Question
A retailer is trying to choose how to allocate 100 square feet of unused floor space and is considering two different product options. Both products
A retailer is trying to choose how to allocate 100 square feet of unused floor space and is considering two different product options. Both products require all of the available space, so the retailer cannot mix and match between the two products. Product A requires 2 square feet per unit and carries a wholesale cost of $30 per unit. The retailer can sell Product A for $50 per unit and sell through the displayed inventory twice per month. Product B requires 5 square feet per unit and carries a wholesale cost of $100 per unit. The retailer can sell Product B for $300 per unit and sell through the displayed inventory once per month. Which product should the retailer stock, and what will be its annual effect on profits?
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