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Case—Beijing Opera Mask Sales in Four Cities in the

United States
Xiangling Hu, Ashok Kumar,

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Transactions on Education

Case
Beijing Opera Mask Sales in Four Cities
in the United States
Xiangling Hu, Ashok Kumar
Management Department, Seidman College of Business, Grand Valley State University, Grand Rapids, Michigan 49504
{[email protected], [email protected]}

Key words: newsvendor; judgmental forecasting; cases; teaching production/operations management;

spreadsheet modeling; developing analytical skills; developing critical thinking
History: Received: September 2011; accepted: July 2012.

1. Beijing Opera Background instrument; the Suona horn; flute drum; big-gong;
cymbals; and other smaller gongs.
1.1. Overview
Beijing Opera (also known as Jingju), a traditional
1.3. The Costumes and Masks
form of Chinese theatre, has been a popular form
The costumes are usually made with handcrafted
of entertainment in China for 200 years. The Beijing
embroidery and are graceful and brilliant in color,
Opera of China is considered a national treasure and
pattern, and style. The facial makeup used to accom-
was developed during the Qing Dynasty through a
pany the costumes is rich in color and variety and
combination and integration of several forms of opera
allows the performers to depict different characters
including Kunqu, Yiyang, Hanju, and Luantan.
and provides astonishing images on stage. The main
The performances depict stories that engage the
audience in fairy tales of preceding dynasties, impor- color of the facial makeup symbolizes the nature and
tant historical events, emperors, ministers and gen- personality of each character. For example, gold and
erals, and other important Chinese traditions and silver colors are usually used to depict gods and spir-
cultural events. Some of the performances are even its, and red symbolizes devotion, courage, and loyalty.
adapted from literature and classic novels well known The masks are shown in Figure 1.
to the public. The combination of music, vocal per-
formance, mime, dance, acrobatics, and elaborate and 1.4. The Characters
colorful costumes creates an amazing spectacle that The characters depicted in Chinese opera can be clas-
brings the stories to life. sified into four main categories: Sheng, the male role;
Dan, the female role; Jing, the painted face male; and
1.2. The Music Chou, the comedy role. Any role from these categories
Looking more closely at the components of Beijing can be the leading role, but females are only allowed
Opera, the music performed is known for its grace- to play a role in the Dan category. The names of the
ful melodies and harmonious rhythms. The melodies categories were selected to create opposition to the
can be classified into two main groups that include characteristics of the roles being played. For example,
“Xipi” and “Erhong,” which follow guided, origi- Sheng means “rare,” but the male role is the charac-
nal, and both slow and fast-paced random patterns. ter most seen during a performance. Dan translates
The main instruments used to accompany the show to “masculine” for a role played by women. Jing is
are wind, percussion, and stringed instruments. The known as being “clean,” but the paintings used on
instruments include the jinghu, a two-stringed bowed stage make this character look unclean. Lastly, Chou
instrument with a high register; the yueqin, a four- means “cow,” which is seen as a slow and sluggish
stringed plucked instrument with a full-moon-shaped animal. Chou characters are usually very active and
sound box; the Sanxian, a three-stringed plucked quick on stage.
145
 Hu and Kumar: Case: Beijing Opera Mask Sales in Four Cities in the United States
146 INFORMS Transactions on Education 13(3), pp. 145–151, © 2013 INFORMS

Figure 1 Examples of Masks Used in Beijing Opera

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1.5. Stage Design and Orientation it was a wearable accessory. The other mask was cre-
Most stages in Chinese theatres consist of square plat- ated for adult clientele as a display piece. The sou-
forms that are exposed to the audience on three sides venirs would be ordered from a Chinese wholesaler
with an embroidered curtain hung over the platform before upcoming shows.
that divides the stage into two parts, the back stage The Chinese Opera is a one-time showing in each
and the stage. A table with musical instruments usu- city. Any masks left after each show will be sold
ally rests in front of the curtain with the musicians sit- back to the Chinese wholesaler. The wholesaler has
ting nearby, completely visible to the audience. There warehouses located in the United States and takes
are even some theatres that expose the audience to care of the shipping and storage of the masks. Art
all four sides of the platform so that the show can be in Motion places orders for the show in the next city
seen from the back. right after the previous show. The wholesaler charges
are in Table 1.
2. Demand Management Issues
of Beijing Opera
Table 1 Shortage and Excess/Leftover Cost of Masks
Jia, now an international businesswoman from the
United States, had first heard about the Beijing Opera Mask Gift 1 (wearable):
several years ago in a business class as a graduate • Price from the Wholesaler:
student. She was so moved by her professor’s descrip- $7 each
• Price for customer: $11 each
tion of the opera that soon after obtaining her MBA • Refund for unsold items:
she decided she wanted to try getting involved with $4 each
a Beijing Opera theatre company.
Jia was lucky enough to meet with the theatre com-
pany, Art in Motion Ltd., at a career fair through her
school’s business department. She discovered that Art
in Motion traveled to many cities around the globe Mask Gift 2 (display):
and had even been to the United States. Art in Motion • Price from the wholesaler:
$9 each
was planning another tour of the United States and • Price for customer: $14 each
was looking to hire someone as a retail manager for • Refund for unsold items:
their shows. The retail manager would be in charge $7 each
of ordering and selling two types of Beijing Opera
masks after the shows that represent the different
characters portrayed on stage. One mask was mar-
keted toward the younger audience members because
 Hu and Kumar: Case: Beijing Opera Mask Sales in Four Cities in the United States
INFORMS Transactions on Education 13(3), pp. 145–151, © 2013 INFORMS 147

Note that the refund price is lower than the whole- Table 2 Demand Data for Both Mask Gifts in Chicago and Chelsea
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sale price because of the wholesaler’s increasing setup

Mask Gift 1 Mask Gift 2
costs and administration costs with the masks. Each Mask Gift 1 Mask Gift 2 demand in demand in
time an order is placed, it must be initiated and demand in Chicago demand in Chicago Chelsea Chelsea
processed. The shipment must be received, put into
205 163 113 65
storage, and loaded into a computerized information 229 160 120 72
system that monitors the inventory status. All of these 193 160 106 67
steps require time and energy from the wholesaler’s 231 155 97 63
employees. Also, setup costs accrue from other fac- 202 123 91 67
tors such as telephone calls, order forms, and ship- 198 157 83 69
195 120 80 76
ping costs. 214 129 67 64
Therefore, it is clear to Jia that this job is impor- 170 133 71 60
tant and challenging. If the retail manager orders too 212 96 114 69
few masks from the wholesaler, there will be a short- 233 151 72 73
age of masks, and Art in Motion loses sales. On the 214 130 67 65
196 166 61 70
other hand, if the retail manager orders too many 226 120 62 83
masks from the wholesaler, Art in Motion will still 217 143 98 69
lose profit by receiving less money in return for left- 212 112 89 64
over masks compared to what was originally paid 207 154 101 80
when the masks were ordered. 194 148 64 61
195 179 116 71
After listening to the job description and talking 182 118 63 74
to Art in Motion’s liaison, Jia decides to submit her 209 128 89 68
resume in the hope of becoming involved with this 201 136 61 76
amazing cultural experience. A few days later, she is 178 185 99 63
called for an interview and soon after discovers she 212 127 92 65
194 160 95 59
is on her way to realizing her dream career! 199 117 67 77
Seven years later 0 0 0 0 221 132 97 67
It has now been seven years since Jia was first 229 194 74 53
hired as the retail manager for Art in Motion. She
still enjoys reflecting back on the excitement she first
experienced when she was hired right out of gradu- the twenty-eight shows between the two locations,
ate school. She cannot believe how fast the time has which appears in Table 2.
flown by. As the retail manager of the Beijing Opera In addition, when Jia was in Michigan last year,
theatre company, she has seen her business grow Art in Motion tried selling mask gift 1 at one of their
throughout the years. The Beijing Opera had gained new venues, the Wharton Center in East Lansing,
extensive recognition in the United States because of Michigan. The decision was made to only sell the
touring that reached many cities in various locations wearable mask because it had been the most popular
and because of the popularity of the souvenir masks. souvenir for a majority of the past performances, and
Two of the locations that Jia enjoys working with the the company wanted to test the market. So far, Art
most are the Steppenwolf Theatre in Chicago, Illinois in Motion has only hosted one show at the Wharton
and the Purple Rose Theatre in Chelsea, Michigan. The Center. The records show that the 400 seats were all
Steppenwolf Theatre can hold 515 audience members, full, and the demand for mask gift 1 was 90 dur-
whereas the Purple Rose can seat 168. Even though ing the first run. Since the show was such a success,
Chelsea is not a typical location for the theatre com- Art in Motion Ltd. decided to continue to host the
pany because of its small size, they decided to try the opera in East Lansing in the future. Since there is not
location because Jia had seen a show there while vaca- enough historic demand data for the Wharton Center,
tioning in Michigan, and she guaranteed that the show the demand needs for the next show in East Lansing
would be a success because of the devoted theatergo- are to be estimated. With the help of local experts, the
ers in and around the town. It turns out that Jia was Opera has come up with the following rough proba-
correct, and Art in Motion has been setting Chelsea bilities of demand for East Lansing:
as a destination ever since. Art in Motion comes to This year, Art in Motion plans to try a new loca-
Chicago and Chelsea every spring, summer, fall, and tion in the United States. They discovered that Grand
winter for a one-time show. Therefore, four shows Rapids, Michigan has been hosting an international
have been put on each year in each location over the art competition throughout the city for the past two
span of Jia’s seven-year employment. Jia was able to years known as Art Prize Exhibition. It surely appears
obtain information on the demand for the masks for to be a community that will embrace the artistically
 Hu and Kumar: Case: Beijing Opera Mask Sales in Four Cities in the United States
148 INFORMS Transactions on Education 13(3), pp. 145–151, © 2013 INFORMS

extravagant Beijing Opera. The location will, in all Chelsea. That is enough for us to figure out the
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probability, be the Circle Theatre. demand pattern. How many masks did you order
Even though Jia truly enjoys most aspects of her each year for Chicago and Chelsea in the past?”
job, there is one question that tends to present major “I am afraid we follow a rather naïve policy.
issues—how many masks should Art in Motion order We order the masks to correspond with the demands
for each show? Currently, Jia orders masks based on from the previous show in the same city,” Jia replies.
the demands from previous shows in each location. “Okay. We can begin from there. We can calculate
Jia wonders whether the current order policy is suf- the optimal order quantity for both types of masks
ficient. If not, how will she decide the best order and then compare the profits from your previous
quantity? Jia cannot think through this problem, nor order sizes and the new order quantity.” The profes-
does she feel competent enough to develop reliable sor takes out the sheet and looks at the data. “The
estimates of the demand for masks. Therefore, she data is from 28 shows in four years, so it is important
decides to contact one of her professors that served for you to first check if it has time series pattern and
as a mentor while she attended graduate school to seasonal effect.”
obtain her MBA. She knows that she is currently “How?” Jia asks.
living in the Grand Rapids area, so she wants to “An easy way to check is to draw the plots of the
get some tips on how many masks to order for the data against time. Let me show you.” The profes-
upcoming Grand Rapids show. After an exchange of sor quickly inputs the data into her computer and
email messages and some laughter over the phone, plots the data against time using Excel. She shows
the professor agrees to meet at a local coffee shop to the plots to Jia. “You see, the data are pretty random
discuss the best course of action. and do not show any obvious upper or down trend
or any seasonal patterns. Therefore, we can roughly
say that there are not obvious time-series effects. If
3. Record of Discussions you are not sure, commonly used statistics software
of the Meeting like SAS provides several procedures to check time-
Jia enters the professor’s office, and after a quick series effects. Next, we should find a distribution that
exchange of a handshake and some reminiscing, cuts best describes the data.” The professor grabs a pen
right to the chase. She begins by explaining previous and begins to write down a series of steps and for-
trends in mask sales and her company’s overall situ- mulas. After a while, she stops, looks at her sheet,
ation. After reviewing data about mask sale demands and explains, “In this step, I suggest that you use
from previous shows in Chelsea and Chicago, Jia a standard software package to analyze the demand
explains that Art in Motion had experienced a short- pattern. EasyFitXL, an Excel add-in, is perhaps one
age of masks and leftover masks from the different of the best packages that provide all the information
venues on several occasions. Jia is adamant about not and analysis necessary for easy and useful decision
running out of masks for the theatergoers but is also making.”
worried about having any leftover masks, because “What’s that?” Jia asks.
in the past she had been refunded a lower price “This is very simple and straightforward software,
from the wholesaler than what Art in Motion had which automatically or manually fits your data to a
originally paid. large number of distributions. For example, after you
After listening to Jia, the professor looks at the input the data, this software provides relative com-
demand table provided by Jia (Table 2) and asks, parisons between 55+ commonly used distribution
“When you have some leftovers, the number of types and an absolute measure of each distribution’s
masks you sold is your demand. But when you have acceptability within seconds, which saves program-
shortage, the number of items you sell is less than ming time and multiple steps operations compared
your demand. Did you realize that?” to using other software. Then, the distributions with
“Yes.” Jia looks proud as she further explains, the corresponding estimated parameters, the corre-
“I have already thought through this question. sponding goodness-of-fit tests results, and the fitting
We have the best salesmen. If a certain mask is sold graph are provided and ranked according to the rank
out, our representatives will record how many more of the fitness. It can be used as either a stand-alone
are needed for the customers and report it to me. application or with Microsoft Excel, enabling you to
I have already adjusted the sales data by the short- solve a wide range of business problems with only a
age, so our data reflects the actual demand from the basic understanding of statistics. Actually, SAS, SPSS,
customers.” Stat::Fit, and some other statistics software can also
“Oh, that is great! Then you have data for seven provide similar functions.
years from four seasons each year for Chicago and “Sounds great! What next?” Jia asks eagerly.
 Hu and Kumar: Case: Beijing Opera Mask Sales in Four Cities in the United States
INFORMS Transactions on Education 13(3), pp. 145–151, © 2013 INFORMS 149

“After you find the distribution pattern of the 4. The Forecasting Option
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demands, you can calculate the stocking level of “We are on a roll!” Jia exclaims. “If you are not too
your orders.” The professor further explains, “Stock- busy, do you think we can continue for a little bit
ing level is calculated by placing unit shortage cost longer to tie up some loose ends?”
over the sum of unit shortage cost and unit leftover “Well 0 0 0 since we are on a roll, we might as well
cost. It represents the optimal probability of having continue until you feel comfortable with the situation.
enough, or more than enough, products to supply. Just make sure to write to your ol’ professor once in
After you get stocking level and the distribution with a while to keep me updated. Deal?”
parameters, you can then come up with an order “You have my word,” Jia replies.
quantity.” Jia begins to discuss with the professor about the
“That sounds great. I will ask the director if we order in Grand Rapids. The professor explains to Jia
can install this software to our computer.” Jia puts that when sufficient historical data is not available,
both hands on her chest and sighs with relief. “Thank i.e., for a new business or a less-established market
goodness! I should have come earlier. I don’t want to environment like the mask sales in Grand Rapids,
come across as greedy, but do you have any sugges- judgmental forecasting methods may be employed.
tions for the sales in East Lansing? We only had one
Jia’s mentor then offers the benefits and shortcom-
show there.” Jia opens her briefcase, brings out the
ings of four commonly used judgmental forecasting
document about the show in East Lansing (Table 3),
methods: the sales force opinions, executive opinions,
and passes it to the professor.
consumer surveys, and the Delphi method.
The professor looks down at the document about
First, the professor explains that collaborating with
the sales in East Lansing and asks, “Let me test you
sales staff who directly work with the customers are
first. How can you calculate cumulative frequencies
great sources of information because they are often
for this discrete distribution?”
aware of plans the customers may have for future
“It is easy; the cumulative frequencies for each
demand level are the summation of the frequencies purchases. The professor further explains that there
on and before that level,” Jia says without a second are several setbacks. These include distinguishing
thought. between what customers would like to do and what
In response, the professor states, “The cumulative they actually will do and compensating for customers
frequency for a certain amount indicates the percent- being overly influenced by recent experiences, which
age of time that demand is less than or equal to can cause sales staff to be pessimistic during low sale
that amount. You should stock at the amount for periods and too optimistic during high sale periods.
which the stocking level is just above the correspond- Lastly, a conflict of interest arises because it benefits
ing cumulative frequency.” The professor pauses and sales staff to provide low estimates in forecasting for
smiles at Jia. “I will leave the calculation to you as sales quotas.
your homework.” “Another option would be to listen to the opin-
Jia returns the smile and confidently replies, “No ions of executive staff members such as managers
problem, I love a good challenge!” in marketing, operations, and finance.” Jia listens as
the professor describes the benefit of this approach:
“It brings together the knowledge and talents of the
various managers; however 0 0 0 0” “I saw that coming,”
Table 3 Estimates of the Demand and Their
Probabilities at the Wharton Center Jia replies with a laugh. The professor continues with
a smile, “However, there is the risk that the opinion
Demand D Probability, f 4D5 of one person will reign over the rest, and spreading
60 0000 out the responsibility for the forecast throughout the
65 0002 group could create less pressure to develop a high-
70 0007 quality forecast.”
75 0008
80 0015
“Let’s move on to consumer surveys. Do you want
85 0012 the good or the bad news first?” asks the professor.
90 0020 “It’s all the same to me,” Jia replies. “Fair enough.
95 0015 For starters, it makes sense to gain direct input from
100 0010
105 0003
the customer because they determine the demand.
110 0004 In some situations, every customer or potential cus-
115 0002 tomer can be contacted. In other cases, there are usu-
120 0002 ally too many customers to contact, and it becomes
125 0000
extremely difficult to identify potential customers.
 Hu and Kumar: Case: Beijing Opera Mask Sales in Four Cities in the United States
150 INFORMS Transactions on Education 13(3), pp. 145–151, © 2013 INFORMS

Therefore, surveys are necessary to sample consumer professor, “my work here is done. You are ready!
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opinions. That’s the good news. Sadly, it’s already Good day to you!”
time for the bad news. Expertise is required when
developing and administering the surveys, and it can
become a very expensive and time-consuming ven- 5. A Suggestion of Cutting the
ture. Not to mention the possibility of fluctuations in Leftover Costs
behavior patterns that can throw off results.” The following day, Jia and the professor meet again
“So it sounds to me like we are zero for three so over lunch. The professor has come prepared. She
far on suggestions. This certainly isn’t making me says, “I have a suggestion for cutting some of your
feel any better about my current situation,” Jia replies company’s costs. Right now you are selling masks in
with a worried look on her face. “Oh don’t worry,” four cities, which are not far from each other. The
assures the professor, “all of these methods have their show first stops in East Lansing, then Chelsea, then
downfalls and benefits. The key to success is to find Chicago, and then Grand Rapids. Is that right?”
which one works best for your company’s current sit- “Yes,” Jia answers.
uation.” “For some reason I don’t believe you, but go “Since you sell the same two types of masks in
ahead. I’m all ears,” Jia utters with a small grin. these cities, why not take the leftovers from Chicago
“It is time you learn about the consensus forecast to Chelsea, take the leftovers from Chelsea to Grand
known as the Delphi method. It involves circulating Rapids, and from Grand Rapids to East Lansing
a series of questionnaires among people who have instead of returning the masks to the wholesaler each
the know-how to contribute in a meaningful way. All time? Have you asked for truck prices for shipments?
responses are kept anonymous, which creates an envi- It is quite possible that it will be cheaper than letting
ronment for honest feedback and tends to reduce the the wholesaler charge high commissions from you,”
risk of one person’s opinion overshadowing the oth- the professor says.
ers.” “So far this all sounds good to me,” Jia says with Jia pats her head and sighs, “Why didn’t I think of
this before? I will bring the shipping cost back to you
a surprised tone. “I told you not to worry. Each ques-
tomorrow.”
tionnaire builds off information from previous ones to
The next day 0 0 0 0
enlarge the scope on which participants can establish
Jia meets her professor in her office and shows
their decisions.” “However 0 0 0 1” Jia says with antic-
her the price quote from a reliable local transporta-
ipation. “I see that you are taking the words right
tion company—FastTransit LLC. FastTransit charges
out of my mouth. Just remember, you must decide
a fixed rate of $10, plus $1 for each mask shipped
which method will be the most beneficial to you,”
between any two of these cities. They also require that
assures the professor. “The Delphi method becomes
a contract be signed before each show if Jia plans to
difficult because they are difficult to perform well.
use their services to ship to the next city. The profes-
A lot of attention must be given to selecting partici- sor thinks for a while and mentions, “This is not bad.
pants, questionnaires take careful planning and test- Let’s see if shipping the masks from city to city saves
ing to avoid uncertainty, and multiround studies take the most money. First, you must understand that this
time. Some people just stop participating because it is question can be a very complicated one, but in this
such a time-consuming task!” special case the question can be pretty simple by turn-
“Thanks a lot, Professor. Now I feel more lost than ing it into classic newsvendor problems for these four
before. No offense.” cities. You may wonder how this is possible. Well,
“None taken. Just be patient, and the best fit will when you ship some products from city A to city B,
reveal itself to you,” says the professor. the shipping cost between A and B can be considered
“Thanks for the pep talk. I hope you’re right,” Jia as the leftover cost of the order in city A. When we
replies. place orders for city B, the leftover from city A will
“I don’t have a Ph.D. for nothing!” laughs the pro- be deducted from the total order quantity in city B
fessor. “Before we adjourn, I want to see if you have if the leftover quantity from city A does not exceed
taken any of this to heart,” says the professor. “As the total order quantity in city B. You must look at
of right now, what thoughts are going through your the demand data. The demand for masks increases
head?” “Well,” replies Jia, “the customer survey may from city to city along the Opera’s tour on its way
be difficult to pull off because we are in a little bit of to Chicago. Grand Rapids is also a big city and the
a time crunch, and it sounds like it might get expen- demand will not be low. Therefore, it is almost certain
sive to administer. Also, I think some of the higher that the leftover quantity from city A will not exceed
up executives will compete to have their voices heard, the optimal order quantity in city B, and we can make
so 0 0 0 0” “This is a good place to stop,” declares the inventory decisions for these cities one by one 0 0 0 0”
 Hu and Kumar: Case: Beijing Opera Mask Sales in Four Cities in the United States
INFORMS Transactions on Education 13(3), pp. 145–151, © 2013 INFORMS 151

Jia laughs, “Then I guess it is time for a new home- Figure 2 2 USD to Chinese Yuans (2010–2011)
Additional information, including supplemental material and rights and permission policies, is available at http://ite.pubs.informs.org.

work assignment? I will make sure to pass with flying CNY

colors, 100%!” 6.86222
6.78785
6.71348
6. A New Challenge from the 6.63911
Potential Cost Changes 6.56473
With help from the professor, Jia comes close to fin- 6.49036
Oct. 6 Nov. 4 Dec. 3 Jan. 4 Feb. 2
ishing her report about the mask sales. A few days
later, Jia watches an increase in the exchange rate from Jia also explains that Art in Motion does not want
U.S. dollars to Chinese yuan on TV and new concerns to change the selling prices of the masks because
arise. She decides it would be in her best interest to the fixed prices allow them to set an exact bud-
consult with the professor once more. This time, the get in advance and maintain consistency. In addi-
two meet up at a local park to soak in some sun in the tion, it allows Art in Motion to charge a high upfront
hope that the fresh air will clear their thoughts. Jia is cost that can be agreed upon with customers so that
better prepared this time around. She has made sure they are not shocked by a possible need for price
that her concerns are laid out as clear as the cloudless increases in the future, which could lead to arguments
sky overhead. over the validity of the pricing. “In such a situation,
“I hope you’re ready for this,” Jia says as the how should we respond? Should we always keep the
professor approaches the park bench. order quantity the same no matter how the wholesaler
“I was born ready. Let’s hear what you’ve got.” changes the wholesale price?” Jia asks.
Jia puts all of her issues on the table. “You already “I know you know the answer,” the professor
know my concerns from before, but I’ve got some responds.
new ones for you. Enjoy.” First, she admits that the “We also need to change our order quantity, but
wholesaler has mentioned several times this year that how?” Jia asks.
if the exchange rate from U.S. dollars to Chinese yuan “Well, let’s run a sensitivity analysis of how the
keeps dropping, they will have to charge more for the order quantities rely on the wholesale prices and
wholesale price. She shows the professor the current draw the plots. Then you will have a more clear idea.”
exchange rate trends as of 2010–2011 to highlight how The professor says.
the rate continues to drop as shown in Figure 2. “Ok. I can do that. Is this another assignment for
The wholesaler has already indicated that the me?” Jia jokes.
increase in the wholesale price can be as high as 15%. The professor smiles and says, “You bet it is!”