If a store decides to sell their products online (in addition to the traditional in-store), how would it impact the implied demand uncertainty? Assuming Amazon is operating on the efficient frontier, give two examples for how Amazon can shift the whole efficient frontier curve.
- If a store decides to sell their products online (in addition to the traditional in-store), how would it impact the implied demand uncertainty?
- Assuming Amazon is operating on the efficient frontier, give two examples for how Amazon can shift the whole efficient frontier curve.
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Demand uncertainty refers to the external factors that affect the demand to suddenly increase or decrease. This may be due to sudden changes in trends, customer taste, distribution activities, etc. Demand uncertainty may create problems in business. This may include determining the next order, the inventory issues related to the quantity of the order that is required, the storage of finished goods, etc. If the demand suddenly increases the business will not have enough goods to supply and if it decreases the business will suffer a loss due to unsold goods and the costs that were incurred.
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