In addition to selling price, product sales can be affected by a number of other factors...
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In addition to selling price, product sales can be affected by a number of other factors such as marketing expenses, product features, actions of competitors, etc. Sometimes, mathematical models can help in determining the effect of these factors on company sales and profits, and therefore in developing the best business decisions (pricing, expenditures, production volumes, etc.). Suppose that the demand (sales) for a product depends upon its price and the marketing expenditure, and can be represented as follows: Sales (Base Sales) (Price)(Marketing Expenditure) = B P-3 MC = where B = base sales P = selling price ε = price elasticity M = marketing expenditure a = marketing expenditure elasticity Preliminary statistical analysis of data suggests that B = 200,000, 2.5, and a = 0.2. Suppose also that the cost of producing the parts is constant, and denoted by C. With the current production technology, C is equal to $30.00/unit. As product manager, you must determine the optimal strategy for your company's pricing, marketing, and production functions by maximizing the profit. Questions: 1) (5 points) Draw a three-dimension (two decision variables) graph to approximate optimal selling price, marketing expense, and production quantity for your firm. In addition to selling price, product sales can be affected by a number of other factors such as marketing expenses, product features, actions of competitors, etc. Sometimes, mathematical models can help in determining the effect of these factors on company sales and profits, and therefore in developing the best business decisions (pricing, expenditures, production volumes, etc.). Suppose that the demand (sales) for a product depends upon its price and the marketing expenditure, and can be represented as follows: Sales (Base Sales) (Price)(Marketing Expenditure) = B P-3 MC = where B = base sales P = selling price ε = price elasticity M = marketing expenditure a = marketing expenditure elasticity Preliminary statistical analysis of data suggests that B = 200,000, 2.5, and a = 0.2. Suppose also that the cost of producing the parts is constant, and denoted by C. With the current production technology, C is equal to $30.00/unit. As product manager, you must determine the optimal strategy for your company's pricing, marketing, and production functions by maximizing the profit. Questions: 1) (5 points) Draw a three-dimension (two decision variables) graph to approximate optimal selling price, marketing expense, and production quantity for your firm.
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Related Book For
College Physics
ISBN: 978-0495113690
7th Edition
Authors: Raymond A. Serway, Jerry S. Faughn, Chris Vuille, Charles A. Bennett
Posted Date:
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