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During the holidays, Kim makes and sells candy. Last holiday season, she made a profit of $10 on each box of candy she sold, and
During the holidays, Kim makes and sells candy. Last holiday season, she made a profit of $10 on each box of candy she sold, and she sold 300 boxes. Based on some experimentation she did, Kim estimates that for every $1 increase in her selling price for each box, her sales will decrease by 15 boxes. (a) How much should Kim increase her selling price to maximize her profit? Clearly follow the five-step method (labelling each step) and model the problem as a single-variable optimization problem. (b) (b) Compute the sensitivity of the answer in (a) - both the proposed increase in selling price and the anticipated max profit - to the assumption: Sales decrease by 15 boxes for every $1 increase in selling price. Make sure to explain what the sensitivity means in words. (c) (c) For which rates of decrease in sales should Kim not increase her selling price because it will no longer lead to an increase in profit? Explain
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a Step 1 Define the Decision Variable Let x be the increase in selling price for each box of candy S...Get Instant Access to Expert-Tailored Solutions
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