A B C D E F G H I

1 Quality Sweaters direct mail model

2
3 Catalog inputs Model of responses Range names used
4 Fixed cost of printing $20,000 Response rate 8% Average_order =Model!$B$11
5 Variable cost of printing mailing $0.25 Number of responses 8000 Fixed_cost_of_printing =Model!$B$4
6 Number_mailed =Model!$B$8
7 Decision variable Model of revenue, costs, and profit Number_of_responses =Model!$E$5
8 Number mailed 100000 Total Revenue $320,000 Profit =Model!$E$13
9 Fixed cost of printing $20,000 Response_rate =Model!$E$4
10 Order inputs Total variable cost of printing mailing $25,000 Total_cost =Model!$E$12
11 Average order $40 Total variable cost of orders $257,600 Total_Revenue =Model!$E$8
12 Variable cost per order $32.20 Total cost $302,600 Variable_cost_of_printing_mailing =Model!$B$5
13 Profit $17,400 Variable_cost_per_order =Model!$B$12
14
15 Sensitivity to number mailed
16 Number mailed Profit
17 $17,400
18 80000 The points are increasing linearly -- as the number
19 90000 mailed increases, profit just keeps increasing. Unless
there is some type of constraint or something else
20 100000 about the model changes, there is no "optimal"
21 110000 number to mail. The company can just keep mailing
22 120000 more and more and sees larger profit.
23 130000
24 140000
25 150000
26
27
28 Sensitivity of profit to number mailed
29
$12
30
31 $10
32
$8
33
Profit

34 $6
35
$4
36
37 $2
38
$0
39 70000 80000 90000 100000 110000 120000 130000 140000 150000 160000
40 Number mailed
41
42