1. A retailer sells high fashion clothing that is very seasonal. They sell a unique line of clothing in the spring, summer, fall and winter. Their primary manufacturer has determined the significant savings from off-shoring is beneficial to them but they need the retailers to order a larger quantity in advance. The retailer has a large store and can hold a significant amount of clothing on display on the floor but very little storage for anything left over from previous season. What action could the manufacturer take to incent the retailer to order more inventory for the upcoming sprint season?
A. Lower the salvage value offered to retailer for the spring clothing line
B. Increase salvage value offered to retailer for the spring clothing line
C. Increase wholesale price to increase retailer’s profit on the spring clothing line
D. None of these will encourage a larger order
2. A retailer is deciding how much of a seasonal item to buy with the goal of maximizing retailer profit. The item sells for $10 each with a wholesale cost of $4. At the end of the season, any unsold items need to be sold at clearance for 70% off retail. Her manager asked her what CSL to target for this item, what is the correct answer?
A. 54.5%
B. 70.5%
C. 85.7%
D. 97.5%