5 :CASE METHOD ANALYSIS

An executive is in the process of deciding on the price for a new product. His goal is to maximize profit. The alternatives are different possible prices from PHP 2 per unit to PHP 15 per unit. The model to be used is described below.

q= Number of units produced (and sold)

C(q) = Total cost of producing q units

P= Price to be charged

NP= Total net profit (to be maximized)

Cost relationship:C(q) = 850 + 1.50

Sales relationship:q= -100+2,000/P

Profit:NP=Pq-C(q)

Find an appropriate solution to the model by trial and error (i.e., try several values of price between PHP 2.00 and PHP 15.00).