Great Threads is a direct mail catalog company. They are looking at one of their regular campaigns where they mail catalogs to people on their mailing list. Most customers throw the catalogs away, but some make a purchase. Those who make a purchase by an average of $50 of the product. Full base case data, and a pro forma financial model, are in the spreadsheet.

The company thinks demand is softening, and that it is likely that response rate and/or average order will decline. They want to understand the possible profit landscape.

1. Vary the Response Rate from 6% to 12% with increments of 1%, vary the Average Order from $20 to $60 with increments of $5, and present the Projected Profit for each combination.
2. Given the results provided by this model and by the data table, would you recommend running this campaign? Briefly explain why or why not.

	Fixed cost of printing	$20,000
	Variable cost of printing & mailing	$0.35
	Number mailed	100,000
	Average Order	$50
	COGS Rate	80%
	Avg Postage Cost Per Order	$2.50
	Response Rate	10.00%

Number of responses ( orders )	10,000
Total Revenue	$ 500,000
Fixed cost of printing	$20,000
Total variable cost of printing & mailing	$35,000
Total Estimated COGS	$400,000
Total postage cost of orders	$25,000
Total cost	$480,000
Projected Profit	$ 20,000