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What is the net supply chain profit

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Reference no: EM133554588

LazyBoy furniture distributes a computer worktable in three price differentiated markets (i = 1, 2 and 3). The annual demand for each market is linearly defined by the function Di=Ai-BiPi. The market parameters are A1=18000 B1= 121, A2=8700 B2=52, and A3=6000 B3= 30. The production cost a worktable is $28/unit. The maximum annual supply is 9200 units.

1. Derive the optimal price and allocated supply quantity for each market.

2. What is the net supply chain profit?

3. If the company decides to close market #2, what is the lost profit?

4. For the three-market distribution, to what level should we increase the maximum annual supply to maximize profit.

Reference no: EM133554588

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