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Unformatted text preview: of price and quality to generate maximum profit. Just to be sure, I did another trial with price $300 and quality 400 with small changes within that range. With the small changes, I’ve noticed that there is a better number of price and quality. With the price of $325 and quality of 350 the simulation generated gross margin of $61,250, $1,250 higher than price of $300 with quality of 400. So again I did small changes to the price and quality. But the small changes only made the Gross margin lower, by having lower sales or high COGS. So I stick with price of $325 and quality of 350. This generated more and more revenues over time. Finally, to generate the maximum profit, I did the 3 rd and final trial with price of $325 and quality of 350. I kept the price and quality same throughout the 10 years term and generated retained earnings of $390,875 at the end of year 2015....
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- Revenue, $120, $1,250, $110, $61,250