Pétale Parfum (PP) manufactures and sells upscale perfumes. In recent months, PP has started selling its products in bundled form, as well as in individual form. Sales in 2013 of three products that have been sold individually are as follows:

REQUIRED
1. Compute the weights for allocating revenues to each division for each of the bundled products using:
a. The stand-alone revenue-allocation method based on total revenues of individual products.
b. The incremental revenue-allocation method, with Innocence ranked 1; Désarmer, 2; and Fraîche, 3, based on retail prices of individual products. According to this ranking, the primary product in a suite has the highest rank, and so on.
2. Recalculate the allocation using the Shapley and the weighted Shapley value methods. What method would you recommend and why?

Transcribed Image Text:

Retail Price Units Sold Stand-alone Fraîche Désarmei Innocence Suite Fraîche Désarmer Fraîche Innocence $110 20,000 37,500 20,000 275 165 308