Solved by Expert Tutors
Solved by Expert Tutors
Question

This question was created from Chapter 2 notes https://www.coursehero.com/file/10496018/Chapter-2-notes/

10496018-441497.jpeg

How does the presence of uncertainty affect the usefulness of model. As this model looks unrealistic, what is the realistic approach

10496018-441497.jpeg
The Quality Sweaters Company sells hand knitted sweaters. The company is planning to
print a catalog of its products and undertake a direct mailing campaign. The cost of
printing the catalog is $20,000 plus $0.10 per catalog. The cost of mailing each catalog
including postage, order forms and buying names from a mail-order database is $0.15. In
addition the company plans to include direct reply envelopes in its mailings and incurs
$0.20 in extra costs for each direct mail envelope used by a respondent. The average size
of a customer order is $40, and the company’s variable cost per order due primarily to
labor and material costs averages about 80% of the order's value — that is, $32. The
company plans to mail 100,000 catalogs. It wants to develop a spreadsheet model to
answer the following questions: 1. How does a change in the response rate affect profit?
2. For what response rate does the company break even? 3. If the company estimates a response rate of 3%, should it proceed with the
mailing? 4. How does the presence of uncertainty affect the usefulness of the model?

Step-by-step answer

Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliqacinia pulvi

Capture.PNGCapture 2.PNG

Capture 2.PNG
r

Subscribe to view the full answer

Subject: Math

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Let our 24/7 Math - Other tutors help you get unstuck! Ask your first question.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes