a.list key variables (input, output, decision variables)

b.create a model in order to define the companys profit and response rate from the mailing.

The Body Shop Sweaters Company sells hand-knitted sweaters. The company is planning to print a catalog of its products and undertake a direct mail campaign. The cost of printing the catalog is $20,000 plus $0.10 per catalog. The cost of mailing each catalog (including postage, order forms, and buying names from a mail-order database) is $0.15. In addition, the company plans to include direct reply envelopes in its mailings and incurs $0.20 in extra costs for each direct mail envelope used by a respondent. The average size of a customer order is $40, and the company's variable cost per order (primarily due to labor and material costs) averages about 80% of the order's value - that is, $32. The company plans to mail 100,000 catalogs. Below is the big picture of the steps in the breakeven analysis for The Body Shop Seaters