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.
Assume that the normal distribution applies and find the critical z value(s). A = 0.04; H1 is mean ≠ 98.6 degrees Fahrenheit. Dteremine the value of Z. Find the value of the
Question: (a) A normal distribution is thought to have a mean of 50. A random sample of 100 gave a mean of 52.6 and a standard deviation of 14.5. A significance test was carri
prove standard deviation of natural natural numbers
Mode The mode is the value which occurs most frequently in a set of observations on the point of maximum frequency and around which other items of the set cluste
Analysis of covariance (ANCOVA) It is initially used for an expansion of the analysis of variance which permits to the possible effects of continuous concomitant variables (suc
Consider the sample of 60 package design ratings given in the table below. A Sample of Package Design Ratings (Composite S
Multivariate analysis of variance (MANOVA) is a technique to assess group differences across multiple metric dependent variables simultaneously, based on a set of categorical (non-
(a) If one solves the ordinary differential equation using Euler's method find an expression for the local truncation error. (b) Using the result of (a) above what will
Risk of Portfolios So far, we have seen the application of standard deviation in the context of risk in single investment. But usually most investors hold portfolios of securi
Empirical Mode Where mode is ill-defined, its value may be ascertained by the following formula based upon the empirical relationship between Mean, Median and Mode: Mode = 3
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