Analyze this operations management issue – Operation Management
ABC’s president believes there is substantial competition for this type of pump, and that price is a significant factor in potential customer’s purchase decision. He estimates that the company will sell 3,600 pumps (unit volume or UV) if they are priced at $100, and will sell 2,900 pumps if they are priced at $110. He wants to know what contribution to profit (CP) would result from each of those two selling prices, and thus which is the better price.
Analyze this operations management issue.
Provide the algebraic equation (using CP, UV, P, and VC as variables) for this analysis.
Calculate and provide the numeric contribution to profit (in dollars) for each of the two price points.
