%. They wondered if offering a "frequent customer" program andgiving discounts after 10 purchases would be useful, but this would also increasetheir costs.This is especiallyFrom a profit perspective, Dayton Pharmacy is a financial success. Thetrading area surrounding the pharmacy contains a large number of senior citizenapartments, convalescent homes, and nursing homes. There are two otherpharmacies in the area. One is an old established neighborhood pharmacy andthe other a small regional drugstore.After reviewing their financial statement with their accountant, the Daytonsare led to believe that they can lower prices on fine gift items by as much as 20%and on cosmetics by up to 25%. Still, they are not sure whether to make anyprice changes or not.The size of the market where Dayton Pharmacy is located remained stableuntil a year ago. Since then there has been a significant increase in population inthe area. New arrivals are largely singles who are attracted to the relatively lowhousing costs in the area. As a result of these new arrivals, Dayton Pharmacyand the other established pharmacies are beginning to feel the effects ofaggressive competition from 3 chain pharmacies located in other parts of the city.Questions:1. Should Dayton Pharmacy be alarmed about the aggressiveness of thechain pharmacies?2. Should Dayton Pharmacy make any changes to its price policy? If so,what should be changed and by how much?3. How much more does Dayton Pharmacy have to sell if it lowers its pricesjust to remain the same as currently?The chain pharmacies are offering weekly specials on front-endmerchandise and aggressively advertise the services of their prescriptiondepartment. The largest chain advertises "Super Low Prescription Prices." Eachnewspaper ad includes the following statements in bold print:Superior service from pharmacists who care about you!Ask about our special service on new or transferred prescriptions.We honor most insurance plans!Telephone us today with your health questions.Open everyday.To respond to this competition, the Daytons are considering the possibilityof lowering their prices on selected front-end merchandise, namely, fine gift itemsand cosmetics. In addition, they are thinking about opening on Sundays, as theycurrently are open Monday through Friday from 10 a.m. to 7 p.m. and 10 a.m. to

The formal records of financial activities and position of a business, person, or other entity are…

Answered: 3. How much more does Dayton Pharmacy…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 30P

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3. How much more does Dayton Pharmacy have to sell if it lowers its prices just to remain the same as currently?