Combinations of production and demand

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Cooke Collectibles produces fine porcelain miniatures representing famous people and historical events. To avoid production and scheduling problems, Cooke's policy is to make all copies of a figure in one production run. In the event that the demand for any figure exceeds the number produced, each customer's money is returned along with a coupon good for $10.00 toward the purchase of another Cooke miniature. If the company makes too many figures, the extras are sold to a discount outlet, which agrees to hold them for six months, for $50.00 each. This price is half the variable production cost of a figure. Cooke Collectibles has recently agreed to pay $200,000 for the rights to produce a miniature representing a famous singer. The company plans to sell the figures for $250 each. The marketing department predicts that actual demand will equal one of these possible demand levels: 20,000; 40,000; 60,000; or 80,000.

a) Setup a payoff table for all combinations of production and demand

Reference no: EM13772281

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