Questions $10)-12)---$ Case Exercise: "Polo Golf Shirt Pricing"

The setting is a Ralph Lauren outlet store, and the product line is Polo golf shirts. A product

manager and the General Manager for Outlet Sales are analyzing the discount to be offered at the

outlet stores. Let's work through the decision at the level of one color of golf shirts sold per

outlet store per day. The decision being made is how low a price to select at the start of any given

day to generate sales at that price throughout the day. The demand, revenue, and variable cost

information is collected on the spreadsheet shown below $($note: variable cost is presented on

per$-$unit basis$).$

Answer the following three questions based on the case information presented above. Be sure to

explain your answers.

What is the change in total revenue from lowering the price to sell seven rather than six shirts

in each color each day?

Calculate the total revenue for selling $10-18$ shirts per day. Calculate the reduced prices

necessary to achieve each of these sales rates.

Would you recommend lowering price to the level required to generate $15-$unit sales per day?

Why or why not?