How many dvd should it order from which supplier

Reference no: EM13754573

A television station is considering the sale of promotional DVDs. It can have the DVDs produced by one of two suppliers. Supplier A will charge the station a set-up fee of $1200 plus $2 for each DVD; supplier B has no set-up fee and will charge $4 per DVD. The station estimates its demand for the DVDs to be given by Q = 1,600 - 200P, where P is the price in dollars and Q is the number of DVDs. The price equation is P = 8 -Q/200.

Suppose the station plans to give away the videos. How many DVDs should it order?

From which supplier? The station should technically speaking purchase from supplier A because it is best for the company and saves money.

Suppose instead that the station seeks to maximize its profit from sales of DVDS. What price should be charged?

How many DVD should it order from which supplier?

Directions: You must solve two separate problems, one with supplier A and one with supplier B, and then compare profits. Maximum profit is found where Marginal Revenue (MR) to Marginal Cost (MC). Here, you need to set MR=MC for each supplier and compare the maximum profit attainable for each.

The marginal cost (MC) is what each supplier charges to produce an extra DVD. This can be directly deduced from the text of the homework (the equations provided for the cost of suppliers). If you are not sure, one easy way is to calculate the cost for 1 DVD and the cost for 2 DVD. The difference would be the marginal cost.

Reference no: EM13754573

Questions Cloud

Describe the steps required to prepare the storage device : Outline and describe the steps required to prepare the storage device. Explain why file systems are critical components of an operating system

Discuss why the two methods result in different results : Explain which of the two options below results in a lower balance after 6 months on an investment of $6,000. •Annual simple interest of 12% applied at the end of 6 months. •A monthly interest rate of 1% applied at the end of each month and before the..

Why did southern states enact the black codes : Why did southern states enact the black codes and what did the freedmen's bureau hope to accomplish? Was it successful? What was the lasting legacy of this organization?

Create an entire sdlc process : Create an entire SDLC process that will bring added value to a business. Use of the following is mandatory: Identify the project-what is it supposed to do

How many dvd should it order from which supplier : How many DVDs should it order - From which supplier? The station should technically speaking purchase from supplier A because it is best for the company and saves money.

Principle of marketing : 1. Describe how marketing functions within the larger organization (internally) and within its environments (externally) including the goals and expected outcomes of this department.

Write research paper on intranets and extranets : Write research paper on Intranets and Extranets

An existing organization : Use the new product or service that will be launched by either an existing organization or one you will create. The company is Samsung and the product is the Galaxy S6/Note smartphone.

Detail the story of nez perce from their first interaction : Detail the story of the Nez Perce from their first interaction with white Americans to their eventual capture?

User Account

All Pages