Excel

1. The sensitivity analysis in the Quality Sweaters example was on the response rate. Suppose now that the response rate is known to be 8%, and the company wants to per- form a sensitivity analysis on the number mailed. After all, this is a variable under direct control of the company. Create a one-way data table and a corresponding line chart of profit versus the number mailed, where the numThe sensitivity analysis in the Quality Sweaters example was on the response rate. Suppose now that the response rate is known to be 8%, and the company wants to per- form a sensitivity analysis on the number mailed. After all, this is a variable under direct control of the company. Create a one-way data table and a corresponding line chart of profit versus the number mailed, where the num-The sensitivity analysis in the Quality Sweaters example was on the response rate. Suppose now that the response rate is known to be 8%, and the company wants to per- form a sensitivity analysis on the number mailed. After all, this is a variable under direct control of the company. Create a one-way data table and a corresponding line chart of profit versus the number mailed, where the number mailed varies from 80,000 to 150,000 in increments of 10,000. Does it appear, from the results you see here, that there is an optimal number to mail, from all possible values, that maximizes profit? Write a concise memo to management about your results.

2. Continuing the previous problem, use Goal Seek for each value of number mailed (once for 80,000, once for 90,000, and so on). For each, find the response rate that allows the company to break even. Then chart these values, where the number mailed is on the horizontal axis, and the breakeven response rate is on the vertical axis. Explain the behavior in this chart in a brief memo to management.