Case Study intro
Our client is a large national retailer whose music segment has seen declining profits over the last couple of years. Profits used to be $80M but are currently very low.
Suppliers sell directly to us. No logistics costs. There are 4 big players in the market all similar size to us. We do not know if they are making money. Two are similar large retailers and two are specialized music suppliers. Market has been shrinking over the last couple of years. We hold both new releases and catalog CDs.
The price of a new CD is $12 and the price of a catalog CD is $15.
The cost to us of either type of CD is $10 and is similar to other player’s cost.
You have been hired to help deal with this problem. Lay out a framework for solving the problem.
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