Question 4:

Mr. Simon wants to evaluate the impact on the profit of the pie price. In order to efficiently run such a sensitivity analysis, he considers the percentage changes in the pie prices relatively to a fixed value: $ 9. The different percentages are in the interval (70% to 130%) with an increment of 5% between two subsequent values.

a. What are the different prices used in this sensitivity analysis?

b. Compute the financial results for each pie price. Use an Excel sheet (Sheet_Q4) for the required calculations. What is the maximizing profit price? Which price should Mr. Simon set if he wants to sell the maximum number of pies?

c. Draw a graph representing the revenue, the total cost and the profit for different pie prices. Interpret it.