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.
Motion Picture Industry (95 Points) The motion picture industry is a competitive business. More than 50 studios produce a total of 300 to 400 new motion pictures each year, and t
Calculation of Degrees of Freedom First we look at how to calculate the number of DOF for the numerator. In the numerator since we calculate the variance from the sample means,
In a three-cornered paint ball duel, A, B, and C successively take shots at each other until only one of them remains paint free. Once hit, a player is out of the game and gets no
Discriminant analysis (DA) helps to determine which variables discriminate between two or more naturally occurring groups. Mathematically equivalent to MANOVA, it ' is extensively
Modify your formulas from (1) to compute the price at time 0 of an American put option with the same contract specications in the binomial model. Report the price of the American
CALCULATE THE PERCENTAGE OF REFUNDS EXPECTED TO EXCEED $1000 UNDER THE CURRENT WITHHOLDING GUIDELINES
Regression line drawn as Y=C+1075x, when x was 2, and y was 239, given that y intercept was 11. calculate the residual
Using Chi Square Test when more than two Rows are Present To understand this, let us consider the contingency table shown below. It gives us the information about the stage
Question 3 25 marks Your employer, Quick Hit Agency (QHA), is a debt collections agency. The company specializes in collecting small accounts. QHA does not deal in large accounts
How can we analyse data with four bilateral response variables measured with errors and three covariated measured without errors?
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