John has asked Karen, his store manager, to develop a three month long sales campaign and estimate the increase in sales. After some deliberation, she proposes a 15% off sale on LPs and 10% off sale of CDs, believing that the ratio of CDs to LPs sold will remain the same, but that overall sales of CDs and LPs will increase 15%. Her young assistant, John who is a student in the UOP MBA program, suggests just the opposite, a 15% reduction in CD prices and 10% off on LPs. Further, he estimates the sales ratio to change to 85% CDs and 15% LPs and also believes this sale will increase total monthly sales by 15% during the three months.
a. What is McClain’s mean pre-sales profit per LP and CD?
LP: $ _________________ CD: $________________
b. Based on strong probability that both Karen’s and John’s sales projections would come true, which plan would give him the most profit per month over the three month sales?
Karen’s profit: $_____________ John’s profit: $______________