Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept
expert
Expert with best answer

Mounir

100% Recommendation Rate

7 Meetings

30 Q&A Upvotes

USD 419 / Coaching

2

How to calculate gross profit when the retailer margin is blank?

I'm not sure how to calculate the gross profit for the Seasoned Rotisserie when there is a "?" on retailer margin - the answers / process on the casebook are a little unclear too. I know that for the standard rotisserie you get gross profit by multiplying retail price (3.33) x retailer margin (0.30) x number of sales (1000/3.33 = 300) to get $300, which seems to be right according to the casebook. However, I just don't know how to solve for the gross profit for the right column on seasoned rot. chicken... especially the question mark is confusing me. Any help would be super appreciated, thanks a lot guys.

(This is from the Kellogg 2011 casebook, case 7 Rotisserie Chicken if that helps)

Kellogg 2011 casebook, case 7 Rotisserie Chicken

I'm not sure how to calculate the gross profit for the Seasoned Rotisserie when there is a "?" on retailer margin - the answers / process on the casebook are a little unclear too. I know that for the standard rotisserie you get gross profit by multiplying retail price (3.33) x retailer margin (0.30) x number of sales (1000/3.33 = 300) to get $300, which seems to be right according to the casebook. However, I just don't know how to solve for the gross profit for the right column on seasoned rot. chicken... especially the question mark is confusing me. Any help would be super appreciated, thanks a lot guys.

(This is from the Kellogg 2011 casebook, case 7 Rotisserie Chicken if that helps)

Kellogg 2011 casebook, case 7 Rotisserie Chicken

2 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Mounir

100% Recommendation Rate

7 Meetings

30 Q&A Upvotes

USD 419 / Coaching

Hey! This is really a typical question that, if you are familiar with, it will increase your chance get an offer. Let's structure this.

PART 1
I checked the prompt on the case book. Another exhibit showed that: the retailer margin is 25%

PART 2
Retailer profit for Seasoned Chicken compared to Standard Chicken
Retailer profit = # of chickens sold * (price per chicken * retailer margin per chicken)

Standard Chicken (total profit for retailers = $300 + $600 = $900/week)

  • Store A: $1,000 (weekly sales) * 30% (retailer margin) = $300 overall profit
  • Store B: $2,000 (weekly sales) * 30% (retailer margin) = $600 overall profit

Test Market BBQ Seasoned Chicken (total profit for retailers = $400+ $675= $1,075/week)

  • Store C: $1,600 (weekly sales) * 25% (retailer margin) = $400 overall profit
  • Store D: $2,700 (weekly sales) * 25%* (retailer margin) = $675 overall profit

FORMULA

  • Profit = Revenu * margin
  • Profit = Revenu - Cost

Hey! This is really a typical question that, if you are familiar with, it will increase your chance get an offer. Let's structure this.

PART 1
I checked the prompt on the case book. Another exhibit showed that: the retailer margin is 25%

PART 2
Retailer profit for Seasoned Chicken compared to Standard Chicken
Retailer profit = # of chickens sold * (price per chicken * retailer margin per chicken)

Standard Chicken (total profit for retailers = $300 + $600 = $900/week)

  • Store A: $1,000 (weekly sales) * 30% (retailer margin) = $300 overall profit
  • Store B: $2,000 (weekly sales) * 30% (retailer margin) = $600 overall profit

Test Market BBQ Seasoned Chicken (total profit for retailers = $400+ $675= $1,075/week)

  • Store C: $1,600 (weekly sales) * 25% (retailer margin) = $400 overall profit
  • Store D: $2,700 (weekly sales) * 25%* (retailer margin) = $675 overall profit

FORMULA

  • Profit = Revenu * margin
  • Profit = Revenu - Cost

Hey, thanks for getting back to me :) I did see the other graph where margin was 25% for pre-seasoned chickens, but I wasn't sure if the "?" labeled margin would be 25% or 30%. Why would it be 25% ( the margin on the previous graph) and not 30% (the margin for standard rot?) Thank you! — Anonymous A on Aug 31, 2020

Book a coaching with Ian

100% Recommendation Rate

127 Meetings

9,234 Q&A Upvotes

USD 289 / Coaching

Hi there,

This is a really great lesson for the following two points:

1) Pay attention to all information provided to you. Make sure you write down + note all important pieces of information. Keep them organized, and make sure to scan through your notes any time you think a piece of information is missing...it might not be!

2) When in doubt, ask (smartly). If you clearly don't have a number when you need one, just ask! However, when you ask, lead with something. In this case, you could say: "So I see that standard rotisseries carries a quite impressive margin of 30%. I assume that the premium rotisserie would carry an even higher margin given that it is a luxury product. Do we have numbers on this? Perhaps 50%?"

Hi there,

This is a really great lesson for the following two points:

1) Pay attention to all information provided to you. Make sure you write down + note all important pieces of information. Keep them organized, and make sure to scan through your notes any time you think a piece of information is missing...it might not be!

2) When in doubt, ask (smartly). If you clearly don't have a number when you need one, just ask! However, when you ask, lead with something. In this case, you could say: "So I see that standard rotisseries carries a quite impressive margin of 30%. I assume that the premium rotisserie would carry an even higher margin given that it is a luxury product. Do we have numbers on this? Perhaps 50%?"

(edited)

Related case(s)

MBB Final Round Case - Smart Education

Solved 11.0k times
MBB Final Round Case - Smart Education Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvantaged areas. The client is considering starting operations for its services in the Chicago area. They hired us to understand if that makes sense. Due to the nonprofit regulation, SmartBridge should operate on its own in the market, without any partnership. How would you help our client?
4.6 5 427
| Rating: (4.6 / 5.0)

Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvant ... Open whole case

Hot Wheels

Solved 2.9k times
Hot Wheels Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability.
4.6 5 199
| Rating: (4.6 / 5.0)

Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability. Open whole case

Chinese Chess - Airline Business During COVID-19

Solved 2.2k times
Chinese Chess - Airline Business During COVID-19 Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April.  They've brought you in to first investigate what can be done immediatedly to prevent hemorrhaging cash and surive in the short-term. They are also looking to see how the current situation can be viewed as an opportunity, and what can be done to prepare for the future. 
4.3 5 64
| Rating: (4.3 / 5.0)

Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April. They've brought you in to first investigate what can be done immediatedly to prevent hemor ... Open whole case

Coronavirus Times - COVID-19 Brainteaser

Solved 2.2k times
Coronavirus Times - COVID-19 Brainteaser You and your family are faced with a challenging set of decisions. Due to coronavirus, your partner has taken a 20% paycut and you are worried you may lose your job. In addition, while daycare is still open, you are worried that sending your two children there will increase the risk of them bringing the virus back to your house, where your elderly grandparents are also staying. How would you go about thinking about this problem, and what would you recommend?
4.5 5 35
| Rating: (4.5 / 5.0)
Difficulty: Beginner | Style: Brain Teaser | Topics: Brain teaser

You and your family are faced with a challenging set of decisions. Due to coronavirus, your partner has taken a 20% paycut and you are worried you may lose your job. In addition, while daycare is still open, you are worried that sending your two children there will increase the risk of them bringing ... Open whole case

McKinsey Digital / BCG Platinion: Oil & Gas Upstream Technology

Solved 1.8k times
McKinsey Digital / BCG Platinion: Oil & Gas Upstream Technology [PLEASE NOTE: This is a technically difficult case and should only be completed by those coming in as a Technology specialist, i.e. recruiting for McKinsey Digital, BCG Platinion, etc.] Our client is a multinational oil and gas company. While they are vertically integrated and have upstream, midstream, and downstream divisions, they have recently been experiencing competitivity issues in the upstream gas division, which brings in $1B in profits annually. Our client’s upstream division has offices in Australia and Indonesia. Their work is highly dependent on their IT systems, as they have to constantly monitor wells and pipes (pressure, hydrocarbon count, fluid makeup, etc.) The upstream division has two large legacy IT systems that are primarily used for downstream operations but have been modified for upstream purposes. These systems are managed by a central team in the US which is responsible for all IT issues across the business. They triage issues/enhancements and then manage development teams in India and Finland who complete the work.
4.5 5 42
| Rating: (4.5 / 5.0)

[PLEASE NOTE: This is a technically difficult case and should only be completed by those coming in as a Technology specialist, i.e. recruiting for McKinsey Digital, BCG Platinion, etc.] Our client is a multinational oil and gas company. While they are vertically integrated and have upstream, midstr ... Open whole case