Pricing for different customer segments

Assignment Help Operation Management

Reference no: EM132104176

Please take the time to explain and over explain, I have answers and have been able to come up with solutions but would like to see things mathmatically/clearly

(Pricing for Different Customer Segments)

Masato is the manager of a bus company that serves the Madison-Green Bay route. The demand curve facing each bus is:

Number of Seats = 50 – 0.5*Price

The cost of serving each customer (that is seated) is $10.

If Masato charges a price of $60 per seat, what is the profit for each bus? ($1K)

If the price is $60 per seat, how much is the “Money Left on the Table”? ($400)

If Masato charges 2 prices, $80 (High Price) and $40 (Low Price), what is the profit for each bus? ($1300)

If Masato charges 3 prices, $90 (High Price), $50 and $30 (Low Price), what is the profit for each bus? ($1400)

What is the optimal single price that Masato should charge? ($55)

If Masato can charge 2 prices, what are the optimal two prices he should charge? ($70 and $40)

I may have a question on charging 2 prices, but I fix one price and ask you to solve for the other optimal high (or low) price.

You'll find max capacity of bus to be 50 since if you plug in 0 to the price, you'll get 50 seats.

Reference no: EM132104176

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