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A QUICK EXAMPLE ON NESTED MARGINAL ANALYSIS You have been retained as a consullant by a business that is considering production of a 10 products
A QUICK EXAMPLE ON NESTED MARGINAL ANALYSIS You have been retained as a consullant by a business that is considering production of a 10 products in three corporate divisions. For each product, you are given the price and quantity sold per month for each product the unit variable cost for each product and the fixed cost for producing each product. The "Product Fixed Cost" must be bor if the product is produce that month. Division 1 Product Line 1 Price 11 13 Quantity 20 Product Unit Var Cost 5 Product Line Fixed Cost 20 20 50 1 2 10 3 4 5 2 1 2 3 4 5 14 10 4 10 2 4 10 3 2 6 4 10 2 2 7 8 20 4 30 140 50 35 10 3 8 12 2 7 10 3 9 7 5 3 10 13 5 3 15 In addition, you are told that cach division has a "divisional overhead" of $100 that must be born if the division produces ANY products in a given month. Finally, there is a $75 "corporate overhead" that must be born each month, if the company stays in business. (1) Conduct an analysis to determine which products to retain, which divisions to retain and whether company should remain open. (2) What if you were told that product line 2 & 3 were complements so that one good can only be sold if the other good is also available. How would that impact your analysis
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