Sellars’ Market

Group 9
Ajoy Roy(192), Muhammed Danish V P(340), Sumayya Samad(368), Akhil J Palakeel(254), Zubin
Imtiaz Ahmed(062)

Question 1

Assuming that the above figures accurately predict incremental contribution, which products
should Oliver carry on the new shelves and on which shelf should they be carried? Use any
solution procedure you please, but also consider the following:

I. Assign the three most profitable items to shelf 1. Of the remaining products, assign the
three most profitable to shelf 2, et cetera.
II. Establish three prices, one each for shelf 1, 2 and 3. Place a product on whatever shelf
maximizes its contribution after paying the relevant shelf price. Find a set of prices so
that exactly three products wish to be on each shelf.

Answer:

The most optimal profit obtained is $450 with the following arrangement

Shelf Products Profit

Shelf 1 A, D, F 79+69+56 = 204

Shelf 2 B, E, J 62+53+39 = 154

Shelf 3 C, I, K 42+28+22 = 92

Total profit = $450

I. Following method I the method described we get the profit

Shelf Products Profit

Shelf 1 A, B, C 79+76+73 = 228

Shelf 2 E, D, J 53+52+39 = 144

Shelf 3 I, F, K 28+24+22 = 74
 Total profit = $446

II. Following method II

We set the price as follows:

● Shelf 1: $70
● Shelf 2: $39
● Shelf 3: $21

Hence after calculating the new contribution values we see that the only distribution that ensures
that Oliver doesn’t incur any losses is the following strategy should be used for placing products.

Shelf Products Profit

Shelf 1 A, B, C 79+76+73 = 228

Shelf 2 E, D, J 53+52+39 = 144

Shelf 3 I, F, K 28+24+22 = 74

Total profit = $446

Question 2

Product B has been redesigned and will no longer fit on the middle shelf. How does this affect
your answer to Question 1?

Answer:

The most optimal profit obtained is $447 with the following arrangement for the given
constraint.

Shelf Products Profit

Shelf 1 A, B, F 79+76+56 = 211

Shelf 2 D, E, J 52+53+39 = 144

 Shelf 3 C, I, K 42+28+22 = 92

Total profit = $447

Question 3

A sales representative visits the store to promote a new product and suggests that the product
would do "just great" if placed on one of the new shelves. Oliver estimates the new product
would add a weekly contribution of $60, $30 and $20 if placed on each of the three shelves.
Should he carry the new product? If yes, on which shelf and which product should not now be
carried on the new shelves? If no, how much extra contribution per week would be needed
before Oliver would regard it as worthwhile to carry this new product? [Please ignore Question 2
in answering this question.]

Answer:

The most optimal profit obtained is $456 with the following arrangement for the given
constraint.

Shelf Products Profit

Shelf 1 A, D, New Product 79+69+60 = 208

Shelf 2 B, E, J 62+53+39 = 154

Shelf 3 C, F, K 42+24+28 = 94

Total profit = $456

● The new product will replace F in the first shelf and product F will replace product I in
the third shelf.
● Product I is no longer carried by Oliver.

Excel Sheet of Analysis