Model Building and What$-$If Analysis $($Tab: Wipers$)$

You are a distributor of automotive wiper blades. At present you sell an average of $40,000$ pairs of blades per year at an average price of $$12\mathrm{.}50.$ The cost to purchase these blades from the manufacturer is $$7\mathrm{.}50$ per pair. You have annual fixed costs of $$75,000$ for rent, insurance, etc.

A$)$ Create an industrial$-$quality analytical spreadsheet model that calculates the annual costs, revenue, and profit.

You are considering offering your customers a rebate of $$2\mathrm{.}50$ per pair, and you believe that this rebate will increase sales volume by $15\%.$ You also think that only about $50\%$ of customers will actually take advantage of the rebate offer $($the rest will just forget to request the rebate$).$

B$)$ Create an industrial$-$quality spreadsheet model that calculates the annual costs, revenue, and profit, with the rebate. Use this model for C$)$ and D$)$ below.

C$)$ The performance measure is annual profit; create a delta cell $($or "change from base"$).$ What is the delta if $70\%$ of customers actually take advantage of the rebate program?

D$)$ Would you recommend that the company institute the rebate program? Briefly justify your answer.