Question

PLEASE HELP ME WITH THIS ONE QUESTION.

Question 8. Assume that there is some uncertainty in the price the market will pay for Blu-Ray DVD players. For what range of selling prices (note that this is not the same as profits so you may need to look at your spreadsheet solution from lecture) will the current production be optimal? Show your calculations.

Anderson Home Electronics M S T B MP3 Player Satellite Tuners LCD TV Blu-Ray Player Solution (Decision Variables) 0 380 0 1060 Selling Price $70 $80 $150 $110 Cost Price 41 48 78 56 Profit $29 $32 $72 $54 Constraints Electronic Components 3 4 4 3 Non-Electronic Components 2 2 4 3 Assembly Time 1 3 2 $ 69,400 < 4700 3940 2500 LHS < Cost Per $7 $5 $10 4700 4500 2500 RHS 1 < Sign

^ spreadsheet solution from lecture

^ Excel's Sensitivity Report

Answer 1

Optimal solution occurs when profit = 0

or we can say that when selling price and cost becomes equal.

current production is 380 satellite tuners and 1060 blu-ray players

total cost = 380*48 + 1060*56

= 77600

let revised selling price of blu-ray player be x

total selling price = 380*80 + 1060*x

=30400 + 1060x

at optimal point

77600 = 30400 + 1060x

x = $44.53

So, selling price of Blu-ray player need to be more than $44.53 in order to get some profit.

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