Weekly demand for electric motors at a Japanese motor manufacturer is normally distributed, with a mean of 1,000 and standard deviation of 1,000. Motors are currently assembled in China and delivered at a cost of 20,000 yen/motor. The supplier takes eight weeks to supply an order. A local Japanese manufacturer has offered to deliver motors with a lead time of one week at cost of 20,400 yen per motor. The motor manufacturer is targeting a CSL of 99% and monitors its inventory continuously. The manufacturer incurs an annual holding cost of 25%. Should the manufacturer accept the local supplier’s offer?

Please show all formulas and work! Has to be done on Excel! Please show me step by step! Attached is what’s required!

Everyday, we see countless “charm” prices (prices that end in the number nine). There might not be any consensus on how this came to be (a few different apocryphal stories exist) but there is little disagreement with the idea that charm prices convey value and motivate customers.

These charm prices work because of the “left digit effect,” which proposes that people place more importance on the leftmost digit in a price. There for $79.99 seems closer to $70 than $80.

In one famous study, three different versions of the same mail order catalog were printed, with each version showing the same shirt at a different price. The shirt sold better at $39 than $44. This result is not surprising, and it illustrates the law of demand; as price goes down demand goes up. But the shirt also sold better at $39 than $34; illustrating that charm prices have an impactful effect and can undermine even our most basic expectations about the effect of price on demand.

Based upon your personal experience as well as readings from your text, answer each of the questions below (number each response):

1. Are there consumer or shopping task characteristics that may make use of a charm price more effective?
2. Do you think this tactic might be counterproductive and backfire for certain types of products or purchases? Why?