Answer:
Answer is explained in the explanation section below.
Explanation:
Solution:
a) Explanation:
Closeness of different shops at one place would result in the increased Profit because of the following reasons:
1. People usually wish to save extra bucks whenever possible, so in this case, they will be saving their travel cost because, they don't need to go somewhere else for other products. As they will be getting every product they need in a single complex.
2. Secondly, because of the greater visibility of different products people would buy things they don't even need for the time being, resulting in the increase in profits.
b) Single Store Shopping Centre:
For Department:
Rent of the store = $ 100,000
Cost ($ 10 per sq. foot) = 9000 x 10 = $ 90,000
Profit = $ 100,000 - $ 90,000 = $ 10,000
For Toy Store:
Rent of the store = $ 11,200
Cost ($ 10 per sq. foot) = 1,000 x 10 = $ 10,000
Profit = $ 11,200 - $ 10,000 = $1,200
For Shoe Store:
Rent of the store = $ 7,800
Cost ($ 10 per sq. foot) = 800 x 10 = $8000
Profit = $ 7,800 - $8000 = -$200
For Hardware Store:
Rent of the store = $7,000
Cost ($ 10 per sq. foot) = 1,100 x 10 = $11,000
Profit = $7,000 - $11,000 = -$4000
c) Two-Store Shopping centers:
Department + Toy :
Toy affected Score = $6000
So,
Profit of Affected Department = $10000 + $6000 = $16000
Profit of Affected Toy Store = $2000 + $1200 = $3200
Total Profit = Profit of Affected Toy Store + Profit of Affected Department
Total Profit = $16000 + $3200 = $19200
Similarly,
For Department + Shoes:
Shoes Affected Score = $8000
So,
Profit of Affected Department = $10000 + $8000 = $18000
Profit of Affected Shoe Store = -$200 + $2000 = $1800
Total Profit = $18000 + $1800 = $19800
Similarly,
For Department + Hardware:
Hardware affected Score = $1000
So,
Profit of Affected Department = $10000 + $1000 = $11000
Profit of Affected Hardware Store = -$4000 + $1000 = -$3000
Total Profit = $11000 -$3000 = $8000
Similarly,
For Toy + Shoes:
Shoes affected Score = $600
Profit of Affected Toy = $1,200 + $600 = $1800
Profit of Affected Shoe Store = -$200 + $500 = $300
Total Profit = $1800 + $300 = $2100
Similarly,
For Toy + Hardware:
Hardware affected Score = $300
So,
Profit of Affected Toy = $1,200 + $300 = $1500
Profit of Affected Hardware Store = -4,000 + 400 = -3600
Total Profit = $1500 -3600 = -2,100
Similarly,
Shoes + Hardware:
Hardware affected Score = $200
Profit of Affected Shoes = -200 + 200 = 0
Profit of Affected Hardware Store = -4,000 + 200 = -3800
Total Profit = 0 - 3800 = -3800
Similarly,
d) Three-store Shopping centers:
For Department + Toy + Shoes:
Department Profit = 10,000 + 6,000 + 8,000 = $24000
Toy Profit = 1,200 + 2,000 + 600 = $3800
Shoes Profit = -200 + 2,000 + 500 = $2300
Total Profit = $24000 + $3800 + $2300 = 30,100
For Department + Toy + Hardware:
Department Profit = 10,000 + 6,000 + 1,000 = $17000
Toy Profit = 1,200 + 2,000 + 300 = $3500
Hardware Profit = -4,000 + 1,000 + 400 = -$2600
Total Profit = $17000 + $3500 - $2600 = 17,900
Department + Shoes + Hardware:
Department Profit = 10,000 + 8,000 + 1,000
Shoes Profit = -200 + 2,000 + 200
Hardware Profit = -4,000 + 1,000 + 200
Total Profit = 18,200
Toy + Shoes + Hardware:
Toy Profit = 1,200 + 600 + 300
Shoes Profit = -200 + 500 + 200
Hardware Profit = -4,000 + 400 + 200
Total Profit = -800
Four store Shopping Centre:
Department + Toy + Shoes + Hardware:
Department Profit = 10,000 + 6,000 + 8,000 + 1,000
Toy Profit = 1,200 + 2,000 + 600 + 300
Shoes Profit = -200 + 2,000 + 500 + 200
Hardware Profit = -4,000 + 1,000 + 400 + 200
Total Profit = 29,200
E)
Now, if you see and compare between the profits of above calculated different category stores, then maximum profit is gained by 3 store shopping center. So, the optimal store is 3 store shopping center.
