Technique to determine the impact of price change

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Reference no: EM132199539

1. Custom computers, Inc. assembles custom home computer systems. The heat sinks needed are bought from $12 each and are ordered in quantitiers of 1,300 units. Annual demand is 5,200 heat sinks, the annual inventory holding cost rate is $3 per unit, and the cost to place an order is estimated to be $50. Calculate the following:

a. Average inventory level:

b. Number of orders placed per year:

c. Total annual inventory holding cost:

d. Total annual ordering cost:

e. Total annual cost:

2. Markets often use which of the following technique to determine the impact of a price change?

A. Competitive analysis

B. Breakeven analysis

C. Price elasticity

D. Assessing perceived value

3. All the following indicators heighten consumer sensitivity to price EXCEPT:

A. the fact that reference prices exist.

B. Difficult comparability.

C. Price is high in a relative sense.

D. Price is not needed as quality cue.

4. A firm's incentive to sell is equal to:

A. True economic value (TEV) minus cost of goods sold (COGS).

B. True economic value (TEV) minus product price.

C. Product price minues cost of goods sold (COGS).

D. Perceived value (PV) minus price.

Reference no: EM132199539

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