Practical Management Science
6th Edition
ISBN: 9781337671989
Author: WINSTON
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 7.3, Problem 3P
Pricing Decisions at Madison
The Madison Company manufactures and retails a certain product. The company wants to determine the price that maximizes its profit from this product. The unit cost of producing and marketing the product is $50. Madison will certainly charge at least $50 for the product to ensure that it makes some profit. However, there is a very competitive market for this product, so that Madison’s demand falls sharply when it increases its price. How should the company proceed?2
In the pricing model in Example 7.1 with the constant elasticity demand function, the assumption is that all units demanded are sold. Suppose the company has the capacity to produce only 200 units. If demand is less than capacity, all of demand is sold. If demand is greater than or equal to capacity, only 200 units are sold. Use Solver to find the optimal price and the corresponding profit. Then use SolverTable to see how sensitive these answers are to the production capacity, letting it vary from 170 to 230 in increments of 10. Discuss your findings relative to the original solution in Example 7.1. In other words, what is the effect of capacity on the optimal price and profit?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
You are the newly appointed CEO of TechSouth, a South African multinational technology company based in Cape Town. TechSouth specialises in manufacturing smartphones, laptops, and smart home devices. The company has a significant presence in the African market and has recently expanded into Europe and Asia. However, TechSouth is facing several critical challenges:· Declining Market Share - Over the past three years, TechSouth has lost considerable market share to both localcompetitors and international giants like Samsung and Apple. The company's products are perceived as outdated and lacking innovation.· Employee Engagement Issues - Recent employee surveys indicate low morale and engagement levels, particularly among the younger workforce, leading to high turnover rates. Many employees feel disconnected from the company's vision and mission.· Siloed Departments - The organizational structure at TechSouth is highly siloed, with departments operatingindependently rather than…
What is the best way to manage emotions and thoughts?
How to work through Emotions and thoughts?
What are the emotions or stressful thoughts? What are the differences between them?
How can we work through the emotions or stressful thoughts?
How can we avoid or prevent emotions or stressful thoughts from happening or occurring?
What are the obstacles?
Chapter 7 Solutions
Practical Management Science
Ch. 7.3 - Prob. 1PCh. 7.3 - Prob. 2PCh. 7.3 - Pricing Decisions at Madison The Madison Company...Ch. 7.3 - Prob. 4PCh. 7.3 - Prob. 5PCh. 7.3 - Prob. 6PCh. 7.3 - Prob. 7PCh. 7.3 - Prob. 8PCh. 7.3 - Prob. 9PCh. 7.3 - Prob. 10P
Ch. 7.3 - Prob. 11PCh. 7.3 - Prob. 12PCh. 7.3 - Prob. 13PCh. 7.3 - PRICING SUITS AT SULLIVANS Sullivans is a retailer...Ch. 7.3 - Prob. 15PCh. 7.4 - Prob. 16PCh. 7.4 - Prob. 17PCh. 7.4 - Prob. 18PCh. 7.4 - Prob. 19PCh. 7.4 - Prob. 20PCh. 7.4 - Prob. 21PCh. 7.4 - Prob. 22PCh. 7.4 - Prob. 23PCh. 7.5 - Prob. 24PCh. 7.5 - Prob. 25PCh. 7.5 - Prob. 26PCh. 7.5 - Prob. 27PCh. 7.6 - Prob. 28PCh. 7.6 - Prob. 29PCh. 7.6 - Prob. 30PCh. 7.6 - Prob. 31PCh. 7.6 - Prob. 32PCh. 7.6 - Prob. 33PCh. 7.6 - The method for rating teams in Example 7.8 is...Ch. 7.7 - Prob. 35PCh. 7.7 - Prob. 36PCh. 7.7 - Prob. 37PCh. 7.7 - The stocks in Example 7.9 are all positively...Ch. 7.7 - Prob. 39PCh. 7.7 - Prob. 40PCh. 7.7 - Prob. 41PCh. 7.7 - Prob. 42PCh. 7.8 - Given the data in the file Stock Beta.xlsx,...Ch. 7.8 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Another way to derive a demand function is to...Ch. 7 - Prob. 48PCh. 7 - If a monopolist produces q units, she can charge...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - A beer company has divided Bloomington into two...Ch. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - You have 50,000 to invest in three stocks. Let Ri...Ch. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Based on Grossman and Hart (1983). A salesperson...Ch. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 86PCh. 7 - Prob. 1.1CCh. 7 - Prob. 1.2CCh. 7 - Prob. 1.3CCh. 7 - Prob. 1.4C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Main Challenges at TechInnovateStrategic DirectionTechInnovate's board of directors is pushing for a more aggressive expansion into emerging markets, particularly in Africaand Southeast Asia. However, there's internal disagreement about whether to focus on these new markets or consolidatetheir position in existing ones. Sarah Chen favors rapid expansion, while some senior executives advocate for a morecautious approach.Ethical ConcernsThe company's AI algorithms have come under scrutiny for potential biases, particularly in facial recognition technology.There are concerns that these biases disproportionately affect minority groups. Some employees have voiced ethicalconcerns about selling this technology to law enforcement agencies without addressing these issues.Team Leadership and DiversityTechInnovate's leadership team is predominantly male and Western, despite its global presence. There's growing pressurefrom employees and some board members to diversify the leadership team to…arrow_forwardSarah Anderson, the Marketing Manager at Exeter Township's Cultural Center, is conducting research on the attendance history for cultural events in the area over the past ten years. The following data has been collected on the number of attendees who registered for events at the cultural center. Year Number of Attendees 1 700 2 248 3 633 4 458 5 1410 6 1588 7 1629 8 1301 9 1455 10 1989 You have been hired as a consultant to assist in implementing a forecasting system that utilizes various forecasting techniques to predict attendance for Year 11. a) Calculate the Three-Period Simple Moving Average b) Calculate the Three-Period Weighted Moving Average (weights: 50%, 30%, and 20%; use 50% for the most recent period, 30% for the next most recent, and 20% for the oldest) c) Apply Exponential Smoothing with the smoothing constant alpha = 0.2. d) Perform a Simple Linear Regression analysis and provide the adjusted…arrow_forwardRuby-Star Incorporated is considering two different vendors for one of its top-selling products which has an average weekly demand of 70 units and is valued at $90 per unit. Inbound shipments from vendor 1 will average 390 units with an average lead time (including ordering delays and transit time) of 4 weeks. Inbound shipments from vendor 2 will average 490 units with an average lead time of 2 weeksweeks. Ruby-Star operates 52 weeks per year; it carries a 4-week supply of inventory as safety stock and no anticipation inventory. Part 2 a. The average aggregate inventory value of the product if Ruby-Star used vendor 1 exclusively is $enter your response here.arrow_forward
- Sam's Pet Hotel operates 50 weeks per year, 6 days per week, and uses a continuous review inventory system. It purchases kitty litter for $13.00 per bag. The following information is available about these bags: > Demand 75 bags/week > Order cost = $52.00/order > Annual holding cost = 20 percent of cost > Desired cycle-service level = 80 percent >Lead time = 5 weeks (30 working days) > Standard deviation of weekly demand = 15 bags > Current on-hand inventory is 320 bags, with no open orders or backorders. a. Suppose that the weekly demand forecast of 75 bags is incorrect and actual demand averages only 50 bags per week. How much higher will total costs be, owing to the distorted EOQ caused by this forecast error? The costs will be $higher owing to the error in EOQ. (Enter your response rounded to two decimal places.)arrow_forwardYellow Press, Inc., buys paper in 1,500-pound rolls for printing. Annual demand is 2,250 rolls. The cost per roll is $625, and the annual holding cost is 20 percent of the cost. Each order costs $75. a. How many rolls should Yellow Press order at a time? Yellow Press should order rolls at a time. (Enter your response rounded to the nearest whole number.)arrow_forwardPlease help with only the one I circled! I solved the others :)arrow_forward
- Osprey Sports stocks everything that a musky fisherman could want in the Great North Woods. A particular musky lure has been very popular with local fishermen as well as those who buy lures on the Internet from Osprey Sports. The cost to place orders with the supplier is $40/order; the demand averages 3 lures per day, with a standard deviation of 1 lure; and the inventory holding cost is $1.00/lure/year. The lead time form the supplier is 10 days, with a standard deviation of 2 days. It is important to maintain a 97 percent cycle-service level to properly balance service with inventory holding costs. Osprey Sports is open 350 days a year to allow the owners the opportunity to fish for muskies during the prime season. The owners want to use a continuous review inventory system for this item. Refer to the standard normal table for z-values. a. What order quantity should be used? lures. (Enter your response rounded to the nearest whole number.)arrow_forwardIn a P system, the lead time for a box of weed-killer is two weeks and the review period is one week. Demand during the protection interval averages 262 boxes, with a standard deviation of demand during the protection interval of 40 boxes. a. What is the cycle-service level when the target inventory is set at 350 boxes? Refer to the standard normal table as needed. The cycle-service level is ☐ %. (Enter your response rounded to two decimal places.)arrow_forwardOakwood Hospital is considering using ABC analysis to classify laboratory SKUs into three categories: those that will be delivered daily from their supplier (Class A items), those that will be controlled using a continuous review system (B items), and those that will be held in a two bin system (C items). The following table shows the annual dollar usage for a sample of eight SKUs. Fill in the blanks for annual dollar usage below. (Enter your responses rounded to the mearest whole number.) Annual SKU Unit Value Demand (units) Dollar Usage 1 $1.50 200 2 $0.02 120,000 $ 3 $1.00 40,000 $ 4 $0.02 1,200 5 $4.50 700 6 $0.20 60,000 7 $0.90 350 8 $0.45 80arrow_forward
- A part is produced in lots of 1,000 units. It is assembled from 2 components worth $30 total. The value added in production (for labor and variable overhead) is $30 per unit, bringing total costs per completed unit to $60 The average lead time for the part is 7 weeks and annual demand is 3800 units, based on 50 business weeks per year. Part 2 a. How many units of the part are held, on average, in cycle inventory? enter your response here unitsarrow_forwardassume the initial inventory has no holding cost in the first period and back orders are not permitted. Allocating production capacity to meet demand at a minimum cost using the transportation method. What is the total cost? ENTER your response is a whole number (answer is not $17,000. That was INCORRECT)arrow_forwardRegular Period Time Overtime Supply Available puewag Subcontract Forecast 40 15 15 40 2 35 40 28 15 15 20 15 22 65 60 Initial inventory Regular-time cost per unit Overtime cost per unit Subcontract cost per unit 20 units $100 $150 $200 Carrying cost per unit per month 84arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
MarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational Publishing
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Marketing
Marketing
ISBN:9780357033791
Author:Pride, William M
Publisher:South Western Educational Publishing
Forecasting 2: Forecasting Types & Qualitative methods; Author: Adapala Academy & IES GS for Exams;https://www.youtube.com/watch?v=npWni9K6Z_g;License: Standard YouTube License, CC-BY
Introduction to Forecasting - with Examples; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=98K7AG32qv8;License: Standard Youtube License