Reference no: EM131825041

A firm starts production of a new product, and forecasts production and sales during the time periods (t1,t2,t3)=(1,2,3). The demand during time period t is estimated to be equal to t(4-t)/p^2 where p is a price of a product the firm will have to choose. At each period the firm is planning to produce N product units. The times T1, T2, T3, spent on production during the given time period (t1,t2,t3) are assumed to follow the learning curve model with learning curve exponent equal to -1. The production costs are proportional to the time spent on production. The unsold items are being stored and will be available at future periods.

1) Given that N=10, p=$0.3, and the production during the first period costs $12, write down the cash flow stream for the firm's operation.

2) Note that the firm can not sell more product than it has produced, and at every period sells as many units as are available, given that availability does not exceed the demand. Given that N=4 and the production during the first period costs $9. find the breakeven point for the third period (only costs and revenue occured during the third period are considered):