Sam Walton, founder of Walmart, was a retail genius. One thing he would do is advertise a product such as a microwave at a knock-down price. Consumers would come into the store to examine the low-priced microwave. Next to the low-cost microwaves, Walmart would position some better quality, higher-priced microwaves. The idea is that consumers will be attracted to the store due to the low-priced product but that they often upgrade and purchase a higher-priced product once they realize that it offers better quality. Such a method is completely legal as long as there are enough low-priced products available that consumers can choose from if they desire. Sam Walton used what type of pricing strategy

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M. cotteleer electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. one of the components has an annual demand of 235 units, and this is constant throughout the year. carrying cost is estimated to be $1.25 per unit per year, and the ordering (setup) cost is $21 per order. a) to minimize cost, how many units should be ordered each time an order is placed? b) how many orders per year are needed with the optimal policy? c) what is the average inventory if costs are minimized? d) suppose that the ordering cost is not $21, and cotteleer has been ordering 125 units each time an order is placed. for this order policy (of q = 125) to be optimal, determine what the ordering cost would have to be.

Assume that a local bank sells two services, checking accounts and atm card services. the bank’s only two customers are mr. donethat and ms. beenthere. mr. donethat is willing to pay $8 a month for the bank to service his checking account and $2 a month for unlimited use of his atm card. ms. beenthere is willing to pay only $5 for a checking account, but is willing to pay $9 for unlimited use of her atm card. assume that the bank can provide each of these services at zero marginal cost.refer to scenario 17-5. if the bank is unable to use tying, what is the profit-maximizing price to charge for a checking account