# 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
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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## This note was uploaded on 12/20/2011 for the course BUS 101 taught by Professor Ecklund during the Spring '01 term at Duke.

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2001PadgettsWidgets - An Excel Modeling Practice Problem...

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