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Any topic (writer's choice) - Essay Example

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This essay stresses that George is aiming to maximize his profit from selling the shirts while at the same time minimizing his losses and expenses. To maximize his profit, he intends to order an amount of shirts that will all be sold at the concert. …
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Download file to see previous pages According to the essay the industry George’s company is operating in deals with goods with a short lifecycle, after which they lose their value. The shirts are only valuable for each event they are made for, after which their value falls and they can only be sold at a fraction of the price. Another product that can be considered similar is daily newspapers, which cannot be sold at the same price a day after. The company's sales cannot be determined with certainty, and probabilities are used to estimate expected sales. Probabilities are used to predict the number of attendees to the events and the number of attendees likely to buy the shirts as well. Demand side probabilities are afterward used to estimate the volumes of the supply side to order.From this paper it is clear that decision alternatives George has to make are between orders of 5000, 7500 and 10000 shirts. A larger order has a volume discount. He also has to decide on the percentage of people attending the concert interested in buying the shirts being 5%, 10% or 15% of the total attendance. Given his expectation of a medium attendance of 50000 grandstand seats and the guaranteed 20000 for the standing area, 10% of the total of 70000 gives a minimum of 7000 shirts. An order of 7500 shirts will cost $25250. Compare this to his preferred order of 5000 shirts. They will cost $17750. Selling them to agents at $100 a dozen he will make $41600 from 416 dozens.8 surplus shirts sold at $1.50 each will generate $12. ...Download file to see next pagesRead More
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