larr, Product Pricing and Reliability

Assignment: Product Pricing and Reliability

$($Work must be clearly shown to earn any credit for the assignment$)$

Q$1$: John Kruda, an inventor, has come up with a cool all$-$in$-$one pocket$-$sized product that replaces TV$,$ cellphone, tablet and even a coffee as well as ice$-$cream maker $($Phew$....$what an invention, don't you agree!$).$

He has priced all the components, production cost and overhead costs, and the total is $$472\mathrm{.}45.$ He want to sell the product to a local wholesaler in such a way that John earns $45\%$ on the selling price to the wholesaler.

a$)$ Help John figure out the selling price for the cool product $($poor John, he is good at inventing but lacks business skills$)$

b$)$ What kind of pricing approach $($cost$+$ or price$-)$ is he using?

Q$2$: John Kruda had a rude$-$awakening. The product above turned out to have some limitations: the TV picture projected by the cool product would not work beyond ${36}^{\text{'}\text{'}}$; the ice$-$cream maker would serve only one small scoop at a time; the coffee maker can only handle $3-oz$ at a time.

So$,$ he did a market survey to learn that he can sell his product to the wholesaler for only $$495.$ Realizing that $45\%$ profit is not possible, he would settle for a profit of $25\%$ on the selling price.

a$)$ How much profit does he want to earn per unit?

b$)$ What kind of pricing approach $($cost$+$ or price$-)$ is he using this time?

c$)$ By what amount must he reduce all his costs from the current cost of $$472\mathrm{.}45$ to meet his profit objective under the new market reality?

Q$3$: Calculate the reliability of the following three systems using the formula given below.

Components in parallel $R=1-[(1-R_1{)}^{**}(1-R_2{)}^{**}(1-R_3{)}^{**}(1-R_4{)}^{**}$dots$]$

Components in series $R=R_1**R_2**R_3**R_4**dots$

a$)$

b$)$

$0\mathrm{.}92$

c$)$

Pricing Formula:

$S=C+M$;

Where,

$S$ is the selling price;

$C$ is the cost;

$M$ is the Margin, which can be either a fraction of $C$ or $S$ depending on the pricing approach