S7.26As a prospective owner of a club known as the Red Rose, you are interested in determining the volumeof sales dollars necessary for the coming year to reach the break-even point. You have decided to breakdown the sales for the club into four categories, the first category being beer. Your estimate of the beersales is that 30,000 drinks will be served. The selling price for each unit will average $1.50; the cost is$.75. The second major category is meals, which you expect to be 10,000 units with an average price of$10.00 and a cost of $5.00. The third major category is desserts and wine, of which you also expect tosell 10,000 units, but with an average price of $2.50 per unit sold and a cost of $1.00 per unit. The finalcategory is lunches and inexpensive sandwiches, which you expect to total 20,000 units at an averageprice of $6.25 with a food cost of $3.25. Your fixed cost (i.e., rent, utilities, and so on) is $1,800 permonth plus $2,000 per month for entertainment.a) What is your break-even point in dollars per month?b) What is the expected number of meals each day if you are open 30 days a month?

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Answered: a) What is your break-even point in…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter7: Nonlinear Optimization Models

Section: Chapter Questions

Problem 49P: If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60...

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PRICING SUITS AT SULLIVANS Sullivans is a retailer of upscale mens clothing. Suits cost Sullivans 320. The current price of suits to customers is 350. which leads to annual sales of 300 suits. The elasticity of the demand for mens suits is estimated to be 2.5 and assumed to be constant over the relevant price range. Each purchase of a suit leads to an average of 2.0 shirts and 1.5 ties being sold. Each shirt contributes 25 to profit, and each tie contributes 15 to profit. Determine a profit-maximizing price for suits. In the complementary-product pricing model in Example 7.3, we have assumed that the profit per unit from shirts and ties is given. Presumably this is because the prices of these products have already been set. Change the model so that the company must determine the prices of shirts and ties, as well the price of suits. Assume that the unit costs of shirts and ties are, respectively, 20 and 15. Continue to assume that, on average, 2.0 shirts and 1.5 ties are sold along with every suit (regardless of the prices of shirts and ties), but that shirts and ties have their own separate demand functions. These demands are for shirts and ties purchased separately from suit purchases. Assume constant elasticity demand functions for shirts and ties with parameters 288,500 and 1.7 (shirts), and 75,460 and 1.6 (ties). Assume the same unit cost and demand function for suits as in Example 7.3. a. How much should the company charge for suits, shirts, and ties to maximize the profit from all three products? b. The assumption that customers will always buy, on average, the same number of shirts and ties per suit purchase, regardless of the prices of shirts and ties, is not very realistic. How might you change this assumption, and change your model from part a accordingly, to make it more realistic?
If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.
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PROBLEM The Seminole Company wishes to apply the Miller-Orr model to manage its cash investment. Seminole’s management has determined that the cost of either investing in or selling marketable securities is $200. By looking at Seminole Company’s past cash needs, they have determined that the variance of daily cash flows is $10,000. Seminole Company’s opportunity cost of cash, per day, is estimated to be 0.05%. Seminole management has figured, based on their experience dealing with the cash flows of the company, that there should be a cushion— a safety stock—of cash of $20,000. 1. How much is the variance of daily cash flows? (Use a number, no decimal value, no commas, no currency, no space) * 2. How much is the opportunity cost of cash, per day? (Use a number, must be in decimal form. eg. 6.3%/100, encode 0.063 , no commas, no currency, no space) * 3. How much is the cost per transaction? (Use a number, no decimal value, no commas, no currency, no space) * PLEASE ANSWER ALL QUESTIONS.…
3. As an owner of a restaurant known as Ryuichi House, you have decided to break down the salesof the club into four categories, the first category is beverages. Your estimate of beverages salesis that 30,000 drinks will be served. The selling price for each unit will average 60Php; cost is30Php. The second category is meals, which you expect to be 10,000 units with an average priceof 400Php and a cost of 200Php. The third category is desserts, of which you also expect to sell10,000 units but with an average price of 100Php per unit sold and cost of 40Php per unit. Thefinal category is snacks, which you expect to total 20,000 units at an average price of 250Php witha cost of 130Php. You will also expense 72,000Php for rent, 8,000Php for utilities, and 80,000Phpfor the entertainment.a. How much is the total sales?b. What is your break-even point in pesos per month?
The local high school soccer club need to borrow to finance a new soccer field. Repayment of the loan involves payments of $10 000.00 at the end of every 3 months for 8 years. No payments are to be made during the development period of 5 years. If interest is 8% compounded quarterly, how much did the Achievers borrow? a) $162 064.83 b) $234 683.35 c) $157 935.17 d) $175.935.71 e) $320 000.00 .
2. Analyze the situation and answer the following questions. Ed and Barbara Bonneau started their wholesale sunglass distribution firm 30 years ago with $1,000 of their own money and $5,000 borrowed from a country banker in Ed’s hometown. The firm grew quickly, selling sunglasses and reading glasses to such companies as Wal-Mart, Eckerd Drugs, and Phar-Mor. In addition, the Bonneaus enjoyed using the company to do good things. For example, they had a company chaplain, who was available when employees were having family problems, such as a death in the family.Although the company had done well, the market had matured recently and profit margins narrowed significantly. Wal-Mart, for example, was insisting on better terms, which meant significantly lower profits for the Bonneaus. Previously, Ed had set the prices that he needed to make a good return on his investment. Now, the buyers had consolidated, and they had the power. Ed didn’t enjoy running the company as much as he had in the…
An insurance company in Trinidad and Tobago seeks to ensure that investments from premiums collected yield adequate rate of returns in order to process claims and generate a profit. Which of the following financial risk management objectives do they aim to achieve? Select one: a. All of the options in this question b. To avoid the misuse of banks c. To reduce the level of risk bank creditors may be exposed to d. To enhance the risk-return profile of the organization’s portfolio
Consider a monopolistically competitive market with NN firms. Each firm's business opportunities are described by the following equations: Demand: Q=100N−PQ=100N−P Marginal Revenue: MR=100N−2QMR=100N−2Q Total Cost: TC=50+Q2TC=50+Q2 Marginal Cost: MC=2QMC=2Q How much profit does each firm make? a: 1,250/N*2−50 b: 2,500/N*2−50 c: 50+625/N*2 d: 1,875/N*2 In the long run, how many firms will exist in this market?
1. Explain the meaning of the expected value of perfect information (EVPI) in this problem. Based on the results of (iii) and (iv), which investment would you choose? 2. Compute the coefficient of variation, the return-to-risk ratio (RTRR) for each investment. Based on (vii) and (viii), what investment would you choose? Compare the results of (vi) and (ix) and explain any differences

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a) What is your break-even point in dollars per month? b) What is the expected number of meals each day if you are open 30 days a month?