The setting is a Ralph Lauren outlet store, and the product line is Polo golf shirts. A product manager and the General Manager for Outlet Sales are analyzing the discounted price to be offered at the outlet store per day. The decision being made is how low a price to select at the start of any given day to generate sales at that price throughout the day. The demand, revenue and variables cost information is collected on the following spreadsheet:QuantityPriceTotal RevMarginal RevVariable Cost0$50$0$0$281$48$48$48$282$46$92$44$283$45$135$43$284$44$176$41$285$42$210$34$286$40$240$30$287$38.31$268$28$288$36.50$292$24$289$34.50$311$19$2810 $16$2811 $13$2812 $10$2813 $7$2814 $4$2815 $0$2816 -$1$2817 -$4$2818 -$7$28 QUESTIONSWould you recommended lowering price to the level required to generate 15 per day? Why or why not? What does it mean to “sell at a negative margin”?At the 14 shirts per day, the margin is positive. But what is the operating profit or loss on the 14th, 12th, and 10th?How many shirts do you recommend selling per color per day? What then is your recommended dollar markup and the markup percentage? What dollar margin and percentage margin is that?

The complete values of given spreadsheet is as follows - Quantity Price Total Rev…

Answered: The setting is a Ralph Lauren outlet…

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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The setting is a Ralph Lauren outlet store, and the product line is Polo golf shirts. A product manager and the General Manager for Outlet Sales are analyzing the discounted price to be offered at the outlet store per day. The decision being made is how low a price to select at the start of any given day to generate sales at that price throughout the day. The demand, revenue and variables cost information is collected on the following spreadsheet:

Quantity	Price	Total Rev	Marginal Rev	Variable Cost
0	$50	$0	$0	$28
1	$48	$48	$48	$28
2	$46	$92	$44	$28
3	$45	$135	$43	$28
4	$44	$176	$41	$28
5	$42	$210	$34	$28
6	$40	$240	$30	$28
7	$38.31	$268	$28	$28
8	$36.50	$292	$24	$28
9	$34.50	$311	$19	$28
10			$16	$28
11			$13	$28
12			$10	$28
13			$7	$28
14			$4	$28
15			$0	$28
16			-$1	$28
17			-$4	$28
18			-$7	$28

QUESTIONS

Would you recommended lowering price to the level required to generate 15 per day? Why or why not? What does it mean to “sell at a negative margin”?
At the 14 shirts per day, the margin is positive. But what is the operating profit or loss on the 14^th, 12^th, and 10^th?
How many shirts do you recommend selling per color per day? What then is your recommended dollar markup and the markup percentage? What dollar margin and percentage margin is that?

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