ABC Inc. is Iowa's leading manufacturer of corn-related novelties. The main focus of ABC Inc. is their Colonel Kernel action doll. It sells on average 7,000 units per retailer a year and ABC expects to sell the product to retailers at $6 per unit. The manufacturing and distribution cost per unit for ABC Inc. is $2.50. In order to promote customer loyalty, ABC Inc. often sends out large samples of premium corn to potential and loyal retailers. Although ABC Inc. solicits a large number of retailers per year with a sample each, only one out of ten choose to open an account with ABC Inc. ABC Inc. rewards all first-year retailers that make a 2nd-year purchase with 3 additional samples over the course of the 2nd year. Assume that each sample of premium corn costs ABC Inc. $700 to produce and deliver and that 14% of retailers stop selling Colonel Kernel after the first year. 

What is the 2-year undiscounted lifetime value of the customer for ABC?  

Answer rating: 100% (QA)

To calculate the 2year undiscounted lifetime value of the customer for ABC Inc we need to consider t... View the full answer