Scribd
Upload
84 views

Assignments Unit 1

1. Managers need quantitative skills to make informed decisions. Simple models can approximate complex situations reasonably while complex models are most accurate but less practical. 2. Higher prices decrease demand while lower prices increase it. The firm's demand model shows demand of 800 - 10p units at price p. 3. With a textbook costing $80k to produce and $3 per copy to print, the break-even point is 4000 copies at $20 each. Selling 4000 copies then yields no profit or loss. The minimum price to break even is $20.

Uploaded by

Hanah Zyra Addu
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
84 views

Assignments Unit 1

1. Managers need quantitative skills to make informed decisions. Simple models can approximate complex situations reasonably while complex models are most accurate but less practical. 2. Higher prices decrease demand while lower prices increase it. The firm's demand model shows demand of 800 - 10p units at price p. 3. With a textbook costing $80k to produce and $3 per copy to print, the break-even point is 4000 copies at $20 each. Selling 4000 copies then yields no profit or loss. The minimum price to break even is $20.

Uploaded by

Hanah Zyra Addu
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Management Science

Feedback/ Assessment

Name: ________________________________________ Date: __________________


Program: _______________________________________ Score: _________________

Activity 1.0

Directions: Do the following. Write your answers briefly and legibly. . For computations,
round off your final answer into 2 decimal places only.

1. Why is it important for a manager or decision maker to have a good


understanding on the different quantitative methods to managerial decision
making? (Note more than 100 words ) (10 points)
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________

2. Suppose that a manager must choose between the following two mathematical
models of a given situation: (a) a relatively simple model that is a reasonable
approximation of the real situation and (b) a thorough and complex model that is
most accurate mathematical representation of the real situation possible. Why?

(Note more than 100 words ) (10 points)

_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________

1
Management Science

3. For most products, higher prices results in a decreased demand, whereas lower
prices results in an increased demand. Let

d = annual demand of a product in units


p = price per unit
Assume that the firm accepts the following price-demand relationship as being
realistic:
d = 800 – 10 p
a. How many units can firm sell at $20 per-unit price? (5 points)

b. Show the mathematical model for the total revenue (TR), which is annual
demand multiplied by the unit price. (5 points)

4. Eastman Publishing Company is considering publishing a paperback textbook on


spreadsheet applications for business. The fixed cost of manuscript preparation,
textbook design, and production setup is estimated to be $80,000. Variable
production and material cost are estimated to be $3 per book. Demand over the
life a book is estimated to be 4000 copies. The publisher plans to sell the text to
college and university bookstores for $20 each.
(5points each)
a. Compute the break-even point.

b. What profit or loss can be anticipated with a demand of 4000 copies?

c. With a demand of 4000 copies, what is the minimum price per copy that the
publisher must charge to break?

d. If the publisher believes that the price per copy could be increased to $25.95
and not affect the anticipated demand of 4000 copies, what action would you
recommend? What profit or loss can be anticipated?

2
Management Science

5. Suppose you are going to a weekend trip to a city that is d miles away. Develop a
model that determines your round-trip gasoline costs. Note: price of gasoline
may vary. (10 points)

You might also like