2001PadgettsWidgets

2001PadgettsWidgets - An Excel Modeling Practice Problem:...

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An Excel Modeling Practice Problem: Padgett’s Widgets E XCEL R EVIEW 2001-2002
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Page 143 This page intentionally left blank. Paula Ecklund ± ² Spring 2001
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1 The Padgett’s Widgets Problem Market research by Padgett’s Widget Company has revealed that the demand for its products varies with the price according to this relation: D = 761 - 8.6 P where D is demand in widgets, and P is price in dollars. For example, if the widget price is set to $50, demand will be 761 - 8.6(50) = 331 widgets. Each widget costs $40 to make and Padgett’s is contemplating charging a price somewhere between $50 and $80. The per-unit profit is the difference between price and manufacturing cost, and total profit equals demand multiplied by per-unit profit. For example, if price is $50 and demand is 331 units, total profit will be 331($50-$40) = $3,310. The Spreadsheet Model to Build Construct a spreadsheet model that can: = Compute Padgett's profit as a function of price for four widget sale prices: $50, $60, $70, and $80. = Allow you to determine which price yields the highest profit and can show
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2001PadgettsWidgets - An Excel Modeling Practice Problem:...

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