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The management of Madeira Manufacturing Company is considering the introduction of a new product. The fixed cost to begin the production of the product is $28,000. The variable cost for the product is expected to be between $14 and $27 with a most likely value of $24 per unit. The product will sell for $65 per unit. Demand for the product is expected to range from 500 to 1900 units, with 1400 units the most likely demand.
Let c = variable cost per unit
x = demand
a. Develop the profit model for this product. Enter your answer in the form of an expression. (Example: (c+10)⋅x+800)
Profit = ______________
b. Provide the base-case, worst-case and best-case analyses. For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)
Base case: Profit = $______________
Worst case: Profit = $ ______________
Bast case: Profit = $____________
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