The following information pertains to a recent Bluetooth cordless headset produced by Optronix, Inc. This device uses Bluetooth technology to allow for hands-free operation of a cell phone. Increased awareness of the dangers of using a cell phone when driving has led to new regulations pertaining to cell phone use. Optronix expects the market for its products to increase rapidly because of these regulations.
Like most electronic products, the model has a short life cycle of about a year. The firm also expects to cut product price at least twice during the year and have a “clearance” sale at year-end.
Price $89 $69 $49 $29
Volume 450,000 400,000 500,000 200,000

Required:
a. Compute the product’s lifetime revenue.
b. Optronix knows that the demand is uncertain and that the data in the problem are just its best estimates. How can Optronix deal with this uncertainty when planning prices?