PRACTICAL MGT. SCIENCE (LL)-W/MINDTAP
6th Edition
ISBN: 9781337610278
Author: WINSTON
Publisher: CENGAGE L
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Chapter 2, Problem 27P
a)
Summary Introduction
To determine: The increase in sales from the rebate that would make the rebate and price cut equally desirable.
Price cut:
Price cut is the cutting down the price of a product. It is usually done to increase sales and improve the market share of a product.
Price rebate:
Price rebate is when a certain amount of the purchase price is returned to the buyer after the buyer has purchased a certain volume of a product.
b)
Summary Introduction
To perform: A sensitivity analysis that could be used to help determine the best decision for Company D.
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Dataware is trying to determine whether to give a $10 rebate, cut the price $6, or have no price change on a software product. Currently, 40,000 units of the product are sold each week for $45 apiece. 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. Given all other assumptions, what increase in sales from the rebate would make the rebate and price cut equally desirable?b. 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 (two-way data table) that could be used to help determine Dataware’s best decision.
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A buyer for a large sporting goods store chain must place orders for professional footballs with the football manufacturer six months prior to the time the footballs will be sold in the stores. The buyer must decide in November how many footballs to order for sale during the upcoming late summer and fall months. Assume that each football costs the chain $45. Furthermore, assume that each can be sold for a retail price of $90. If the footballs are still on the shelves after next Christmas, they can be discounted and sold for $35 each. The probability distribution of consumer demand for these footballs (in hundreds) during the upcoming season has been assessed by the market research specialists and is presented below. Finally, assume that the sporting goods store chain must purchase the footballs in lots of 100 units.
Demand (in hundreds)
Probability
4
0.30
5
0.50
6
0.20
a) Construct a decision tree to identify the buyer’s course of action that maximizes the expected profit…
Chapter 2 Solutions
PRACTICAL MGT. SCIENCE (LL)-W/MINDTAP
Ch. 2.4 - Prob. 1PCh. 2.4 - Prob. 2PCh. 2.4 - Prob. 3PCh. 2.4 - Prob. 4PCh. 2.5 - Prob. 5PCh. 2.5 - Prob. 6PCh. 2.5 - Prob. 7PCh. 2.5 - Prob. 8PCh. 2.5 - Prob. 9PCh. 2.6 - Prob. 10P
Ch. 2.6 - Prob. 11PCh. 2.6 - Prob. 12PCh. 2.6 - Prob. 13PCh. 2.7 - Prob. 14PCh. 2.7 - Prob. 15PCh. 2.7 - Prob. 16PCh. 2.7 - Prob. 17PCh. 2.7 - Prob. 18PCh. 2.7 - Prob. 19PCh. 2 - Julie James is opening a lemonade stand. She...Ch. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - The file P02_26.xlsx lists sales (in millions of...Ch. 2 - Prob. 27PCh. 2 - The file P02_28.xlsx gives the annual sales for...Ch. 2 - Prob. 29PCh. 2 - A company manufacturers a product in the United...Ch. 2 - Prob. 31PCh. 2 - Prob. 32PCh. 2 - Assume the demand for a companys drug Wozac during...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 36PCh. 2 - Prob. 37PCh. 2 - Suppose you are borrowing 25,000 and making...Ch. 2 - You are thinking of starting Peaco, which will...Ch. 2 - Prob. 40PCh. 2 - The file P02_41.xlsx contains the cumulative...Ch. 2 - Prob. 42PCh. 2 - Prob. 43PCh. 2 - The IRR is the discount rate r that makes a...Ch. 2 - A project does not necessarily have a unique IRR....Ch. 2 - Prob. 46PCh. 2 - Prob. 1CCh. 2 - The eTech Company is a fairly recent entry in the...
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