The Container Transportation Company is trying to adjust the recently design pri

Question

The Container Transportation Company is trying to adjust the recently design pricing and allocation model to increase even more its future revenues. The business analyst in charge with the project revised the demand forecasts and realized that the reported High demand values are 10% lower. A new report from the sales department indicates that during the high season, a price reduction of 5 cents would result in a 6 cents increase in the volume of the containers.

Based on these changes, what is the optimal pricing policy and containers allocation for the High demand season?

There was no case included with this question; only infomrmation given is what is seen here. Please show all formulas, calculations, and excel spreadsheets (including solver) used to get answers in order to receive full credit.

Explanation / Answer

Answer: During the high season the demand would be: 10% lower So, Normal demand = 100 units New demand = 90 Normal pricing = $10 if price reduced by 5% demnad increases by 6% Therefore New price = $9.50 and new demand = 95.4

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