A company that produces cleaning products is considering a proposal to begin production of a new detergent that
would cost $1 a bottle to make and distribute, and retail for $2.19 a bottle. Fixed cost for the operation would be
$3000 a week. Assume that all output can be sold.
(a) What would be the total cost, revenue and profit for a weekly
volume of 10,000 bottles?
(b) What is the break-even volume?
(c) Set the problem in Excel, and use Goal Seek to confirm your
answer in parts (a) and (b).
(d) Suppose the company has a goal to make a weekly profit that
is at least 25% of the revenue. What level of output satisfies
this goal? Use the Excel Goal Seek to answer this question, and
submit your printout.
(e) Suppose the weekly demand for the new product is 3,500
bottles, that is, the company could only make and sell 3,500
bottles each week. Given the same fixed cost and retail price,
how low should the variable cost be to realize the same goal in
part (d).
3. Yoshi Yamamura sells silk-screened T-shirts at the multi-culture festival. She estimates that she can sell 600 T-
shirts during the weeklong event if she charges $18 each. She also estimates that 750 T-shirts can be sold if she
charges only $15 each.
(a) Assuming that the demand is linear; determine the demand
function that relates the number of T-shirts sold, q, to the
price p dollars.
(b) Suppose that the supply function