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In: Accounting

McDowell's is considering adding a healthy alternative to its traditional dinner meal. This proposed

McDowell's is considering adding a healthy alternative to its traditional dinner meal. This proposed healthy meal will consist of two components: a quinoa & spinach salad and a wheatgrass smoothie. A sector of the company's management wants to use the Shapley method to allocate revenues. This sector of management has already solicited a market research firm to conduct a survey which will determine which component of this new, healthier meal will be the primary factor that causes customers to purchase the meal. Pricing information and the results of the market research are as follow:

Determine how much revenue will be allocated to each product using the Shapley method.
Your Answer
The revenue from the new, healthier meal will be allocated to the quinoa & spinach salad and the wheatgrass smoothie using the Shapley method.

Solutions

Expert Solution

The Shapley method is a way of allocating the revenues from a new product or service to the various components that make up that product or service. In this case, the new, healthier meal will be allocated to the quinoa & spinach salad and the wheatgrass smoothie in proportion to the amount that each component contributes to the overall meal. The market research firm's survey will be used to determine the percentage of customers that purchase the meal because of the quinoa & spinach salad, and the wheatgrass smoothie. This information will be used to calculate the Shapley value for each component, which will in turn be used to determine the revenue that each component will receive.

 

Nabeel answered 3 years ago
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