Question

Bob owns a t-shirt store. Bob’s hometown team is playing for the championship this weekend. Bob needs to decide whether to print some "championship" t-shirts to sell to fans if his hometown team wins the championship.

Bob knows that his best chance to sell a lot of shirts is to have the shirts ready to sell as fans are leaving the championship game. But what happens if the hometown team loses the championship game – then no one will want the shirts!

It will cost Bob $200 to make the shirts, but he thinks he can sell them for $600. The local newspaper puts the probability of the hometown team winning the championship at 30%.

Answer the following questions:

What are alternative options for Bob?

Answer 1

Bob is contemplating whether to print 'championship' t-shirts in advance of his hometown team's game. He knows making the shirts cost $200 and could sell them for $600. Bob should consider alternatives that mitigate the risk, such as on-demand printing, pre-orders, or a quick-to-alter design contingent on the game's outcome.

Step-by-step explanation:

Alternative Options for Bob and His T-Shirt Business Decision

Bob? is currently facing a business decision that involves some level of risk. With the possibility of his hometown team winning a championship, he is considering printing 'championship' t-shirts to sell. However, Bob is aware that if the team loses, the shirts will not sell, leaving him with a loss on investment. Given that the cost to make the shirts is $200 and the potential revenue is $600, he is essentially weighing the expected value of this venture against the risk of loss.

Some alternative options Bob could consider are:

• Waiting until the outcome of the game is certain and then quickly printing and selling the shirts, albeit potentially missing out on immediate post-game sales.
• Creating a design that could be quickly altered or finalized post-game, to reduce the risk of unsellable stock.
• Collaborating with other local businesses for a joint venture, thereby sharing the risk.
• Looking into on-demand t-shirt printing services that can produce shirts quickly after the event in case the team wins.
• Setting up a pre-order system with a non-refundable deposit to gauge interest and reduce potential losses.

Bob will need to consider the financial implications and his understanding of his customers' purchasing behavior, captured in the surveys involving t-shirts over $19, and align his strategy accordingly.