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Strategic Decision-Making For Merchandise Purchases: A Profit Maximization Approach

This Homework Answers document focuses on profit-driven merchandise purchasing strategies. Download now!

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Strategic Decision-Making for Merchandise Purchases: A ProfitMaximization ApproachIn four weeks it will be time for the NCAA college football championship game,which will be between the Sloths and the Jellyfish. Sports Store Supreme has$50,000 with which to purchase associated merchandise, and wants to determinewhich of several choices will provide the largest expected profit.These choicesare as follows:1)Assume that the Sloths will win, and purchase 10,000 shirts at $5.00 eachcelebrating their victory. These shirts can be sold for $20.00 each if theSloths win, and will be donated to charity and claimed as a businessexpense at $2.00 per shirt if the Sloths lose.2)Assume that the Jellyfish will win, and purchase8,500shirts at $5.00 eachcelebrating their victory(research shows that there is a smaller percentageof Jellyfish fans that are customers, and it is not expected that 10,000 shirtswould sell). These shirts can be sold for $20.00 eachif the Jellyfish win, andwill be donated to charity and claimed as a business expense at $2.00 pershirt if the Jellyfish lose.3)Purchase 5,000 shirts for each team at $5.00 each, understanding that thelosing team’s shirts can be donated to charity and claimed as a businessexpense at $2.00 per shirt. The winning team’s shirts can be sold for $20.00each.4)Purchase 10,000 shirts commemorating the event for $5.00 each. Theseshirts can be sold to fansof either team for $12.00 each regardless of whichteam wins.The first state of nature will be that the Sloths win the championship. The secondstate of nature will be that the Jellyfish win the championship.There is no reason

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Economics

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