Tower Hill Plc has a history of success in the past but now operates in a...

  

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Tower Hill Plc has a history of success in the past but now operates in a competitive market. Its interest is in Oil and Gas, Manufacturing and Consulting. The Manufacturing sector produces push chairs for babies, Children bicycles and baby toys. In order to be competitive, Tower Hill Plc has decided to launch a revolutionary new style of sporty pushchairs to compete effectively with the imported ones from Japan. Market research was commissioned by the company to determine possible demand for the sporting pushchairs and the information below has been obtained. Price £4250 £5000 £6000 Expected Demand 100,000 73,000 42,000 Variable costs are estimated at £1,700, £2,100 and £2,600 respectively. Management needs to decide on the appropriate price to charge. Required: a. Use a table to show the expected contribution for each of the nine possible outcomes. (10 Marks) b. Based on the data above, illustrate the meaning of Maximax, maximin and minimax regret decision (Show your calculations) (10 Marks) c. Explain the use of expected values and suggest how Tower Hill Plc could make use of this technique. d. Discuss two key objectives of transfer pricing (5 Marks) Tower Hill Plc has a history of success in the past but now operates in a competitive market. Its interest is in Oil and Gas, Manufacturing and Consulting. The Manufacturing sector produces push chairs for babies, Children bicycles and baby toys. In order to be competitive, Tower Hill Plc has decided to launch a revolutionary new style of sporty pushchairs to compete effectively with the imported ones from Japan. Market research was commissioned by the company to determine possible demand for the sporting pushchairs and the information below has been obtained. Price £4250 £5000 £6000 Expected Demand 100,000 73,000 42,000 Variable costs are estimated at £1,700, £2,100 and £2,600 respectively. Management needs to decide on the appropriate price to charge. Required: a. Use a table to show the expected contribution for each of the nine possible outcomes. (10 Marks) b. Based on the data above, illustrate the meaning of Maximax, maximin and minimax regret decision (Show your calculations) (10 Marks) c. Explain the use of expected values and suggest how Tower Hill Plc could make use of this technique. d. Discuss two key objectives of transfer pricing (5 Marks)

Answer rating: 100% (QA)

a Table showing expected contribution for each price and demand combination plaintext Price Demand R... View the full answer