Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Analytical Approach
We will illustrate this through an example.
Example 1
A firm sells a product in a market with a few competitors. The average price charged by the competitors is Rs.10. The firm can follow any one of the pricing policies given below:
Match the competition price at Rs.10
Price two rupees above the competition at Rs.12
Price two rupees below the competition at Rs.8.
The firm knows the quantities it can sell at these prices:
Price (Rs.)
Quantity (Nos.)
8
10
12
15,000
10,000
7,500
The total cost of production is as below:
Quantity
Cost (Rs.)
95,000
80,000
75,000
To find out the price that the firm should charge, we must first determine the objective of the firm. Let us assume that the objective of the firm is to maximize profits. (The firm could easily have other objectives - to price the product always below the competitor's price in which case Rs.8 would be chosen or to price the product always above the competitors' price so that a higher price can be used to create the impression of a better quality in the minds of the consumers. In the latter case Rs.12 would be chosen).
To find out the price which would maximize the profits, we construct the following table:
Sales Quantity (Nos.)
Sales Value
Profit (Rs.)
1,20,000
25,000
1,00,000
20,000
90,000
We thus find that the profits are maximized at the price of Rs.8 per unit, and therefore this price should be chosen.
Though the analytical approach is quite simple and intuitive, it may not be possible to adopt this in all decision making situations. In reality, information regarding the average price charged by the competitors may not be available or may be dependent upon the price charged by the firm as the competitors may react to every change effected by the firm. The information regarding the exact quantities that can be sold at different prices may not be available or only a possible range of quantities may be known. Similarly, the cost of producing different quantities may not be exactly known.
Multivariate analysis involves a set of techniques to analyse data sets on more than one variable. Many of these techniques are modern and often involve quite sophisticated use of
As we stated above, we start factor analysis with principal component analysis, but we quickly diverge as we apply the a priori knowledge we brought to the problem. This knowled
A rightist incumbent (player I) and a leftist challenger (player C) run for senate. Each candidate chooses among two possible political platforms: Left or Right. The rules of the g
Accident proneness A personal psychological issue which affects the individual's probability of suffering the accident. The concept has been studied statistically under the num
A study was designed to investigate the effects of two variables - (1) a student's level of mathematical anxiety and (2) teaching method - on a student's achievement in a mathemati
Skewness Meaning and Definition Literal meaning of skewness is lack of symmetry; it is a numerical measure which reveals asymmetry of a statistical series. According t
In the context of multivariate data analysis, one might be faced with a large number of v&iables that are correlated with each other, eventually acting as proxy of each other. This
defin fair game
Statistics Can Lead to Errors The use of statistics can often lead to wrong conclusions or wrong estimates. For example, we may want to find out the average savings by i
10. If a set of scores has a sample mean of 25 and a sample variance of 4, find the following: a. the z-score for a raw score of 31 b. the z-score for a raw score of 18 c. the raw
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd