Use the Table Below to Answer the Following Question(s) -Which of the Following Conditions Is a Solution to the Pharmaceuticals

question 8

Multiple Choice

Use the table below to answer the following question(s) .
Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug.The total R&D costs are estimated to reach around $875,000,000 with clinical trials mounting to $145,000,000.The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year.The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years.A monthly prescription is anticipated to generate revenue of $420 while incurring variable costs of $150.A discount rate of 8 percent is assumed.
$$\begin{array}{l}\text { Dresden Pharmaceuticals }\\\begin{array} { | l | l | } \hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit (monthly Rx) revenue (\$) } & 420 \\\hline \text { Unit (monthly Rx) cost (\$) } & 150 \\\hline \text { Discount Rate ( per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D (\$) } & 875,000,000 \\\hline \text { Clinical Trials (\$) } & 145,000,000 \\\hline & \\\hline\end{array}\end{array}$$
-Which of the following conditions is a solution to the newsvendor problem, where Q is the quantity to be purchased, and D is demand?

• A)Q > D
• B)Q = D
• C)D > Q
• D)Q / D = 0

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