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The market price for a product has been $50 per unit, but competitive pressures have reduced the market price to $45. The firm manufactures 10,000 of these products per year at a manufacturing cost of $38 per unit (including $22 fixed cost and $16 variable cost per unit). Other selling and administrative costs for the product are $8 per unit.
1. The firm in above ignores competitive prices because it has a differentiated product. It uses cost life-cycle-based pricing with a 10 percent markup. What is the firm's price?
2. At what phase in the product sales life cycle will prices likely be the highest: introduction, growth, maturity, or decline?
3. If customer demand is 200,000 units per month, and available manufacturing capacity is 6,000 hours per week, what is the Takt time for this firm?
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Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills. Click here to access the rubric for this assignment.
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