There are 2 different catalogs sent to customers. One of the catalogs costs 50 cents to...

There are 2 different catalogs sent to customers. One of the catalogs costs 50 cents to make and is 50 pages long. The conversion rate for the catalog is 5% and each customer brings in 315 dollars. The second catalog costs 95 cents to make, is 100 pages long and each customer brings in 300 dollars from it. The profit margin is 30%. What should the conversion rate for the second catalog be to make at least the same amount of profit as the first one.

Expert Solution

We can assume without any loss of generality that 100 catalogs of both the 1^st and the 2^nd type are made.

In case of the 1^st catalog, the cost is 100 * $ 0.50 = $ 50. The conversion rate is 5 % so that the number of customers that the 1^st catalog brings in is 5. Hence, the revenue generated is 5 * $ 315 = $ 1575 so that the profit is $ 1575 - $ 50 = $ 1525.

Let the conversion rate for the 2^nd catalog be x %.

In case of the 2^nd catalog, the cost is 100 * $ 0.95 = $ 95. The conversion rate is x % so that the number of customers that the 2^nd catalog brings in is x. Hence, the revenue generated is x * $ 300 = $ 300x so that the profit is $ 300x-95.

If the second catalog is to make at least the same amount of profit as the first one, then 300x-95 ≥ 1525 or, 300x ≥ 1525+95 or, 300x ≥ 1620 so that x ≥ 1620/300 i.e. x ≥ 5.4.

Thus, the conversion rate for the second catalog should be at least 5.4 % to make at least the same amount of profit as the first one.

milcah answered 1 year ago

The following data are costs (in cents) per ounce for nine different brands of sliced Swiss...

The following data are costs (in cents) per ounce for nine different brands of sliced Swiss cheese. 27 64 38 44 70 81 47 52 49 a) Calculate the variance for this data set. (Round your answer to three decimal places.) b) Calculate the standard deviation for this data set. (Round your answer to three decimal places.)

the company is going to send 2 different catalogs to their customers. One of the catalogs...

the company is going to send 2 different catalogs to their customers. One of the catalogs costs 50 cents to make and is 50 pages long. The conversion rate for the catalog is 5% and each customer brings in 315 dollars. The second catalog costs 95 cents to make, is 100 pages long and each customer brings in 300 dollars from it. The profit margin is 30%. What should the conversion rate for the second catalog be to make at...

A store has issued two different coupons for its customers to use. One coupon gives customers...

A store has issued two different coupons for its customers to use. One coupon gives customers $25 off their purchase price, and the other coupon gives customers 35% off of their purchase. The store allows customers to use both coupons and choose which coupon to apply first. For this context, ignore sales tax. Let f be the function that inputs a cost (in dollars) and outputs the cost after applying the "$25 off" coupon, and let g be the function...

The government has imposed a 50 cents gas tax in New York. Many of the residents...

The government has imposed a 50 cents gas tax in New York. Many of the residents are going to the nearby states to get gas instead. Construct a Supply and Demand graph showing the impact of the 50 cents gas tax increase in New York & the shift of some NY residents to the gas stations in nearby states. Show any shifts in the demand and/or supply curves and the resulting equilibrium Price and Quantity. Explain this situation.

Price discrimination is the practice of charging different customers or groups of customers different prices for...

Price discrimination is the practice of charging different customers or groups of customers different prices for the same product. Why does price discrimination occur? Describe the conditions that must be present for price discrimination to occur and justify your answer.

The table below shows that costs per mile (in cents) for a sample of automobiles. Small...

The table below shows that costs per mile (in cents) for a sample of automobiles. Small sedan Medium sedan Large sedan SUV 4WD Minivan 43 67 64 87 66 41 49 73 66 76 49 63 83 75 59 54 59 75 78 51 46 64 80 70 52 72 Use the one-way ANOVA test in Excel to complete the following table (round decimals to three decimal places) ANOVA Source of Variation SS df MS F P-value F crit Between...

A shop sells one new designed jacket. Of the customers who buy this jacket, 50% choose...

A shop sells one new designed jacket. Of the customers who buy this jacket, 50% choose the color black, 30% choose dark blue, and 20% choose green. Assume choice of color is made independently by different customers. 1. Calculate the probability that among the next 10 customers who buy the jacket, the first 6 will choose black jackets and the next 4 will not choose black jackets. 2. Calculate the probability that exactly one of the next 10 customers who...

A call option with a strike price of $50 costs $2. A put option with a...

A call option with a strike price of $50 costs $2. A put option with a strike price of $45 costs $3. Explain how a strangle can be created from these two options. Construct a table that shows the payoff and profits of the strangle.

(1) A company manufacturer pipes which was sent out to customers in losts of 1000.The manufacturer...

(1) A company manufacturer pipes which was sent out to customers in losts of 1000.The manufacturer operates a sampling scheme whereby a random sample 10 is taken from each lot ready for despatch and they are released only if the number of defective pipes in the sample is less than 3.Otherwise, the whole lot of 1000 is rejected and reprocessed using the Binomial p.d.f. (I) if 5% of all the pipes produced are known to be defective, how many lots...

Using SPSS!!! ONY SPSS 13. The table shows the costs per mile (in cents) for a...

Using SPSS!!! ONY SPSS 13. The table shows the costs per mile (in cents) for a sample of automobiles. At α = 0.01, can you conclude that at least one mean cost per mile is different from the others? Small Sedan Medium Sedan Large Sedan SUV 4WD Minivan 41 65 60 79 64 39 47 69 58 74 47 61 79 67 57 52 57 71 70 49 44 62 76 68 50 68

Question