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.
Range Official Exports Target 2000-2001 Product ($ million) Plantation 500 Agriculture and Alli
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
how can we use measurement error method with eight responses variables (we do not have explanatory variable in the data )?.the data analyse 521 leaves ..
Henry Kaiser suggested a rule for selecting a number of components m less than the number needed for perfect reconstruction: set m equal to the number of eigenvalues greater than I
Show that the ISB in a bin containing the origin of the double exponen-tial density, f(x) = exp(-|x|)/2, is O(h 3 ); hence, the discontinuity in the derivative of f does not have a
You are currently working with a supplier who is producing a shaft whose diameter specification is 6.00 ± .003 inches. Currently, the process is yielding shafts wit
Ask Describe What-if Analysis
Convenience Sampling It means a convenient sample is obtained by selecting convents units from the universe. Convenient sample is also known as chunk. It means a fraction of
Using the raw measurement data presented below, calculate the t value for independent groups to determine whether or not there exists a statistically significant difference between
Random Sampling Method In this method the units are selected in such a way that every item in the whole universe has an equal chance of being included. In the words of croxton
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: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd