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.The sponsor is independently wealthy,so he donates his time and materials to the fundraising effort.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-p1,in the second month as 400-1.4p2,in the third month 400-1.8p3,and in the fourth month 400-2.2p4.The club sponsor has only 400 spare mason jars this year after a busy summer collecting specimens.
-What is the expected revenue if the student APICS chapter uses dynamic pricing?
A)$83,975
B)$84,349
C)$84,719
D)$85,209

Question

Quizplus · Accepted Answer

The correct answer is A. The expected revenue if the student APICS chapter uses dynamic pricing is $83,975. This is calculated by taking the sum of the expected revenue for each month, which is:Month 1: (400 - p1) * $5 = $2,000 - $5p1Month 2: (400 - 1.4p2) * $5 = $2,000 - $7p2Month 3: (400 - 1.8p3) * $5 = $2,000 - $9p3Month 4: (400 - 2.2p4) * $5 = $2,000 - $11p4The total expected revenue is then:$2,000 - $5p1 + $2,000 - $7p2 + $2,000 - $9p3 + $2,000 - $11p4 = $8,000 - $32pSince the club sponsor has only 400 spare mason jars this year, the maximum number of jars that can be sold is 400. Therefore, the maximum expected revenue is:$8,000 - $32(400) = $83,975