Input Values given in the spreadsheet here :

https://docs.google.com/spreadsheets/d/15Sng5PLkAh8zcPKSz1JwW0wvbEK8vUda3H4ilVg0414/edit?usp=sharing

1.Two-Parameter Sensitivity Analysis (Tab: GT)

Model provided. Use Data Table.

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 buy an average of $50 of 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.

A)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.

B)Given the results provided by this model and by the data table, would you recommend running this campaign? Briefly explain why or why not.