Reference no: EM132518164
Viking InterWorks is one of many manufactures that supplies memory products to original equipment manufactures (OEMs) of desktop system. The CEO recently read an article in a trade publication that reported the projected demand for desktop systems to be :
Qddesktop=1600 - 2Pdesktop+ 0.6M ( in millions of units), where Pdesktopis the price of the desktop system and M is consumer income.
The same article reported that the incomes of the desktop systems primary consumer demographic would increase 4.2 percent this year to $61,300 and that the selling price of a desktop would decrease to $980, both of which the CEO viewed favorably for Viking. In a related article, the CEO read that the upcoming year's projected demand for 512 MB desktop memory modules is:
Qdmemory=11,200 - 100Pmemory-2desktop(in thousands of units). Where P memoryis the market price for a 512 MB memory module and Pdesktopis the selling price of a desktop system.
The report also indicates that five new, small start ups entered the 512MB memry module market bringing the total number of competitors to 100 firms. Furthermore, suppose that vikings CEO commissioned a an industry wide study to examine the industry capacity for 512 MB memory modules. The results indicate that when the industry is operating at maximum efficiency, this competitive industry supplies modules according to the following function.
Qsmemory=1000+25Pmemory+N where Pmemory is the price of a 512 MB memory module and N is the number of memory module manufactures in the market.
Vikings CEO provides you, the production manager, with the above information and requests a report containing the market price for memory modules and the number of units to manufacture in the upcoming year based on the assumption that all firms producing 512 MB modules supply an equal share to the market.
Instructions: enter your responses rounded to two decimal places.
Markets price for memory modules: $____________
Number of units to manufacture: ___________ thousand
How would you report change if the price of desktops were $1,080?
Market Price for modules: $_____________
Number of units to manufacture: __________ thousand