Homework_4_RevenueManagement

Homework_4_RevenueManagement - Homework #4 1. Price $ $ $ $...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Homework #4 1. Price Demand Revenue  $200.00  40 1  $200.00   $250.00  30 0.857  $214.29   $300.00  20 0.571  $171.43   $350.00  10 0.286  $100.00  The airline should pick $250 as the price of the last tickets 2. Decision Discounted Rev. Revenue (M) Expected Profits (M) Small Factory High Revenue (40%) $6.00 $4.80 Low Revenue (60%) $4.00 Large Factory High Revenue (40%) $5.00 $2.60 Low Revenue (60%) $1.00 Don't Build High Revenue (40%) $0.00 $0.00 Low Revenue (60%) $0.00 The best strategey is to build a small factory 3. 1 Year Demand Produced Sales - Cost = Revenue * Probability Buying 1 machine High  20M 10M 0.05  $500,000.00   $1,000,000.00   $(500,000.00) 0.5  $(250,000.00)  $(500,000.00) Low 10M 10M 0.05  $500,000.00   $1,000,000.00   $(500,000.00) 0.5  $(250,000.00) Buying 2 machines High  20M 20M 0.05  $1,000,000.00   $1,800,000.00   $(800,000.00) 0.5  $(400,000.00)  $(1,050,000.00) Low 10M 10M 0.05
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/16/2008 for the course BUAD 311 taught by Professor Vaitsos during the Spring '07 term at USC.

Ask a homework question - tutors are online