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Determine the Optimal Q value for the following scenario. Market report: Demand

ID: 1166176 • Letter: D

Question

Determine the Optimal Q value for the following scenario.

Market report:  Demand remains strong, and many fleets are still knocked out of the crabbing market. Expected market price remains $625 per 20lb container.

First Mate’s report: Well, finally some good news for a change. Seems like the storm made those little crabs extra fertile. We are pulling in crabs at record rates. The cost of finding the crabs is down from $5 per unit on average to $3.

Q FC VC TC MC P TR MR 0     12,500.00                  -       12,500.00                    -   625 0 1     12,500.00         105.00     12,605.00           105.00 625 625 625 2     12,500.00         220.00     12,720.00           115.00 625 1250 625 3     12,500.00         345.00     12,845.00           125.00 625 1875 625 4     12,500.00         480.00     12,980.00           135.00 625 2500 625 5     12,500.00         625.00     13,125.00           145.00 625 3125 625 6     12,500.00         780.00     13,280.00           155.00 625 3750 625 7     12,500.00         945.00     13,445.00           165.00 625 4375 625 8     12,500.00      1,120.00     13,620.00           175.00 625 5000 625 9     12,500.00      1,305.00     13,805.00           185.00 625 5625 625 10     12,500.00      1,500.00     14,000.00           195.00 625 6250 625 11     12,500.00      1,705.00     14,205.00           205.00 625 6875 625 12     12,500.00      1,920.00     14,420.00           215.00 625 7500 625 13     12,500.00      2,145.00     14,645.00           225.00 625 8125 625 14     12,500.00      2,380.00     14,880.00           235.00 625 8750 625 15     12,500.00      2,625.00     15,125.00           245.00 625 9375 625 16     12,500.00      2,880.00     15,380.00           255.00 625 10000 625 17     12,500.00      3,145.00     15,645.00           265.00 625 10625 625 18     12,500.00      3,420.00     15,920.00           275.00 625 11250 625 19     12,500.00      3,705.00     16,205.00           285.00 625 11875 625 20     12,500.00      4,000.00     16,500.00           295.00 625 12500 625 21     12,500.00      4,305.00     16,805.00           305.00 625 13125 625 22     12,500.00      4,620.00     17,120.00           315.00 625 13750 625 23     12,500.00      4,945.00     17,445.00           325.00 625 14375 625 24     12,500.00      5,280.00     17,780.00           335.00 625 15000 625 25     12,500.00      5,625.00     18,125.00           345.00 625 15625 625 26     12,500.00      5,980.00     18,480.00           355.00 625 16250 625 27     12,500.00      6,345.00     18,845.00           365.00 625 16875 625 28     12,500.00      6,720.00     19,220.00           375.00 625 17500 625 29     12,500.00      7,105.00     19,605.00           385.00 625 18125 625 30     12,500.00      7,500.00     20,000.00           395.00 625 18750 625 31     12,500.00      7,905.00     20,405.00           405.00 625 19375 625 32     12,500.00      8,320.00     20,820.00           415.00 625 20000 625 33     12,500.00      8,745.00     21,245.00           425.00 625 20625 625 34     12,500.00      9,180.00     21,680.00           435.00 625 21250 625 35     12,500.00      9,625.00     22,125.00           445.00 625 21875 625 36     12,500.00    10,080.00     22,580.00           455.00 625 22500 625 37     12,500.00    10,545.00     23,045.00           465.00 625 23125 625 38     12,500.00    11,020.00     23,520.00           475.00 625 23750 625 39     12,500.00    11,505.00     24,005.00           485.00 625 24375 625 40     12,500.00    12,000.00     24,500.00           495.00 625 25000 625 41     12,500.00    12,505.00     25,005.00           505.00 625 25625 625 42     12,500.00    13,020.00     25,520.00           515.00 625 26250 625 43     12,500.00    13,545.00     26,045.00           525.00 625 26875 625 44     12,500.00    14,080.00     26,580.00           535.00 625 27500 625 45     12,500.00    14,625.00     27,125.00           545.00 625 28125 625 46     12,500.00    15,180.00     27,680.00           555.00 625 28750 625 47     12,500.00    15,745.00     28,245.00           565.00 625 29375 625 48     12,500.00    16,320.00     28,820.00           575.00 625 30000 625 49     12,500.00    16,905.00     29,405.00           585.00 625 30625 625 50     12,500.00    17,500.00     30,000.00           595.00 625 31250 625 51     12,500.00    18,105.00     30,605.00           605.00 625 31875 625 52     12,500.00    18,720.00     31,220.00           615.00 625 32500 625 53     12,500.00    19,345.00     31,845.00           625.00 625 33125 625 54     12,500.00    19,980.00     32,480.00           635.00 625 33750 625 55     12,500.00    20,625.00     33,125.00           645.00 625 34375 625 56     12,500.00    21,280.00     33,780.00           655.00 625 35000 625 57     12,500.00    21,945.00     34,445.00           665.00 625 35625 625 58     12,500.00    22,620.00     35,120.00           675.00 625 36250 625 59     12,500.00    23,305.00     35,805.00           685.00 625 36875 625 60     12,500.00    24,000.00     36,500.00           695.00 625 37500 625 61     12,500.00    24,705.00     37,205.00           705.00 625 38125 625 62     12,500.00    25,420.00     37,920.00           715.00 625 38750 625 63     12,500.00    26,145.00     38,645.00           725.00 625 39375 625 64     12,500.00    26,880.00     39,380.00           735.00 625 40000 625 65     12,500.00    27,625.00     40,125.00           745.00 625 40625 625 66     12,500.00    28,380.00     40,880.00           755.00 625 41250 625 67     12,500.00    29,145.00     41,645.00           765.00 625 41875 625 68     12,500.00    29,920.00     42,420.00           775.00 625 42500 625 69     12,500.00    30,705.00     43,205.00           785.00 625 43125 625 70     12,500.00    31,500.00     44,000.00           795.00 625 43750 625 71     12,500.00    32,305.00     44,805.00           805.00 625 44375 625 72     12,500.00    33,120.00     45,620.00           815.00 625 45000 625 73     12,500.00    33,945.00     46,445.00           825.00 625 45625 625 74     12,500.00    34,780.00     47,280.00           835.00 625 46250 625 75     12,500.00    35,625.00     48,125.00           845.00 625 46875 625 76     12,500.00    36,480.00     48,980.00           855.00 625 47500 625 77     12,500.00    37,345.00     49,845.00           865.00 625 48125 625 78     12,500.00    38,220.00     50,720.00           875.00 625 48750 625 79     12,500.00    39,105.00     51,605.00           885.00 625 49375 625 80     12,500.00    40,000.00     52,500.00           895.00 625 50000 625 81     12,500.00    40,905.00     53,405.00           905.00 625 50625 625 82     12,500.00    41,820.00     54,320.00           915.00 625 51250 625 83     12,500.00    42,745.00     55,245.00           925.00 625 51875 625 84     12,500.00    43,680.00     56,180.00           935.00 625 52500 625 85     12,500.00    44,625.00     57,125.00           945.00 625 53125 625 86     12,500.00    45,580.00     58,080.00           955.00 625 53750 625 87     12,500.00    46,545.00     59,045.00           965.00 625 54375 625 88     12,500.00    47,520.00     60,020.00           975.00 625 55000 625 89     12,500.00    48,505.00     61,005.00           985.00 625 55625 625 90     12,500.00    49,500.00     62,000.00           995.00 625 56250 625 91     12,500.00    50,505.00     63,005.00        1,005.00 625 56875 625 92     12,500.00    51,520.00     64,020.00        1,015.00 625 57500 625 93     12,500.00    52,545.00     65,045.00        1,025.00 625 58125 625 94     12,500.00    53,580.00     66,080.00        1,035.00 625 58750 625 95     12,500.00    54,625.00     67,125.00        1,045.00 625 59375 625 96     12,500.00    55,680.00     68,180.00        1,055.00 625 60000 625 97     12,500.00    56,745.00     69,245.00        1,065.00 625 60625 625 98     12,500.00    57,820.00     70,320.00        1,075.00 625 61250 625 99     12,500.00    58,905.00     71,405.00        1,085.00 625 61875 625

Explanation / Answer

When the VC changes from $5 to $3 per unit, the profit keeps increasing with the output and at Q=99 the profit is maximum

Q

FC

VC

TC

MC

P

TR

MR

Profit

0

12500

0

12500

625

0

625

-12500

1

12500

60

12560

60

625

625

625

-11935

2

12500

120

12620

60

625

1250

625

-11370

3

12500

180

12680

60

625

1875

625

-10805

4

12500

240

12740

60

625

2500

625

-10240

5

12500

300

12800

60

625

3125

625

-9675

6

12500

360

12860

60

625

3750

625

-9110

7

12500

420

12920

60

625

4375

625

-8545

8

12500

480

12980

60

625

5000

625

-7980

9

12500

540

13040

60

625

5625

625

-7415

10

12500

600

13100

60

625

6250

625

-6850

11

12500

660

13160

60

625

6875

625

-6285

12

12500

720

13220

60

625

7500

625

-5720

13

12500

780

13280

60

625

8125

625

-5155

14

12500

840

13340

60

625

8750

625

-4590

15

12500

900

13400

60

625

9375

625

-4025

16

12500

960

13460

60

625

10000

625

-3460

17

12500

1020

13520

60

625

10625

625

-2895

18

12500

1080

13580

60

625

11250

625

-2330

19

12500

1140

13640

60

625

11875

625

-1765

20

12500

1200

13700

60

625

12500

625

-1200

21

12500

1260

13760

60

625

13125

625

-635

22

12500

1320

13820

60

625

13750

625

-70

23

12500

1380

13880

60

625

14375

625

495

24

12500

1440

13940

60

625

15000

625

1060

25

12500

1500

14000

60

625

15625

625

1625

26

12500

1560

14060

60

625

16250

625

2190

27

12500

1620

14120

60

625

16875

625

2755

28

12500

1680

14180

60

625

17500

625

3320

29

12500

1740

14240

60

625

18125

625

3885

30

12500

1800

14300

60

625

18750

625

4450

31

12500

1860

14360

60

625

19375

625

5015

32

12500

1920

14420

60

625

20000

625

5580

33

12500

1980

14480

60

625

20625

625

6145

34

12500

2040

14540

60

625

21250

625

6710

35

12500

2100

14600

60

625

21875

625

7275

36

12500

2160

14660

60

625

22500

625

7840

37

12500

2220

14720

60

625

23125

625

8405

38

12500

2280

14780

60

625

23750

625

8970

39

12500

2340

14840

60

625

24375

625

9535

40

12500

2400

14900

60

625

25000

625

10100

41

12500

2460

14960

60

625

25625

625

10665

42

12500

2520

15020

60

625

26250

625

11230

43

12500

2580

15080

60

625

26875

625

11795

44

12500

2640

15140

60

625

27500

625

12360

45

12500

2700

15200

60

625

28125

625

12925

46

12500

2760

15260

60

625

28750

625

13490

47

12500

2820

15320

60

625

29375

625

14055

48

12500

2880

15380

60

625

30000

625

14620

49

12500

2940

15440

60

625

30625

625

15185

50

12500

3000

15500

60

625

31250

625

15750

51

12500

3060

15560

60

625

31875

625

16315

52

12500

3120

15620

60

625

32500

625

16880

53

12500

3180

15680

60

625

33125

625

17445

54

12500

3240

15740

60

625

33750

625

18010

55

12500

3300

15800

60

625

34375

625

18575

56

12500

3360

15860

60

625

35000

625

19140

57

12500

3420

15920

60

625

35625

625

19705

58

12500

3480

15980

60

625

36250

625

20270

59

12500

3540

16040

60

625

36875

625

20835

60

12500

3600

16100

60

625

37500

625

21400

61

12500

3660

16160

60

625

38125

625

21965

62

12500

3720

16220

60

625

38750

625

22530

63

12500

3780

16280

60

625

39375

625

23095

64

12500

3840

16340

60

625

40000

625

23660

65

12500

3900

16400

60

625

40625

625

24225

66

12500

3960

16460

60

625

41250

625

24790

67

12500

4020

16520

60

625

41875

625

25355

68

12500

4080

16580

60

625

42500

625

25920

69

12500

4140

16640

60

625

43125

625

26485

70

12500

4200

16700

60

625

43750

625

27050

71

12500

4260

16760

60

625

44375

625

27615

72

12500

4320

16820

60

625

45000

625

28180

73

12500

4380

16880

60

625

45625

625

28745

74

12500

4440

16940

60

625

46250

625

29310

75

12500

4500

17000

60

625

46875

625

29875

76

12500

4560

17060

60

625

47500

625

30440

77

12500

4620

17120

60

625

48125

625

31005

78

12500

4680

17180

60

625

48750

625

31570

79

12500

4740

17240

60

625

49375

625

32135

80

12500

4800

17300

60

625

50000

625

32700

81

12500

4860

17360

60

625

50625

625

33265

82

12500

4920

17420

60

625

51250

625

33830

83

12500

4980

17480

60

625

51875

625

34395

84

12500

5040

17540

60

625

52500

625

34960

85

12500

5100

17600

60

625

53125

625

35525

86

12500

5160

17660

60

625

53750

625

36090

87

12500

5220

17720

60

625

54375

625

36655

88

12500

5280

17780

60

625

55000

625

37220

89

12500

5340

17840

60

625

55625

625

37785

90

12500

5400

17900

60

625

56250

625

38350

91

12500

5460

17960

60

625

56875

625

38915

92

12500

5520

18020

60

625

57500

625

39480

93

12500

5580

18080

60

625

58125

625

40045

94

12500

5640

18140

60

625

58750

625

40610

95

12500

5700

18200

60

625

59375

625

41175

96

12500

5760

18260

60

625

60000

625

41740

97

12500

5820

18320

60

625

60625

625

42305

98

12500

5880

18380

60

625

61250

625

42870

99

12500

5940

18440

60

625

61875

625

43435

Q

FC

VC

TC

MC

P

TR

MR

Profit

0

12500

0

12500

625

0

625

-12500

1

12500

60

12560

60

625

625

625

-11935

2

12500

120

12620

60

625

1250

625

-11370

3

12500

180

12680

60

625

1875

625

-10805

4

12500

240

12740

60

625

2500

625

-10240

5

12500

300

12800

60

625

3125

625

-9675

6

12500

360

12860

60

625

3750

625

-9110

7

12500

420

12920

60

625

4375

625

-8545

8

12500

480

12980

60

625

5000

625

-7980

9

12500

540

13040

60

625

5625

625

-7415

10

12500

600

13100

60

625

6250

625

-6850

11

12500

660

13160

60

625

6875

625

-6285

12

12500

720

13220

60

625

7500

625

-5720

13

12500

780

13280

60

625

8125

625

-5155

14

12500

840

13340

60

625

8750

625

-4590

15

12500

900

13400

60

625

9375

625

-4025

16

12500

960

13460

60

625

10000

625

-3460

17

12500

1020

13520

60

625

10625

625

-2895

18

12500

1080

13580

60

625

11250

625

-2330

19

12500

1140

13640

60

625

11875

625

-1765

20

12500

1200

13700

60

625

12500

625

-1200

21

12500

1260

13760

60

625

13125

625

-635

22

12500

1320

13820

60

625

13750

625

-70

23

12500

1380

13880

60

625

14375

625

495

24

12500

1440

13940

60

625

15000

625

1060

25

12500

1500

14000

60

625

15625

625

1625

26

12500

1560

14060

60

625

16250

625

2190

27

12500

1620

14120

60

625

16875

625

2755

28

12500

1680

14180

60

625

17500

625

3320

29

12500

1740

14240

60

625

18125

625

3885

30

12500

1800

14300

60

625

18750

625

4450

31

12500

1860

14360

60

625

19375

625

5015

32

12500

1920

14420

60

625

20000

625

5580

33

12500

1980

14480

60

625

20625

625

6145

34

12500

2040

14540

60

625

21250

625

6710

35

12500

2100

14600

60

625

21875

625

7275

36

12500

2160

14660

60

625

22500

625

7840

37

12500

2220

14720

60

625

23125

625

8405

38

12500

2280

14780

60

625

23750

625

8970

39

12500

2340

14840

60

625

24375

625

9535

40

12500

2400

14900

60

625

25000

625

10100

41

12500

2460

14960

60

625

25625

625

10665

42

12500

2520

15020

60

625

26250

625

11230

43

12500

2580

15080

60

625

26875

625

11795

44

12500

2640

15140

60

625

27500

625

12360

45

12500

2700

15200

60

625

28125

625

12925

46

12500

2760

15260

60

625

28750

625

13490

47

12500

2820

15320

60

625

29375

625

14055

48

12500

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