[TepSteade]

I'm doing a case study and I'm trying to find the break even point (in terms of tire sales)

Find Break even:
Goodyear 1991: Goodyear 1992 (prediction Sears):
Number of tires sold: 24,864,000 26,864,000
Average Retail Price per Tire: $150 $150
Gross Retail Sales: $3,729,600,000 $4,029,600,000
Dealer Margin: 0% ~40% (on how many tires?)
Net Retail Sales: $3,729,600,000 $3,729,600,000



in 1992, 2 million extra tires are sold on which there is a 40% dealer margin (because tires are sold through Sears)..


My question is how many tires have to be sold through Sears (with the 40% dealer margin) from the 26,864,000 to have the same Net retail as in 1991. So it's possible that for example 60% of the tires are sold without dealer margin and 40% with..

[Saispapedlimi]

If all tyres had been sold for €150 (net), the tyre manufacturer would have gotten €4,029,600,000. That's a given. Also given is they don't get that, they got €3,729,600,000.

The difference between the two numbers is what they've given to Sears. The difference between the two numbers is Sears' margin. The total dealer margin is thus €300,000,000.

Amount of tyres sold * price per tyre = x = €4,029,600,000
Amount of tyres sold * price per tyre - dealer margin = x - y = €4,029,600,000 - €300,000,000

€300,000,000 is 40% of the money made on tyres sold through Sears.
€300,000,000 / 40 * 100 is the total amount of money made on tyres sold through Sears:
€750,000,000

To gross €750,000,000, you have to sell 5,000,000 tyres (5 million * 150 = 750 million).

Five million tyres were sold through Sears to hit the same net result as in the previous year.


Check:
21,864,000 * €150 + 5,000,000 * €90 = €3,279,600,000 + €450,000,000 = €3,729,600,000 [thumbup]
(€90 is what the manufacturer makes on tyres sold through Sears: €150 - 40%)

[TepSteade]

Thanks a lot dude.. I was coming up with all sorts of equations and it was actually easy as you showed haha.. I kinda feel stupid for not figuring it out.. thx though[thumbup]

[Saispapedlimi]

Thanks a lot dude.. I was coming up with all sorts of equations and it was actually easy as you showed haha.. I kinda feel stupid for not figuring it out.. thx though[thumbup]

Don't worry - I too was thinking up all kinds of odd equations!

When I finally wrote down 90 * x + 150 * y = 4 billion (x is amount sold through Sears, y is other) it suddenly dawned on me where this was going. [surrender]