X-Tech Inc. produces specialized bolts for the aerospace industry. The operating cost of producing a single bolt is $2. The company currently sells the bolts for $6/unit. Each time the company arranges to sell a batch, it incurs a fixed cost of $20. This fixed cost mainly includes administrative expenses. The volume of sales is primarily dependent on the price of the product. The manager has come up with the following relationship between demand (volume) and price: Volume = 500 – 25*price.

Determine the optimal price and optimal volume that will result in the maximum profit. Solve the problem using Excel solver.

Due to marketing and competitive considerations, X-Tech decided to limit its price to $8. State the non-linear programming formulation of this problem, and solve it.

Repeat part b by changing the restriction on price from a maximum of $8 to a maximum of $14.

Answer rating: 100% (QA)

Quiz 1 To solve this problem we will set up a worksheet like this We wan... View the full answer