1) The management of Thompson Controls must decide between three processes for its model D electronic thermostat. The monthly cost of the first process is given by C(x) = 200x + 15,000 dollars, where x is the number of thermostats produced; Their marketing department has recently done a survey showing that they can set a price of $58 per thermostat and expect the demand of 2500. Another possibility is for them to consider a lower quality product with a monthly cost of C(x) = 15x + 20,000 and the demand of 3000 units. In case of the second process, the selling price should not be more than 85% of $58. 1) What is your recommendation as their business analysis advisor? 2) How much is their monthly revenue? (based on your answer in part 1)
1) The management of Thompson Controls must decide between three processes for its model D electronic thermostat. The monthly cost of the first process is given by C(x) = 200x + 15,000 dollars, where x is the number of thermostats produced; Their marketing department has recently done a survey showing that they can set a price of $58 per thermostat and expect the demand of 2500. Another possibility is for them to consider a lower quality product with a monthly cost of C(x) = 15x + 20,000 and the demand of 3000 units. In case of the second process, the selling price should not be more than 85% of $58. 1) What is your recommendation as their business analysis advisor? 2) How much is their monthly revenue? (based on your answer in part 1)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:1) The management of Thompson Controls
must decide between three processes for its
model D electronic thermostat. The monthly
cost of the first process is given by C(x) =
200x + 15,000 dollars, where x is the number
of thermostats produced; Their marketing
department has recently done a survey
showing that they can set a price of $58 per
thermostat and expect the demand of 2500.
Another possibility is for them to consider a
lower quality product with a monthly cost of
C(x) = 15x + 20,000 and the demand of 3000
units. In case of the second process, the
selling price should not be more than 85% of
$58. 1) What is your recommendation as their
business analysis advisor? 2) How much is
their monthly revenue? (based on your answer
in part 1)
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