A Company Makes Products a and B from 2 Resources,labor

question 22

Essay

A company makes products A and B from 2 resources,labor and material.The company wants to determine the selling price which will maximize profits.A unit of A costs 30 to make and demand is estimated to be 50 ? .09 * Price of A.A unit of B costs 20 to make and demand is estimated to be 30 ? .14 * Price of B.The utilization of labor and materials and the available quantity of resources is shown in the table.A reasonable price for the products is between 90 and 140.
$\begin{array}{rrrr}\text { Product } & \text { A } & \text { B } & \text { Available resources } \\\hline \text { Labor hr/unit) } & 2 & 4 & 150 \\\text { Material ounces/unit) } & 2 & 8 & 220 \\\text { Manufacturing cost } \$ / \text { unit) } & 30 & 20 & \\\text { Demand units) } & 50-0.09^{*} \mathrm{P}_{1} & 30-0.14^{*} \mathrm{P}_{2} &\end{array}$
Let X₁ = demand for As and X₂ = demand for Bs.Let P₁ = price for As and P₂ = price for Bs.
Formulate the NLP for this company

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Definitions:

Skimming Pricing Strategy

A pricing approach where a relatively high price is set for a new product or service at its launch to maximize profitability before aiming at more price-sensitive customers.

Odd Pricing Strategy

A pricing strategy where prices are set slightly below a round number, e.g., $19.99, to make products appear less expensive.

Standardization

The process of implementing and developing technical standards to maximize compatibility, efficiency, and quality among products and systems.

Differentiation

A marketing strategy where a company designs its products or services to be unique and attractive to a specific customer segment, setting it apart from competitors.