An article in the Wall Street Journal gave the following explanation of how products were traditionally priced at Parker-Hannifin Corporation:

For as long as anyone at the 89-year-old company could recall, Parker used the same simple formula to determine prices of its 800,000 parts—from heat-resistant seals for jet engines to steel valves that hoist buckets on cherry pickers. Company managers would calculate how much it cost to make and deliver each product and add a flat percentage on top, usually aiming for about 35%. Many managers liked the method because it was straightforward.

Is it likely that this system of pricing maximized the firm’s profit? Briefly explain.

Source: Timothy Aeppel, “Seeking Perfect Prices, CEO Tears Up the Rules,” Wall Street Journal, March 27, 2007.