Home Auto Parts is a large retail auto parts store selling the full range of auto parts and supplies for do-it-yourself auto repair enthusiasts. The store is arranged with three prime displays in the store: front door, checkout counters, and ends of aisles. These display areas receive the most customer traffic and contain special stands that display the merchandise with attractive eye-catching designs. Each display area is set up of the beginning of the week and runs for one week. Three items are scheduled next week for special display areas: Texcan Oil, windshield wiper blades, and floor mats. The accompanying table provides information for the three promotional areas scheduled to run next week:
Planned Displays for Next Week
- End of Aisles Front Door Checkout Counter
- Item Texcan Oil Wiper blades Floor mats
- Sales price $.69 can $9.99 $22.99
- Projected weekly 5,000 200 70
- Unit Cost $ .62 $7.99 $17.49
Required:
a. Home Auto has not yet purchased any of the promotion items for the next week. Should management substitute the Armadillo car wax for one of the three planned promotion displays? If so, which one?
b. A common practice in retailing is for the manufacturer to give free units to a retail store to secure desirable promotion space or shelf space. The Armadillo distributor decides to sweeten the offer by giving Home Auto 50 free units of car was if it places the Armadillo was on display. Does this change your answer to part (a)?