Howe, Dewey, Cheatem (HDC) produces parts for airplanes. HDC has two pricing schemes: 1) fixed price (not directly driven by costs) and 2) cost plus (costs plus fixed fee). All parts fabricated by HDC are bespoke to the customer. HDC determines on which basis to charge the customer based on which will provide the highest profit. Is it ethical to choose a price scheme based on which will produce the higher income? Why?

Howe, Dewey, Cheatem (HDC) produces parts for airplanes. HDC has two pricing schemes: 1) fixed price (not directly driven by costs) and 2) cost plus (costs plus fixed fee). All parts fabricated by HDC are bespoke to the customer. HDC determines on which basis to charge the customer based on which will provide the highest profit. Is it ethical to choose a price scheme based on which will produce the higher income? Why?

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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