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1. 2. Assume ties and shirts are sold separately also, even when a suit is not purchased. When ties and shirts are sold separately, the demand for ties and shirts follows constant elasticity function of the form aPb. The values of the "a" and "b" parameters are given. 3. When ties and shirts are sold when the customer purchases a suit, on average 2.5 ties and 1.5 shirts are purchased for each suit purchased. 4. Assume that none of the products may be priced lower than the cost. 5. Assume none of the products may be price above the given upper limits. A B D G I Shirts 15 Shirts 290000 -1.7 A c E F 5 #3. Modified Pricing with Complementary Products problem (30 points) 6 Shirts and ties sales 7 Suits Ties 8 Current price per suit $250 Tie & shirt cost per unit 20 9 Current suit demand 400 10 Unit cost per suit $320 Ties and shirts sold separately 11 Upper limit for suit price 500 Demand function Ties 12 Constant (a) 75000 13 Demand function for suits Elasticity (b) -1.6 14 Constant for suit $25,000,000 15 Elasticity for suit -2 Tie & shirt price per unit 16 17 Decision taking complementary products into account Upper limit for price 18 Suit price per unit 500 19 Suit demand Demand for ties and shirts (sold separate) 621.4601283 20 21 Profit from suits with new price Ties and shirts sold with suits Ties 22 Revenue from suit sales 50000 Number of units sold per suit 2.5 23 Cost of suits sold 32000 Total number of ties & shirts sold with suit 250 24 Profit from suits sold 18000 25 Grand total ties and shirts sold 25000 50 35 50 35 100 2904.309246 Shirts 1.5 150 250 A D E F H 26 27 B Profit from ties and shirts Revenue from all ties and shirts Cost of ties and shirts sold Profit from ties and shirts 132723.83 28 55993.84126 76729.98878 29 30 31 Total profit 94729.98878 32 33 34 25 1. 2. Assume ties and shirts are sold separately also, even when a suit is not purchased. When ties and shirts are sold separately, the demand for ties and shirts follows constant elasticity function of the form aPb. The values of the "a" and "b" parameters are given. 3. When ties and shirts are sold when the customer purchases a suit, on average 2.5 ties and 1.5 shirts are purchased for each suit purchased. 4. Assume that none of the products may be priced lower than the cost. 5. Assume none of the products may be price above the given upper limits. A B D G I Shirts 15 Shirts 290000 -1.7 A c E F 5 #3. Modified Pricing with Complementary Products problem (30 points) 6 Shirts and ties sales 7 Suits Ties 8 Current price per suit $250 Tie & shirt cost per unit 20 9 Current suit demand 400 10 Unit cost per suit $320 Ties and shirts sold separately 11 Upper limit for suit price 500 Demand function Ties 12 Constant (a) 75000 13 Demand function for suits Elasticity (b) -1.6 14 Constant for suit $25,000,000 15 Elasticity for suit -2 Tie & shirt price per unit 16 17 Decision taking complementary products into account Upper limit for price 18 Suit price per unit 500 19 Suit demand Demand for ties and shirts (sold separate) 621.4601283 20 21 Profit from suits with new price Ties and shirts sold with suits Ties 22 Revenue from suit sales 50000 Number of units sold per suit 2.5 23 Cost of suits sold 32000 Total number of ties & shirts sold with suit 250 24 Profit from suits sold 18000 25 Grand total ties and shirts sold 25000 50 35 50 35 100 2904.309246 Shirts 1.5 150 250 A D E F H 26 27 B Profit from ties and shirts Revenue from all ties and shirts Cost of ties and shirts sold Profit from ties and shirts 132723.83 28 55993.84126 76729.98878 29 30 31 Total profit 94729.98878 32 33 34 25