Question

Sujito Electronix makes headphones for $22 and sells them for $32. Sujito has sold at least 50 headphones on average per week in the past, though the actual demand is unknown. Sujito has also often run short of supply in the past. After three months of release, the headphones are sold at 40 percent discount. The spreadsheet below shows Sujito's sales and demand for the headphones. We take demand at 51, and quantity produced at 55. Newsvendor model for Sujito's headphones Data Selling Price $32 Cost $22 Discount Price $19.2 Model Demand 51 Produced Quantity 55 Quantity Sold Surplus Quantity What is the net profit for the headphones

Answer 1

The net profit for the headphones is $498.80.

Step-by-step explanation:

Quantity produced = 55

Quantity sold at normal selling price of $32 = Demand = 51

Quantity sold at discount price of $19.20 = Quantity produced - Demand = 55 - 51 = 4

Total revenue = (Demand * $32) + (Quantity sold at discount price of $19.20 * $19.20) = (51 * $32) + (4 * $19.20) = $1,708.80

Total cost = Cost * Quantity produced = $22 * 55 = $1,210

Net profit = Total revenue - Total cost = $1,708.80 - $1,210 = $498.80

Therefore, the net profit for the headphones is $498.80.