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Management of the Toys R4U Company needs to decide whether to introduce a certain new novelty toy for the upcoming Christmas season, after which it would be discontinued. The total cost required to produce and market this toy would be $500,000 plus $15 per toy produced. The company would receive revenue of $35 for each toy sold. Assuming that every unit of this toy that is produced is sold, write an expression for the profit in terms of the number produced and sold. Then find the break-even point that this number must exceed to make it worthwhile to introduce this toy. Now assume that the number that can be sold might be less than the number produced. Write an expression for the profit in terms of these two numbers.

Management of the Toys R4U Company needs to decide whether to introduce a certain new novelty toy for the upcoming Christmas season, after which it would be discontinued. The total cost required to produce and market this toy would be $500,000 plus $15 per toy produced. The company would receive revenue of $35 for each toy sold. Assuming that every unit of this toy that is produced is sold, write an expression for the profit in terms of the number produced and sold. Then find the break-even point that this number must exceed to make it worthwhile to introduce this toy. Now assume that the number that can be sold might be less than the number produced. Write an expression for the profit in terms of these two numbers.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Management of the Toys R4U Company needs to decide whether to introduce a certain new novelty toy for the upcoming Christmas season, after which it would be discontinued. The total cost required to produce and market this toy would be $500,000 plus $15 per toy produced. The company would receive revenue of $35 for each toy sold. Assuming that every unit of this toy that is produced is sold, write an expression for the profit in terms of the number produced and sold. Then find the break-even point that this number must exceed to make it worthwhile to introduce this toy. Now assume that the number that can be sold might be less than the number produced. Write an expression for the profit in terms of these two numbers. Formulate a spreadsheet that will give the profit in part b for any values of the two numbers. Write a mathematical expression for the constraint that the number produced should not exceed the number that can be sold.
Transcribed Image Text:Management of the Toys R4U Company needs to decide whether to introduce a certain new novelty toy for the upcoming Christmas season, after which it would be discontinued. The total cost required to produce and market this toy would be $500,000 plus $15 per toy produced. The company would receive revenue of $35 for each toy sold. Assuming that every unit of this toy that is produced is sold, write an expression for the profit in terms of the number produced and sold. Then find the break-even point that this number must exceed to make it worthwhile to introduce this toy. Now assume that the number that can be sold might be less than the number produced. Write an expression for the profit in terms of these two numbers. Formulate a spreadsheet that will give the profit in part b for any values of the two numbers. Write a mathematical expression for the constraint that the number produced should not exceed the number that can be sold.
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