You are the sales manager at the local Walmart and upper management wants to better understand the outlook for the upcoming season and you have to stock the store with bicycles. Create a Markdown Pricing Model with the following facts Retail Price: $100 Inventory: 100 Selling Season: 60 Days at Full Retail: 50 Intermediate Markdown: 25% Clearance Mark Down: 60%
Calculate the Demand Function and Determine the Revenue for Retail, Discount, and Clearance.
Please show formulas in Excel***
We have the following items given:-
Retail Price: $100
Inventory: 100
Selling Season: 60
Days at Full Retail: 50
Intermediate Markdown: 25%
Clearance Mark Down: 60%
To find :- Demand Function and the Revenue for Retail, Discount, and Clearance.
Solution:-
Markdown price by 100*0.25 = $25 which makes the new retail price $75 and a discount of $25.
Thus revenue = $75*60=$4500 -------------1
Discount = $25*60=$1500------------------2
Now the clearance markdown is by $100*0.60=$60
New retail price for clearance is $40 and discount is $60
Thus revenue is = $40*40=$1600----------------1
Discount = $60*40=$2400--------------------2
Thus total revenue from both 1 is $6100 and total discount given from both 2 is $3900.
Thus the demand function which can be obtained is D=f(P,d) where D= demand, P= Price and d=discount.