An Entrepreneur Considers Three Possibilities for the Production of Her

question 81

Essay

An entrepreneur considers three possibilities for the production of her new product. One alternative, a job process, would have fixed costs of $22,000 and a per unit cost of $11.63. The large batch option would have a fixed cost of $54,000 and a per unit cost of $8.82. The line process would have a fixed cost of $85,000 and a per unit cost of $7.33. Graph the total cost lines and determine over what range of output each production alternative is superior.

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Definitions:

Intensive Distribution

Intensive distribution is a strategy where a company makes its product available through as many outlets as possible to maximize coverage and product availability.

Selective Distribution

A type of distribution strategy that involves placing products in selected retail outlets, rather than mass marketing or exclusive distribution.

AIDA Model

A marketing framework that outlines the customer journey as Attention, Interest, Desire, and Action, guiding marketers in creating effective advertising strategies.

Potential Customers

Individuals or organizations that could become purchasers of a product or service but have not yet done so.