Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and website construction is estimated to be $160,000. Variable processing costs are estimated to be $6.00 per book. The publisher plans to sell single-user access to the book for $46. a. Build a spreadsheet model to calculate the profit/loss for a given demand. For example, what profit can be anticipated with a demand of 3500 copies? b. Use a data table to very demand from 1000 to 6000 in increments of 200 to assess the sensitivity of profit to demand. c. Use Goal Seek to determine the access price per copy that the publisher must charge to break even with the demand of 3500 copies. Before you move on to Problem 2, make sure you save your workbook with this value displayed or else you will not receive credit.

Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and website construction is estimated to be $160,000. Variable processing costs are estimated to be $6.00 per book. The publisher plans to sell single-user access to the book for $46. a. Build a spreadsheet model to calculate the profit/loss for a given demand. For example, what profit can be anticipated with a demand of 3500 copies? b. Use a data table to very demand from 1000 to 6000 in increments of 200 to assess the sensitivity of profit to demand. c. Use Goal Seek to determine the access price per copy that the publisher must charge to break even with the demand of 3500 copies. Before you move on to Problem 2, make sure you save your workbook with this value displayed or else you will not receive credit.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $171,000. Variable processing costs are estimated to be $8 per book. The publisher plans to sell single-user access to the book for $41. Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand = 4,000 − 6p, where p is the price of the e-book. (a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated
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Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?