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The manager for a sport team purchases sweatshirts that are embroidered with the school name,...

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Accounting

The manager for a sport team purchases sweatshirts that are embroidered with the school name, logo and various sports graphics. The manager needs to determine how many Football Fan sweatshirts to purchase from the supplier for the upcoming season. The supplier will give the bookstore a quantity discount so the cost of the sweatshirts will change depending on the order size as indicated in the table below.

Sweatshirts ordered

Cost per shirt

1 to 199

$37

200 to 399

$36

300 to 599

$35

600 +

$34

Each sweatshirt will be sold during the football season for $55. If there are shirts leftover after the fall football season, they will be sold for $25. Cost for placing the order with the supplier is $120.

a. Create a profit model for the bookstore so the manager can investigate different order quantities vs potential demand.

(You must use IF and VLOOKUP functions)

b. Create a two-way table (use Excel Data/What-if/Data Table) to show the sensitivity of Profit to changes in Demand and Order Quantity.

  • Put Demand as the row, Order Quantity as the column.
  • Use the values 200, 400, 600, 800, 1000 for both.

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