How-much do consumers in the Rainbow Republic pay

ICA 14-1: Evaluating the costs of adjusting discrepancies of quantity and assortment in channel systemsAssignmentThe following case shows the role of marketing middlemen (particularly wholesalers) in creating and adjusting discrepancies of quantity and assortment. Questions appear at various points through the case–to test your understanding of the material. Read the case carefully and answer the questions as they appear. It is important that you understand the concepts involved, even though the case has been simplified to aid analysis. So think about the implications for a highly developed economy such as the United States.RAINBOW REPUBLICThe Rainbow Republic is a small developing country that recently experienced an industrial revolution. The country’s 100 basic commodities are produced by 100 specialized firms, each of which makes only one product. All of the products are in turn sold through a network of 2,000 equal-sized retailers who are scattered all around the country. The Cosmic Company produces sunstars (a consumer staple) for the Rainbow Republic. Due to large fluctuations in demand, the sunstars cannot be manufactured in large quantities–and therefore cost $12.50 each to produce. Each week Cosmic’s salespeople have to call on all of the retailers to solicit their ordersfor sunstars. This results in a relatively high selling cost of $2.00 per each unit sold. Since orders are generally quite small, order processing costs amount to about 50 cents per unit. Finally, the necessity of shipping many small orders to retailers results in transportation costs of $1.00 per unit. The price Cosmic charges for each unit is determined by adding on 50 percent of the total unit cost of producing, selling, and delivering the sunstars. Each retailer, then, takes a 40 percent markup on the cost they, are charged by Cosmic.How-much do consumers in the Rainbow Republic pay for sunstars? Show your work (and labelyour numbers). The retail price of sunstars isWhat discrepancies of quantity and assortment exist in the Rainbow Republic? Be specific.Consumers in the Rainbow Republic complained about the high prices they were being asked to pay for

 

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