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QUESTION 1: Please complete the following Table by filling in the missing numbers. TRANSACTIONAL RELATIONSHIP TOTAL
VA PRODUCT SALES $284.50 $1,158.50 $1,443
B&S PRODUCT SALES $293 $574.00 $867
TOTAL $577.50 $1,732.50 $2,310.00

Exhbit7 provides the value of last column
In Optimistic Scenario, B&S Transactional Business is cannibalized. That value is $293.

QUESTION 2: How much is Arrow’s GROSS MARGIN before the Express Proposal? (Please show how you calculate it) Is it higher than the goal of 15%?
Gross Margin on BAS Products 20%-25% (Assuming 22.5% for calculations)
Gross Margin on VA Products 10%-15% (Assuming 12.5% for calculations)

Gross Margin Market Segment (From Exhibit 7 and calculated from above)
BAS PRODUCT 22.50% $867
VA Product 12.50% $1,443 $375.45 =(22.50%*$867)+(12.50%*$1,443)
Gross Margin for Both the Products 16.253% = ($375.45)/($867+$1,443) Gross Margin for Both the Products is Higher than the Goal of 15%

QUESTION 3: Suppose the Express proposal is accepted by Arrow. Under the OPTIMISTIC SCENARIO, how much is Arrow’s GROSS MARGIN expected to be? (Please show how you calculate it) Is it higher than the goal of 15%?
In Optimistic Scenario, B&S Transactional Business is cannibalized. That value is $293.

Given that VA Product sales is immune to cannibalization. Gross Margin
BAS PRODUCT 22.50%
VA Product 12.50% $357.87 = (22.50%*$574)+(12.50%*$1,443)+ (16.5%*293)
Gross Margin for Both the Products 15.492% = ($357.87)/($867+$1,443)

Gross Margin for Both the Products is Higer than the Goal of 15%

QUESTION 4: Suppose the Express proposal is accepted by Arrow. Under the PESSIMISTIC SCENARIO, how much is Arrow’s GROSS MARGIN expected to be? (Please show how you calculate it) Is it higher than the goal of 15%?
In Pessimistic Scenario, all transactional customers and roughly 40%

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