reply to classmates week2

CLASSMAT #2

Chapter 3 DB Topic #3

 A sales mix is the proportion of which a company sells it's products.  For there to be a sales mix the company would need to sell more than one product.  The sales mix could be very diversified, such as at Unilever who owns over 400 brands, or could just be between two products.  Ideally, a company would want to maximize profits in their sales mix.

It is important to know your restraints when looking at maximizing profits.  We studied this in Stats and used solver in Excel to solve problems.  Some restraints could include labor, available resources, or quantity of items produced.  If quantity is a restraint you'd want the item with the higher contribution margin, if it is not you would likely want more of the product with the higher profit margin percentage. 

For example a company could make benches and tables.  The benches could be sold for $50 and cost $25 to make, a $25 contribution margin or 50% contribution margin. Or a Table could be sold for $100, but cost $60 to make, for $40 contribution margin or 40% contribution margin percentage.  You could make more per table then per bench, but if you can sell the 2 benches for each table you would make $50 for the $100 sale instead of $40.  

The general assumption is that there is some kind of restraint that will effect the sales mix that must be maintained if the sales mix is changed up.