a) Build the basic model to compute the profits of the three options. b) What increase in sales from the rebate would make the rebate and price cut equally desirable? c) Dataware does not really know the increase in sales that will result from a rebate or price cut. However, the company is sure that the rebate will increase sales by between 15% and 40% and that the price cut will increase sales by between 10% and 30%. Perform a sensitivity analysis that could be used to help determine Dataware’s course of action.
Excel spreadsheet question.
. Dataware is trying to determine whether to give a $10 rebate, to cut the price $6,
or to have no price change on a software product. Currently, 40,000 units of the
product are sold each week for $45. The variable cost of the product is $5. The
most likely case appears to be that a $10 rebate will increase sales 30%, and half
of all people will claim the rebate. For the price cut, the most likely case is that
sales will increase 20%.
a) Build the basic model to compute the profits of the three options.
b) What increase in sales from the rebate would make the rebate and price cut
equally desirable?
c) Dataware does not really know the increase in sales that will result from a
rebate or price cut. However, the company is sure that the rebate will increase
sales by between 15% and 40% and that the price cut will increase sales by
between 10% and 30%. Perform a sensitivity analysis that could be used to
help determine Dataware’s course of action.
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