"Trueba Electronics Corporation" Has Developed a New Testing Instrument-Model JJ-92-That

question 18

Essay

"Trueba Electronics Corporation" has developed a new testing instrument-model JJ-92-that has been designed to outperform a competitor's best-selling instrument. Model JJ-92 has a useful life of 100,000 hours of service and its operating cost is $0.50 per hour. In contrast, the competitor's product has a useful life of 20,000 hours of service and has operating costs that average $0.80 per hour. The competitor's instrument sells for $109,000. "Trueba" has not yet established a selling price for model JJ-92.
Required:
From a value-based pricing standpoint:
a. What is the reference value that "Trueba" should consider when pricing model JJ-92?
b. What is the differentiation value offered by model JJ-92 relative to the competitor's offering for each 100,000 hours of service?
c. What is model JJ-92's economic value to the customer over its 100,000 hour useful life?
d. What range of possible prices should "Trueba "consider when setting a price for model JJ-92?

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Definitions:

Degrees of Freedom

Degrees of freedom refer to the number of independent pieces of information used in the calculation of a statistic, often related to the number of samples minus the number of parameters estimated.

P Value

A statistical measure that indicates whether the results of an experiment are significant, specifically it measures the probability of observing the given results if the null hypothesis were true.

Type II Error

Error that occurs when the alternative hypothesis is true but the decision is made to not reject the null hypothesis.

Nonparametric Test

A type of statistical test that does not assume the data comes from a particular distribution, often used when data doesn't meet the assumptions of parametric tests.