Answer to Test #6: Negative Sales Growth, Positive Volatility

Volatility and Sales GrowthAnswer to Test #6: Negative Sales Growth, Positive Volatility

Yellow Highlighting=Change from Beginning of Period

End of Period
Customers in Market	Amt Purch from all Suppliers	Primary Supplier	Primary Supplier % of Cust Purch	Units of Sale by Primary Supp	Secondary Supplier	Secondary Supp % of Cust Purch	Units of Sale by Secondary Supp
Customer A	1000	Supplier 1	60%	600	Supplier 2	40%	400
Customer B	200	Supplier 1	80%	160	Supplier 2	20%	40
Customer C	100	Supplier 2	50%	50	Supplier 3	50%	50
Customer D	500	Supplier 3	100%	500	0	0%	0
Total	1800			1310			490
Suppliers in Market	Amount Sold	% Total Market Share
Supplier 1	760	42.2%
Supplier 2	490	27.2%
Supplier 3	500	30.6%
Total	1800	100.0%
*Summary of Changes During Period*
Supplier	Change in Unit Sales Volume	% Volume Change from Beginning to End	Net Unit Volatility in Volume Change	Volatility as % of Unit Sales Volume Change	Customer Growth in Volume Change	Customer Growth as % of Unit Sales Volume Change
Supplier 1	-1100	-59.1%	0	0%	-1100	100%
Supplier 2	-850	-63.4%	0	0%	-850	100%
Supplier 3	50	10.0%	500	1000%	-450	-900%
Total	-1900	-51.4%	500	-26%	-2400	126%

Explanation: In order for this condition to hold, the existing customers must buy fewer units and a new customer must enter the market place. We reached our answer by having Customer D enter the market and Customers A, B and C purchasing far fewer units.