Deck 16: Pricing and Revenue Management in a Supply Chain

Question 1

Unused capacity from the past is extremely valuable.

Answer 1

FALSE

Question 2

Revenue management may also be defined as the use of differential pricing based on customer segment, time of use, and product or capacity availability to increase supply chain surplus.

Answer 2

TRUE

Question 3

The amount of the asset reserved for the higher price segment is such that the expected marginal revenue from the higher priced segment is less than the price to the lower price segment.

Answer 3

FALSE

Question 4

Revenue management is the use of marketing to increase the profit generated from a limited supply of supply chain assets.

Question 5

Faced with seasonal peaks, an effective revenue management tactic is to charge a higher price during the peak period and a higher price during off-peak periods.

Question 6

Wastage occurs if higher price buyers have to be turned away because the capacity has already been committed to lower price buyers.

Question 7

Revenue management adjusts the pricing and available supply of assets to maximize profits.

Question 8

An order from a lower price buyer should be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer.

Question 9

The basic trade-off to consider during overbooking is between having wasted capacity (or inventory) because of few cancellations or having a shortage of capacity (or inventory) because of excessive cancellations.

Question 10

In theory, the concept of differential pricing decreases total cost for a firm.

Question 11

In most instances of differential pricing, demand from the segment paying the lower price arises earlier in time than demand from the segment paying the higher price.

Question 12

The goal when making the overbooking decision is to maximize supply chain profits by minimizing the cost of wasted capacity and the cost of capacity shortage.

Question 13

To differentiate between the various market segments, the firm must either eliminate barriers that identify product or service attributes the segments value differently.

Question 14

The tactic of overbooking or overselling the available asset is suitable in any situation where customers are able to cancel orders and the value of the asset drops significantly after a deadline.

Question 15

Pricing may influence demand if customers are price sensitive.

Question 16

Effective differential pricing over time will generally increase the level of product availability for the consumer willing to pay full price, but will decrease total profits for the retailer.

Question 17

The cost of wasted capacity is the margin that would have been generated if the capacity had been used for production.

Question 18

The tactic of varying price over time is suitable for assets such as fashion apparel that have a clear date beyond which they lose a lot of their value.

Question 19

Spoilage occurs when the capacity reserved for higher price buyers is wasted because demand from the higher price segment does not materialize.

Question 20

The cost of a capacity shortage is the increase in productivity that results from having to go to a backup source.

Question 21

The reserved quantity will be affected by the difference in margin between the spot market and the bulk sale, but not the distribution of demand from the spot market.

Question 22

To differentiate between the various market segments, the firm must

A) create barriers by identifying product or service attributes that the segments value differently.
B) eliminate barriers that identify product or service attributes that the segments value differently.
C) negotiate separately with different market segments that value product or service attributes differently.
D) develop pricing structures based on the volume of various product or service attributes.

Question 23

Customers will have a negative perception of revenue management tactics if they are simply presented as a mechanism for extracting maximum revenue.

Question 24

Revenue management may be defined as

A) the use of differential costing based on product or capacity availability to decrease supply chain cost.
B) the use of differential costing based on customer segment, time of use, and product or capacity availability to increase profitability.
C) the use of differential pricing based on customer segment, time of use, and product or capacity availability to decrease supply chain surplus.
D) the use of differential pricing based on customer segment, time of use, and product or capacity availability to increase supply chain surplus.

Question 25

When the capacity reserved for higher price buyers is wasted because demand from the higher price segment does not materialize, this is

A) spill.
B) spoilage.
C) wastage.
D) excess.

Question 26

The forecasting function is not necessary for most revenue management systems.

Question 27

Shifting demand from peak to off-peak periods is beneficial if the discount given during the off-peak period is more than offset by the decrease in cost because of a smaller peak and the increase in revenue during the off-peak period.

Question 28

In most instances of differential pricing, demand from the segment paying the lower price

A) arises earlier in time than demand from the segment paying the higher price.
B) arises later in time than demand from the segment paying the higher price.
C) arises about the same time as demand from the segment paying the higher price.
D) arises both earlier and later in time than demand from the segment paying the higher price.

Question 29

Revenue management is

A) the use of marketing tools to increase revenue.
B) the use of pricing to increase the profit generated from a limited supply of supply chain assets.
C) a process designed to determine the best use of funds generated through sales.
D) the use of accounting tools to monitor cash flow.

Question 30

Pricing can be used to

A) change available supply.
B) reduce supply chain costs.
C) influence demand if customers are price sensitive.
D) all of the above

Question 31

Too low a level of overbooking will lead to unutilized assets and lost revenue.

Question 32

The use of differential pricing should

A) decrease total profits for a firm.
B) increase total profits for a firm.
C) increase capacity for a firm.
D) decrease capacity utilization for a firm.

Question 33

The goal of optimization is to use forecasts of customer behavior to identify a revenue management tactic that will be most effective.

Question 34

Ultimately, a proper understanding of customer preferences and a quantification of the impact of various tactics on consumer behavior are at the core of successful revenue management.

Question 35

The amount reserved for the spot market should be such that the expected marginal revenue from the spot market equals the current revenue from a bulk sale.

Question 36

The two forms of supply chain assets are

A) capacity and inventory.
B) capacity and revenue.
C) inventory and revenue.
D) inventory and warehouse space.

Question 37

The basic trade-off to be considered by the supplier with production capacity is between

A) committing to an order from a high-price buyer or waiting for a lower price buyer to arrive later on.
B) committing to an order from a lower price buyer or waiting for a high-price buyer to arrive later on.
C) allowing the market to be controlled by price or capacity.
D) having marketing or operations establish the constraints within which orders are accepted.

Question 38

Salespeople must understand the revenue management tactic in place so they can align their sales pitch accordingly.

Question 39

If higher price buyers have to be turned away because the capacity has already been committed to lower price buyers, this is

A) spill.
B) spoilage.
C) wastage.
D) excess.

Question 40

Any asset that loses value over time is perishable.

Question 41

Scenario 16.1 - The Stone Lion
The Stone Lion, a bed and breakfast located in a sleepy town, caters to two groups of customers, young couples interested in something marginally more exotic than a staycation, and corporate clients interested in doing some team-building at a location with no cellular service. Corporations know they can get rooms with minimal notice, but young couples on tight budgets tend to plan well in advance of their planned stay at the property. The corporate rate for rooms is $250 per person and the demand pattern is normal with a mean of 20 and a standard deviation of 10. The proprietor of the Stone Lion takes pity on the young couples and charges them only $150 for identical accommodations.
If the price young couples are willing to pay increases by 50%, how many rooms should be reserved for corporate clients?

A) 17
B) 7
C) 4
D) 10

Question 42

A shortage of capacity (or inventory) occurs when

A) there are excessive cancellations.
B) there are few cancellations.
C) an expensive backup needs to be arranged.
D) B and C only

Question 43

Scenario 16.1 - The Stone Lion
The Stone Lion, a bed and breakfast located in a sleepy town, caters to two groups of customers, young couples interested in something marginally more exotic than a staycation, and corporate clients interested in doing some team-building at a location with no cellular service. Corporations know they can get rooms with minimal notice, but young couples on tight budgets tend to plan well in advance of their planned stay at the property. The corporate rate for rooms is $250 per person and the demand pattern is normal with a mean of 20 and a standard deviation of 10. The proprietor of the Stone Lion takes pity on the young couples and charges them only $150 for identical accommodations.
What is the difference in the number of rooms that should be held by the Stone Lion if the standard deviation of corporate demand increases by five and if it decreases by five?

A) 1
B) 2
C) 3
D) 4

Question 44

An effective revenue management tactic when faced with seasonal peaks is to charge a

A) high price during the peak period and a higher price during off-peak periods.
B) higher price during the peak period and a lower price during off-peak periods.
C) lower price during the peak period and a higher price during off-peak periods.
D) low price during the peak period and a lower price during off-peak periods.

Question 45

Scenario 16.1 - The Stone Lion
The Stone Lion, a bed and breakfast located in a sleepy town, caters to two groups of customers, young couples interested in something marginally more exotic than a staycation, and corporate clients interested in doing some team-building at a location with no cellular service. Corporations know they can get rooms with minimal notice, but young couples on tight budgets tend to plan well in advance of their planned stay at the property. The corporate rate for rooms is $250 per person and the demand pattern is normal with a mean of 20 and a standard deviation of 10. The proprietor of the Stone Lion takes pity on the young couples and charges them only $150 for identical accommodations.
How many rooms should be reserved for corporate clients?

A) 17
B) 14
C) 13
D) 10

Question 46

The cost of a capacity shortage is

A) the reduction in margin that results from having to go to a backup source.
B) the margin that would have been generated if the capacity had been used for production.
C) the productivity increase generated when the capacity is used for production.
D) the sales potential of excess capacity kept in reserve for emergency production.

Question 47

Wasted capacity (or inventory) occurs when

A) there are excessive cancellations.
B) there are few cancellations.
C) an expensive backup needs to be arranged.
D) all of the above

Question 48

An order from a lower price buyer

A) should always be accepted rather than waiting for potential revenue from a higher price buyer.
B) should only be accepted if the expected revenue from a higher price buyer is higher than the current revenue from the lower price buyer.
C) should be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer.
D) should not be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer.

Question 49

The tactic of varying price over time is suitable for assets

A) that do not have a clear date beyond which they lose a lot of their value.
B) that have a clear date beyond which they lose a lot of their value.
C) where customers are able to cancel orders and the value of the asset drops significantly after a deadline.
D) where customers are unable to cancel orders and the value of the asset drops significantly after a deadline.

Question 50

The tactic of overbooking or overselling the available asset is suitable where

A) there is a clear date beyond which the asset loses a lot of its value.
B) there is no clear date beyond which the asset loses a lot of its value.
C) customers are able to cancel orders and the value of the asset drops significantly after a deadline.
D) customers are unable to cancel orders and the value of the asset drops significantly after a deadline.

Question 51

The cost of wasted capacity is

A) the reduction in margin that results from having to go to a backup source.
B) the margin that would have been generated if the capacity had been used for production.
C) the productivity increase generated when the capacity is used for production.
D) the sales potential of excess capacity kept in reserve for emergency production.

Question 52

Scenario 16.2 - Card Table Vendor
The traditional fundraiser for the student chapter of APICS is pint mason jars filled with a tangy barbecue sauce that the club sponsor whips up in his kitchen. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the barbecue season, which is four months. Eighteen sad years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 400-p?, in the second month as 400-1.4p?, in the third month 400-1.8p?, and in the fourth month 400-2.2p?.
What should the price be in period 3?

A) $185.13
B) $181.27
C) $177.43
D) $173.61

Question 53

The goal when making the overbooking decision is to maximize supply chain profits by

A) maximizing the value of wasted capacity and the cost of capacity shortage.
B) maximizing supply chain profits.
C) minimizing the cost of wasted capacity and the cost of capacity shortage.
D) minimizing the cost of wasted capacity and minimizing capacity shortages.

Question 54

The amount of the asset reserved for the higher price segment is such that

A) all orders from the lower priced segment will be accepted and filled.
B) the expected marginal revenue from the higher priced segment is more than the price to the lower price segment.
C) the expected marginal revenue from the higher priced segment is less than the price to the lower price segment.
D) the expected marginal revenue from the higher priced segment equals the price to the lower price segment.

Question 55

Scenario 16.2 - Card Table Vendor
The traditional fundraiser for the student chapter of APICS is pint mason jars filled with a tangy barbecue sauce that the club sponsor whips up in his kitchen. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the barbecue season, which is four months. Eighteen sad years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 400-p?, in the second month as 400-1.4p?, in the third month 400-1.8p?, and in the fourth month 400-2.2p?.
What should the price be in period 1?

A) $287.50
B) $275.00
C) $262.50
D) $250.00

Question 56

Effective differential pricing over time will generally

A) decrease the level of product availability for the consumer willing to pay full price and also decrease total profits for the retailer.
B) decrease the level of product availability for the consumer willing to pay full price but will increase total profits for the retailer.
C) increase the level of product availability for the consumer willing to pay full price and also increase total profits for the retailer.
D) increase the level of product availability for the consumer willing to pay full price but will decrease total profits for the retailer.

Question 57

The basic trade-off to consider during overbooking is between

A) having wasted capacity (or inventory) or a shortage of capacity (or inventory).
B) having lost sales or a shortage of capacity (or inventory).
C) having wasted capacity (or inventory) or excess capacity (or inventory).
D) having high sales or a shortage of capacity (or inventory).

Question 58

Scenario 16.1 - The Stone Lion
The Stone Lion, a bed and breakfast located in a sleepy town, caters to two groups of customers, young couples interested in something marginally more exotic than a staycation, and corporate clients interested in doing some team-building at a location with no cellular service. Corporations know they can get rooms with minimal notice, but young couples on tight budgets tend to plan well in advance of their planned stay at the property. The corporate rate for rooms is $250 per person and the demand pattern is normal with a mean of 20 and a standard deviation of 10. The proprietor of the Stone Lion takes pity on the young couples and charges them only $150 for identical accommodations.
If the corporate demand and standard deviation both decrease by 50%, how many rooms should be reserved for corporate clients?

A) 7
B) 8
C) 9
D) 10

Question 59

Scenario 16.2 - Card Table Vendor
The traditional fundraiser for the student chapter of APICS is pint mason jars filled with a tangy barbecue sauce that the club sponsor whips up in his kitchen. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the barbecue season, which is four months. Eighteen sad years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 400-p?, in the second month as 400-1.4p?, in the third month 400-1.8p?, and in the fourth month 400-2.2p?.
What is the expected revenue if the student APICS chapter uses dynamic pricing?

A) $83,975.47
B) $84,349.06
C) $84,719.84
D) $85,209.84

Question 60

Scenario 16.1 - The Stone Lion
The Stone Lion, a bed and breakfast located in a sleepy town, caters to two groups of customers, young couples interested in something marginally more exotic than a staycation, and corporate clients interested in doing some team-building at a location with no cellular service. Corporations know they can get rooms with minimal notice, but young couples on tight budgets tend to plan well in advance of their planned stay at the property. The corporate rate for rooms is $250 per person and the demand pattern is normal with a mean of 20 and a standard deviation of 10. The proprietor of the Stone Lion takes pity on the young couples and charges them only $150 for identical accommodations.
If the corporate price and young couples' price both double, how many additional rooms should the Stone Lion hold for corporate clients?

A) 3
B) 2
C) 1
D) 0

Question 61

Scenario 16.2 - Card Table Vendor
The traditional fundraiser for the student chapter of APICS is pint mason jars filled with a tangy barbecue sauce that the club sponsor whips up in his kitchen. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the barbecue season, which is four months. Eighteen sad years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 400-p?, in the second month as 400-1.4p?, in the third month 400-1.8p?, and in the fourth month 400-2.2p?.
Responding to customer complaints (primarily from period 1 purchasers) the student APICS chapter decides to use static pricing over the four month season. What is the total revenue for the season's sales at the optimal price?

A) $49,490.00
B) $494,747.50
C) $50,000.00
D) $50,247.50

Question 62

Scenario 16.4 - Santorini Donkeys
Sturdy little donkeys are used to carry corpulent tourists up the Santorini caldera to the town of Fira. One cruise line that routinely docks at the port is considering a plan to maintain their own donkey herd, which will cost them $15,000 per thousand tourists. The number of tourists needing this service is normally distributed, with a mean of Usually, this is enough donkey capacity, but occasionally the cruise line rotates a bigger ship through this route and the excursion director must purchase donkey capacity on the spot market, where is costs $20 per tourist.
Once a local donkey herder learns of the cruise line's plan, he lowers his donkey rental price to $17.50 per tourist. How many donkeys should be in the cruise line's herd?

A) 7,264
B) 7,005
C) 6,711
D) 6,370

Question 63

The decision to use overbooking will

A) lead to upset customers and a high cost of providing them space.
B) lead to unutilized assets and lost revenue.
C) lead to reduced profits.
D) depend upon optimization to be successful.

Question 64

Hotels use differential pricing by day of week and time of year

A) in order to shift demand from peak periods to off-peak periods.
B) in order to increase demand during off-peak periods.
C) in order to shift revenue from peak periods to off-peak periods.
D) in order to shift profit from peak periods to off-peak periods.

Question 65

Scenario 16.3 - AITP's Revenge
The student chapter of the Association of Information technology Professionals (AITP) notices the success that the APICS student chapter has with their traditional barbecue sauce fundraiser. Blinded by their jealousy, the club officers decide to sell a competing product, clocks made out of junk computer parts that the club sponsor whips up in his garage. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the computer clock season, which is four months. Twenty-five years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 20-p?, in the second month as 20-1.4p?, in the third month 20-1.8p?, and in the fourth month 20-2.2p?.
The components needed to produce a computer clock cost twenty-five cents. What is the expected profit if the AITP club sponsor produces the optimal number of clocks?

A) $263.72
B) $262.54
C) $260.97
D) $269.41

Question 66

Most firms must decide what fraction of an asset to

A) sell in bulk and what fraction of the asset to discard.
B) save for the spot market and what fraction of the asset to discard.
C) save for emergencies and what fraction of the asset to rework.
D) sell in bulk and what fraction of the asset to save for the spot market.

Question 67

Scenario 16.4 - Santorini Donkeys
Sturdy little donkeys are used to carry corpulent tourists up the Santorini caldera to the town of Fira. One cruise line that routinely docks at the port is considering a plan to maintain their own donkey herd, which will cost them $15,000 per thousand tourists. The number of tourists needing this service is normally distributed, with a mean of Usually, this is enough donkey capacity, but occasionally the cruise line rotates a bigger ship through this route and the excursion director must purchase donkey capacity on the spot market, where is costs $20 per tourist.
The cruise line's insurance policy limits the number of donkeys in their herd to 5,000. What bulk price should the cruise line negotiate to make the 5,000 donkey herd size optimal?

A) $18,586 per ten thousand
B) $18,362 per ten thousand
C) $18,134 per ten thousand
D) $17,978 per ten thousand

Question 68

Scenario 16.3 - AITP's Revenge
The student chapter of the Association of Information technology Professionals (AITP) notices the success that the APICS student chapter has with their traditional barbecue sauce fundraiser. Blinded by their jealousy, the club officers decide to sell a competing product, clocks made out of junk computer parts that the club sponsor whips up in his garage. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the computer clock season, which is four months. Twenty-five years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 20-p?, in the second month as 20-1.4p?, in the third month 20-1.8p?, and in the fourth month 20-2.2p?.
The components needed to produce a computer clock cost twenty-five cents. How many clocks should the AITP club produce?

A) 39
B) 47
C) 55
D) 63

Question 69

Scenario 16.4 - Santorini Donkeys
Sturdy little donkeys are used to carry corpulent tourists up the Santorini caldera to the town of Fira. One cruise line that routinely docks at the port is considering a plan to maintain their own donkey herd, which will cost them $15,000 per thousand tourists. The number of tourists needing this service is normally distributed, with a mean of Usually, this is enough donkey capacity, but occasionally the cruise line rotates a bigger ship through this route and the excursion director must purchase donkey capacity on the spot market, where is costs $20 per tourist.
How many donkeys should the cruise line have in its herd?

A) 8,111
B) 7,977
C) 7,842
D) 7,707

Question 70

In order to achieve the greatest value

A) supply planning and revenue management should be performed separately.
B) supply planning should be completed first.
C) supply planning and revenue management should be combined.
D) revenue management should be completed first.

Question 71

The amount reserved for the spot market should be

A) such that the expected marginal revenue from the spot market equals the current revenue from a bulk sale.
B) such that the expected marginal revenue from the spot market exceeds the current revenue from a bulk sale.
C) such that the expected marginal revenue from the spot market is less than the current revenue from a bulk sale.
D) equal to the maximum revenue available from the spot.

Question 72

The forecasting function is

A) the foundation of any revenue management system.
B) unnecessary for a revenue management system.
C) an added plus for any revenue management system.
D) likely to create problems for any revenue management system.

Question 73

Scenario 16.2 - Card Table Vendor
The traditional fundraiser for the student chapter of APICS is pint mason jars filled with a tangy barbecue sauce that the club sponsor whips up in his kitchen. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the barbecue season, which is four months. Eighteen sad years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 400-p?, in the second month as 400-1.4p?, in the third month 400-1.8p?, and in the fourth month 400-2.2p?.
Responding to customer complaints (primarily from period 1 purchasers) the student APICS chapter decides to use static pricing over the four month season. What is the optimal price to charge for their barbecue sauce?

A) $122.50
B) $125.00
C) $127.50
D) $130.00

Question 74

It is important for the firm to structure its revenue management program in a way that

A) it is presented simply as a mechanism for extracting maximum revenue.
B) revenue increases while improving service along some dimension that is important to customers that pay the highest price.
C) profit is maximized.
D) all of the above

Question 75

The fundamental trade-off between selling in bulk or on the spot market is

A) different from the situation where a firm serves two market segments.
B) similar to the case when a firm serves two market segments.
C) similar to the case where a firm must deal with seasonal demand.
D) similar to the case where a firm has a perishable asset.

Question 76

The goal of optimization in revenue management is to identify a tactic

A) using forecasts of customer behavior that will be most effective.
B) using linear regression that will maximize revenue.
C) using linear regression that will minimize cost.
D) that will not have to be altered.

Question 77

Scenario 16.4 - Santorini Donkeys
Sturdy little donkeys are used to carry corpulent tourists up the Santorini caldera to the town of Fira. One cruise line that routinely docks at the port is considering a plan to maintain their own donkey herd, which will cost them $15,000 per thousand tourists. The number of tourists needing this service is normally distributed, with a mean of Usually, this is enough donkey capacity, but occasionally the cruise line rotates a bigger ship through this route and the excursion director must purchase donkey capacity on the spot market, where is costs $20 per tourist.
Once a local donkey herder learns of the cruise line's plan, he raises his donkey rental price to $25 per tourist. How many donkeys should be in the cruise line's herd?

A) 9,111
B) 8,971
C) 9,139
D) 8,707

Question 78

Scenario 16.3 - AITP's Revenge
The student chapter of the Association of Information technology Professionals (AITP) notices the success that the APICS student chapter has with their traditional barbecue sauce fundraiser. Blinded by their jealousy, the club officers decide to sell a competing product, clocks made out of junk computer parts that the club sponsor whips up in his garage. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the computer clock season, which is four months. Twenty-five years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 20-p?, in the second month as 20-1.4p?, in the third month 20-1.8p?, and in the fourth month 20-2.2p?.
The components needed to produce a computer clock cost twenty-five cents. What should the price of the computer clocks be in the first month of the selling season?

A) $5.68
B) $7.27
C) $10.13
D) $14.52

Question 79

Shifting demand from peak to off-peak periods is beneficial if the discount given

A) during the off-peak period is more than offset by the decrease in cost because of a larger peak.
B) during the off-peak period is more than offset by the decrease in cost because of a smaller peak.
C) during the peak period is more than offset by the decrease in cost because of a smaller peak.
D) during the peak period is more than offset by the decrease in cost because of a larger peak.

Question 80

Scenario 16.3 - AITP's Revenge
The student chapter of the Association of Information technology Professionals (AITP) notices the success that the APICS student chapter has with their traditional barbecue sauce fundraiser. Blinded by their jealousy, the club officers decide to sell a competing product, clocks made out of junk computer parts that the club sponsor whips up in his garage. Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the computer clock season, which is four months. Twenty-five years of experience have revealed that demand varies depending on the month of the season. Customer demand in the first month can be described as 20-p?, in the second month as 20-1.4p?, in the third month 20-1.8p?, and in the fourth month 20-2.2p?.
The components needed to produce a computer clock cost twenty-five cents. What should the price of the computer clocks be in the third month of the selling season?

A) $14.52
B) $10.13
C) $7.27
D) $5.68