A Retail Store Sells a Popular Cosmetic Called Devine and the Store

question 64

Multiple Choice

A retail store sells a popular cosmetic called Devine and the store manager is given $300,000 by the corporate office to improve store performance any way she thinks best. The "base case" information is a price of $30 per bottle, a contribution margin of 0.50, a customer defection rate of 20%, and a repurchase frequency of 3 times a year. If these improvement funds could be used to either (a) increase the contribution margin to 0.60 or (b) reduce the customer defection rate to 12% or (c) increase the repurchase frequency to 4 times per year, what is the best way to spend these improvement funds? (Assume all other variables remain at the base case level for each of the three improvement options.) VLC = P*CM*RF*BLC
You may want to use the worksheet below to help organize your computations and answer of the question(s) .
$\begin{array}{|c|c|c|c|c|c|}\hline \begin{array}{c}\text { Improvement } \\\text { Option }\end{array} & \text { Price } & \begin{array}{c}\text { Contribution } \\\text { Margin }\end{array} & \begin{array}{l}\text { Repurchase } \\\text { Frequency }\end{array} & \begin{array}{l}\text { Defection } \\\text { Rate }\end{array} &\text { VLC in } \$\\\hline \text { Base case } & \$ 30 & 0.50 & 3 & 20 \%& \\\hline(\mathrm{a}) & \$ 30 & & & \\\hline \text { (b) } & \$ 30 & & & \\\hline \text { (c) } & \$ 30 & & & \\\hline\end{array}$
-Which of the following is the best way to use the $300,000 in improvement funds?

• A) Do nothing (stay with base case).
• B) Improve option (a).
• C) Improve option (b).
• D) Improve option (c).

Understand the concepts of prejudice and discrimination and their differences.

Recognize the role of leadership styles and theories in organizational effectiveness.

Identify factors influencing attitudes, including the formation and change of attitudes.

Distinguish between various psychological theories related to conformity, compliance, and obedience.

---

Definitions:

Consciousness

The state of being awake and aware of one's surroundings and one's own thoughts and feelings.

Critical Decisions

Decisions that are highly important and can have significant consequences on the outcome of a situation or the future of an individual or organization.

Fire Department

A public or private organization that provides emergency firefighting and rescue services to protect people and property from fire and other hazards.

Reflective Thinkers

Individuals who critically analyze their beliefs and experiences to gain deeper understanding.