1. A Western shop wishes to purchase 300 felt and 200 straw cowboy hats. Bids have been received fromthe wholesalers. Beta Hatters has agreed to supply not more than 200 hats. Kappa Hatters not more than250, Delta Hatters not more than 150. The owner of the shop has estimated that his profit per hat sold fromBeta Hatters would be P30/felt and P40/straw, from Kappa Hatters P38/felt and P35/straw, and from DeltaHatters P40/felt nad P36/straw. The Western shop wants to determine maximum profit.

Let a1 be felt hats and a2 be straw hats from Beta Hatters b1 be felt hats and b2 be straw hats from…

Answered: 1. A Western shop wishes to purchase…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter7: Nonlinear Optimization Models

Section7.3: Pricing Models

Problem 4P

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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 Madisons 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?
Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?
Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
Using method 1 (combined depreciation and investment cost) determine the probable cost per hour of owning and operating a caterpillar that uses rubber tires.The equipment is a 185-hp diesel engine and the following conditions apply. Factor delivered price = $ 472,550Sales tax = 6.5% of delivered priceUnloading and assembling = $2,175Salvage value = $ 115,000Useful life = $ 6 yr.Hours used per year = 1,675 hrInterest on investment = 9.5%Maintenance and repair = 65% of straight line depreciationDiesel engine = 185 hpOperating factor = 0.60Fuel cost = $5.45/galCrankcase capacity = 9 galHours between oil changes = 135 hr.Oil cost = $14.25/galTires = $ 62,500Tire life = 4950 hr.Tire repairs = 12% of tire depreciation.
1. Select the rule which determines the quantity of a rice which a consumer will demand.a) Continue to buy so long as there is no consumer surplus.b) Stop buying rice at the level of demand where the consumer surplus rises above the market price.c) Stop buying rice at the level of demand where the marginal utility falls to the price of rice.d) Continue to buy so long as demand for rice is price elastic. 2. In which of these situations might moral hazard arise?a) Insurance companies fail to calculate the risks of accident correctly.b) A company receives an exemption from pollution control legislation.c) A sports team accepts bribes which affect their performance in a game.d) A group of households makes a collective purchase of flood insurance
The director collected $3000 amount as funds for the tournament on the condition that the amount will be spent on buying prices and trophies and for the two-day tournament and also arranging food for people participating in the tournament. The funds were collected as donations from the people. However, the manager of the club said that as the club is struggling in making profits, $1500 would be spent on the tournament, and the remaining $1500 will be considered as pure profits. This was not acceptable by the person who arranged the funds for the tournament after convincing people that the entire amount will only be used on the tournament. 1. Was it right in challenging my manager? Should I have handled this differently?
The director collected $3000 amount as funds for the tournament on the condition that the amount will be spent on buying prices and trophies and for the two-day tournament and also arranging food for people participating in the tournament. The funds were collected as donations from the people. However, the manager of the club said that as the club is struggling in making profits, $1500 would be spent on the tournament, and the remaining $1500 will be considered as pure profits. This was not acceptable by the person who arranged the funds for the tournament after convincing people that the entire amount will only be used on the tournament. 1. Do you think the companies would have felt cheated if the golf course had pocketed theirdonations?
3. Elana owns a consulting business that helps software companies market their services to school districts. She earns an average of $4635.7 for every contract one of her client companies signs with her help. In order to be able to run her business, she needs to cover $7,000/month (rent, licenses, etc.). The average costs associated with each contract are $1676.6. How many contracts must she facilitate each month in order to break even? a. -2.37 b. 2.37 c. 10966.14 d. 1.51 e. -1675.09 f. None of the other options.
Arts N Crafts Industries manufacturers high-end lightfixtures, which it sells internationally. The company is re-sponsible for paying for shipping its product to a distributorlocated in Atlanta, Georgia. Due to the high cost of ship-ping, the company is considering shipping its productsunassembled, but will include detailed assembly instruc-tions in each package. By shipping unassembled products,Arts N Crafts will be able to shrink the size of its cartons andthereby increase the number of products per pallet from16 (4 rows of 4) to 25 (5 rows of 5). Note that this changewill not appreciably increase each product’s 8-pound ship-ping weight. Furthermore, since individual fixtures will bepacked more tightly, they will be less susceptible to damageand easier to handle. Thus, the company expects the freightclass to decrease from 85 to 70. Currently the companyships 400 units per week.a. Using Table 15.2, assess the impact of the proposedchange in packaging on weekly shipping cost.b. How…
When SS Electroplating Company started the electroplating operations in a residential location in Bengaluru, it received a notice from the pollution Control Board to install the effluent treatment plant within 15 days, failing which they would seal the plant. The Director of the company collected the information that it would cost about 10,00,000 to buy an effluent treatment plant, an area of about 600 sq.feet to install it over a period of 2-3 months, & running cost of about 40,000 per month for the purchase of material like costic soda & others. The effluent contained nickel, synide, cromium, cadminum & zinc, which were to be treated separately using different chemicals. After effluent liquid of about 800 litres per day was treated, the sludge was to be dried, packed, stored & dumped in a government notified place. The entire process would not only cost substantial amount, but also would need additional area of about 600-700 sq. feet The company gathered information…
Travis Kellogg is a sales representative for Xerox and his territory includes St. Louis and the surrounding suburbs. One of his accounts is Cintas, which offers a wide range of products to businesses. Travis was working with the Cintas division manager, Kiera Valentine, to gain her approval to purchase a networked printer and copier for the local office. The price of the printer/copier including installation would be $5,490, but Kiera has a spending limit of $5,000. She and Travis try to negotiate how Xerox can get the order and Kiera can get the printer but stay within her division’s budget. Eventually, they agreed to a deal of $5,000 for the printer/copier, plus Cintas would deliver and maintain welcome mats or rugs in Xerox’s St. Louis office. Travis and Kiera successfully utilized _____ to facilitate the exchange. A.trade B.credit C.money D.bartering E. negotiation
The Gray Ferrari I t all got started when Robert L. Johnson had dinner at Mr. K’s Chinese restaurant with Michael Jordan of the Washington Wizards and David Falk, the leading sports agent. When the discussion turned to cars, Johnson mentioned his interest in getting a Ferrari. Both Falk and Jordan recommended their respective dealers but Johnson found the going tough. Only a select number of Ferraris are made annually, and the automaker limits how many are sold through U.S. dealers to about 1,000 units. In practice, anyone placing an order would have to wait over two years for delivery for a car that would cost $200,000 to $300,000 depending on the model. A New Jersey dealer had a Ferrari available, but, at $300,000, Johnson felt the price was too high. Michael Jordan’s dealer had a 360 Modena available for $160,000. Although he bought it, it was not exactly what he had wanted because the Modena is not a convertible. Franco Nuschese, the owner of Georgetown’s…

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