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Problem Definition

Your client is a direct mail clothing retailer. They primarily sell clothes through their product catalog. Next year, postage costs will increase to 40 cents per catalog. Your client wants to know whether his current business model is still profitable.

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21.2k
Times solved
Beginner
Difficulty
Do you have questions on this case? Ask our community!

Exhibits

Case Structure

Revenue estimation tree

Assumption:

The average repeat order price (some customers buy more than once from the retailer) is the same as the average price of the initial orders.

Clothing Retailer's Revenue

*Orders received within 2 weeks of sending the catalog are counted as initial orders.

2x2 Matrix