Question: Royal Enfield (RE) is known for making muscly two-wheelers. Their Bullet-350 is a classic and has a cult following. The company operates its own showroom at Trichy, and an external retailer sells RE bikes at Tanjore. The company makes the vehicle for Rs.40,000. The retailer purchase each vehicle at Rs. 63,000. The customers purchase the vehicle for Rs. 1 Lakh (either from the showrooms or from retailers). When the vehicle is in the inventory of the company, 12.5 % of the making cost is incurred for storing it for a month's period. Retailer stores it at 11.5% of his purchase cost for a month. The paper work for processing an order internally at RE costs Rs. 5000, while the retailer incus an additional Rs. 2000 for his own overheads when processing an order. Now, RE has modernised its showroom and is looking at the following managerial questions:

1. If the demand for the past two years at a showroom is as given in Table-1, then what can be the expected demand for next quarter at the showroom?

\f\fOrder Quantity Discount 0-40 2% 40-60 2.2% 60-100 2.5% 100-150 3.1% 150 or more 3.5% Table-3: Price discount offered by RE to the Retailer