Revenue Management: Finding the Best Combination of Price/Supply
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The following is an extract from a company's accounts.
Price 4
Supply 29000
Unitcost 0.45
fixed cost 45,000
Revenue ?
variable cost 13050
Profit ?
Set up a spreadsheet to calculate revenue and profit of the company. Also perform sensitivity analysis for the following cases and find out the right combination of price and supply which yields better revenue:
i) Vary the price between 1 and 6 (in steps of 0.5)
ii) Vary the supply between 25,000 and 50,000 ( in steps of 5000)
iii) Simultaneously varying both price and supply (Two variable sensitivity analysis)
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Solution Summary
Here is a solution using excel spread sheet for Revenue Management.
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