Olivier Industries Incorporated Has Developed a New Instrument, Model AG-06

question 221

Multiple Choice

Olivier Industries Incorporated has developed a new instrument, model AG-06, that is designed to offer superior performance to a comparable instrument sold by Olivier's main competitor. The competing instrument sells for $74,000 and needs to be replaced after 1,000 hours of use. It also requires $7,000 of preventive maintenance during its useful life. Model AG-06's performance capabilities are similar to the competing product with two important exceptions-it needs to be replaced only after 4,000 hours of use and it requires $14,000 of preventive maintenance during its useful life.From a value-based pricing standpoint what is the differentiation value offered by model AG-06 relative to the competitor's offering for each 4,000 hours of usage?

• A) $296,000
• B) $102,000
• C) $236,000
• D) $14,000