Develop a model to maximize the total revenue

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Reference no: EM131939441

The entrepreneur in the previous problem did very well selling Victor shoes. His shoe supplier told him of a new product, Top Notch, that was entering the market. This shoe would be a product substitute for Victors, so that the higher the price of either shoe, the greater the demand for the other. He interviewed more potential clients to determine price response and cross elasticities. This yielded the following relationships:

Volume of Victors = 1,000 - 20Pv + 1Pn

Volume of Top Notch = 800 + 2Pv - 18Pn

where Pv = price of Victors and Pn = price of Top Notch. Develop a model to maximize the total revenue and find the optimal prices using Solver.

Reference no: EM131939441

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