Samurai, Ltd., must forecast sales for a popular trivia game in order to avoid s

Question

Samurai, Ltd., must forecast sales for a popular trivia game in order to avoid stockouts or excessive inventory charges during the coming Christmas season. In percentage terms, the company estimates that game sales fall at double the rate of price increases and grow at five times the rate of customer traffic increases. Furthermore, these effects seem to be independent 3) write an equation for estimating the Christmas season sales, using the symbols S = sales, P A. price, T- traffic, and t- time. Forecast this season's sales if Samurai sold 10,000 games last season at $20 each, this season's price is anticipated to be $25, and customer traffic is expected to rise by 10% over B. previous levels.

Explanation / Answer

A . St+1= St+ S

= St - SP+ ST

= St- 2( (Pt+1/Pt) - 1)St+ 5((Tt+1/Tt ) - 1)St

= -2St- 2(Pt+1/Pt)St+ 5(Tt+1/Tt)St

B. St+1 = -2(10,000) - 2($25/$20)10,000 + 5(1.10)10,000

= 10,000 games.

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