Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bada Bing Bada Boom Candy, Inc. supplies the milk chocolate to candy makers throughout the mid - western states. After tracking your customers behaviors, you

Bada Bing Bada Boom Candy, Inc. supplies the milk chocolate to candy makers throughout the mid-western states. After tracking your customers behaviors, you find that 43% of these companies like your chocolate enough that they will wait until you can fill the order--even if it means a delay. Twenty-nine percent need the chocolate for immediate production and will make a one-time buy somewhere else. They realize that your product is superior and will come back. However, 28% of your customers get put off by not having the product and will permanently switch to another supplier.
The added processes and delivery fees to get late deliveries out run around $500 per incident.
An average chocolate order is about 200 lbs. You charge $22 per pound. Your profit margin is 13%.
The lifetime stream of profits for a customer who permanently defects is estimated to be $254,096.
Given the information above, what is the expected cost for a customer who decides to make a one-time buy eleswhere?
a. $215
b. $400
c. $165.88
d. $193.37
e. None of the above

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quantitative Analysis For Management

Authors: Barry Render, Ralph M. Stair, Michael E. Hanna

11th Edition

9780132997621, 132149117, 132997622, 978-0132149112

More Books

Students also viewed these General Management questions