Question #2

Follow up question(note that the dollar amounts have not changed from the previous scenario.)

You help couples book their perfect honeymoon.You currently offer plans for a cruise and for a casino stay.

Your sales manager is getting her MBA and has suggested you might consider mixed bundling as a way to boost profits.

The table below shows the customer preferences.Your costs are$100for the first booking in a customer's name and$50for each additional booking in the same customer's name.

"We Book Your Honeymoon Tour"

You know that about 21% of your customers decline cruises because of seasickness.At least 12% decline the casino trip saying they don't believe in gambling.

As a rough approximation, you estimate that approximately 33% of your customers will never bundle.

Given the preferences distribution, will mixed bundling increase profits?You must show the calculations that support your conclusion.

Cruise

Casino

Customer1

$7,000

$3,000

Customer2

$2,000

$6,000