Question

1. Use the table below to answer the following question(s).
   
   Fiberia Accessories, a clothing retailer, is planning to introduce a new line of sweaters as part of the winter collection for $65 with an inventory of 1500. The main selling season is 60 days between November and December. The store then sells the remaining units in a clearance sale at 65 percent discount. Out of the 60 main retail days, Fiberia sells the sweaters at full retail price for only 45 days, while giving a discount of 25 percent for the remaining 15 days. The demand functions a, and b are given as 79.5 and 1.1 respectively.
   

   Marked Down Pricing Model for Fiberia Accessories's new sweater	​
   ​	​
   Data	​
   ​	​
   Retail Price	$65
   Inventory	1500
   Selling Season (days)	60
   Days at Full Retail	45
   Intermediate Markdown	25 percent
   Clearance Markdown	65 percent
   Demand Function	​
   A	79.5
   B	1.1

   
   
   Calculate the revenue for the clearance sales period.

   		$23,400
   		$18,921.09
   		$17,105.16
   		$48,871.88

Answer 1

Total number of units sold during the full retail sales period.

Demand Function: Q = a - b.P = 79.5 - 1.1P

At full retail price period, P = $65

, Q (per day) = 79.5 - 1.1 x 65 = 8

The period is of 45 days, so, total sales = 8 x 45 = 360

Calculate the total revenue for the new line of sweaters

Revenue of the full price period = 360 x $65 = $23,400