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The Canadian Motorcycle Company (CMC) has determined that its customers are very price-sensitive, with the number of motorcycles purchased heavily dependent upon the prices set. The company makes two different styles of bike: the high-end Jet and the lower-end Canuck. Market research has shown that the Jet has a price-demand curve of p = 22,000 - 0.25x, where p represents price and x represents the demand volume. For the Canuck, the curve is p = 18000 - 0.3x. In order to determine profit, CMC will simply take the selling price minus the materials costs. Raw materials for the Jet are $6000 per bike, and they are $5000 per bike for the Canuck. Since CMC hand-builds each bike it makes, the only real constraint for building the bike is the number of manufacturing hours available. CMC has 10,000 hours per month of manufacturing capacity available. A Jet takes 23 hours to manufacture and a Canuck takes 20. CMC also wants to ensure the integrity of each product line, so it will require that a minimum of 100 of each bike should be made each month. Note: All figures are in Canadian dollars. 1. How many of each type of bike should CMC manufacture each month? What will its profit be? 2. Should it drop its minimum limit of 100 of each bike? Why or why not? *** I'm having trouble with the formulas in Excel and setting up the model - Specifically what I may need to type in Excel would be ideal, please! ***
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