3. Problem 5 in Chapter 8 posed the following situation: The Radio Shop sells two popular models...
Question:
3. Problem 5 in Chapter 8 posed the following situation: The Radio Shop sells two popular models of portable sport radios, model A and model B. The sales of these products are not independent of each other (in economics, we call these substitutable products, because if the price of one increases, sales of the other will increase). The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model:
NA = 20 - 0.62PA + 0.30PB NB = 29 + 0.10PA - 0.60PB You were asked to construct a model for total revenue and implement it on a spreadsheet. Use nonlinear optimization with Solver to find the optimal prices to maximize revenue.
Step by Step Answer:
Business Analytics Methods Models And Decisions
ISBN: 9780132950619
1st Edition
Authors: James R. Evans