Beyond confused, why are we using -7.5 when the PED is -0.75? At what point have we converted it from 0.75 to 7.5??? Where has that happened and how are you meant to know to do it
The PED coefficient was -0.75. Which means that for every 1% increase in selling price, quantity demanded will fall by 0.75%. In the question we were told rhat the selling price will increase by 10%. Which means that quantity demanded will fall by 7.5% (10 x 0.75). So the existing sales units of 150,000 units will fall by 7.5% (a fall of 11,250 units). So, after the price rise of 10% the new sales volume will be 138,750 units (150,000 less 11,250) [Jim]
Hellooo I’m going through this video again to go over some of the calculations again. Everything is making more sense apart from the ped question. I am trying really hard to understand how 150,000 x (-7.5%) = 138,750 units, I keep getting 1,125,000 instead. Thank you!
@Dolly Nash It is because to find out the new quantity of units sold you do: 150,000 x 0.925 = 138,750 0.925 comes from 100-7.5 = 92.5% So sales will be 92.5% of 150,000. Therefore 150,000 x 0.925 = 138,750. Hope that makes sense.
basically the opposite, if demand remains the same, they will be holding an increased amount of inventory which could decrease competitiveness as they have more working capital held up in stock, decreasing the amount of capital available for a promotional strategy etc, however, this may lead to a competitive advantage in the spring months as they will be able to respond to the increased demand more effectively than its competitors and be able to increase sales. This might not be direct enough about Reorder QL but it’s on track
Wow ! What a good paper, thanks so much Jim. Everything came up ! Very confident with this especially with the question on venture !
Glad it was helpful!
where is graham :(
Beyond confused, why are we using -7.5 when the PED is -0.75? At what point have we converted it from 0.75 to 7.5??? Where has that happened and how are you meant to know to do it
10% increase there you multiply -0.75 PED by 10. This then turns the PED into a a percentage and that's how u get 7.5%
The PED coefficient was -0.75. Which means that for every 1% increase in selling price, quantity demanded will fall by 0.75%. In the question we were told rhat the selling price will increase by 10%. Which means that quantity demanded will fall by 7.5% (10 x 0.75). So the existing sales units of 150,000 units will fall by 7.5% (a fall of 11,250 units). So, after the price rise of 10% the new sales volume will be 138,750 units (150,000 less 11,250) [Jim]
Hellooo I’m going through this video again to go over some of the calculations again. Everything is making more sense apart from the ped question. I am trying really hard to understand how 150,000 x (-7.5%) = 138,750 units, I keep getting 1,125,000 instead. Thank you!
i also don’t understand, or why you times by -7.5% rather than -0.75%
@@leahelizabeth9480 guys i think they got it because they did 9.25 instead ( 10-0.75) but i still don't get how it works
@Dolly Nash
It is because to find out the new quantity of units sold you do:
150,000 x 0.925 = 138,750
0.925 comes from 100-7.5 = 92.5%
So sales will be 92.5% of 150,000. Therefore 150,000 x 0.925 = 138,750.
Hope that makes sense.
@@dujanahahmad3439 thank you so much it almost makes sense 😂❤️
@@leahelizabeth9480 I think cos the price is going up my 10% but honestly struggle to understand this bit a lot!!
What happens if the garden management increases its re order quantity level
basically the opposite, if demand remains the same, they will be holding an increased amount of inventory which could decrease competitiveness as they have more working capital held up in stock, decreasing the amount of capital available for a promotional strategy etc, however, this may lead to a competitive advantage in the spring months as they will be able to respond to the increased demand more effectively than its competitors and be able to increase sales.
This might not be direct enough about Reorder QL but it’s on track
If the reorder level rises, then the business will reorder earlier - so it hold more inventory on average.