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Toys unlimited LTD., must forecast sales

Toys unlimited LTD., must forecast sales for a popular adult computer game to avoid stockouts or excessive inventory charges during the upcoming Christmas season. In percentage terms, the estimates that game sales fall at double the rate of price increases and that they grow at triple the rate of customer traffic increases. Furthermore, these effects seem to be independent.

A. Write an equation for estimating the Christmas season sales, using the variables S=sales, P= price, T=traffic, and t= time.

B. Forecast this seasons sales if Toys Unlimited sold 10,000 games last season at $15 each, this season's price is anticipated to be $16.50 , and customer traffic is expected to rise by 15 percent over previous levels.

Solution Preview

a. S = -2P + 3T + x.t
Note: S, P, T are all percentage terms.
Relationship between S and P is negative because game sales fall at ...

Solution Summary

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