### Specialized in selling electrical vehicles-hybrid vehicles

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##### Reference no: EM131126534

A car dealership is specialized in selling Electrical Vehicles (EVs) and Hybrid Vehicles (HV). The demand for each vehicle type is sensitive to its price as well as to the price of the other type. In other words, there is an interaction between the EV and HV markets. An expert introduced the following demand curves: EV demand = 300 – 0.014(EV price) + 0.003 (HV price) HV demand = 325 – 0.018 (HV price) + 0.005 (EV price) The dealership’s unit costs are \$17000 and \$14000 per EV and HV respectively. Each HV requires 2 hours of labor for preparing the car and each EV requires 3 hours of preparation labor. The current staff can supply 320 hours of labor. 1. Develop a mathematical model to maximize the dealership’s total profit. Clearly define your decision variables, constraints and objective function 2. Implement your model in Excel and use Solver to find the optimal prices and optimal profits. Include a snapshot of your Excel answer 3. What sales levels will result from the prices in part (2) (you can ignore fractional values)

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