(Answered) Fashion buyersa buyer for a department store must decide on

Economics

Fashion Buyers

A buyer for a department store must decide on which designs the stores will carry before he knows what the demand will be in the coming season. Choosing a poorly demanded design means lots of unsold merchandise and losses that are $200,000 on average. Passing on a highly demanded design means lots of unsold merchandise and missing out on profits that are $300,000 on average. So long as he is more than 40% confident that the design will be successful, carrying the design will minimize expected decision error costs. Why might he opt to carry designs only if he is more than, say, 50% confident of success?

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Business Economics, Economics

Category:- Business Economics
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