Question

You are the manager of a local sporting goods store and recently purchased a shipment of 60 sets of skis and ski bindings at a total cost of $25,000 (your wholesale supplier would not let you purchase the skis and bindings separately, nor would it let you purchase fewer than 60 sets). The community in which your store is located consists of many different types of skiers, ranging from advanced to beginners. From experience, you know that different skiers value skis and bindings differently. However, you cannot profitably price discriminate because you cannot prevent resale. There are about 20 advanced skiers who value skis at $400 and ski bindings at $275; 20 intermediate skiers who value skis at $300 and ski bindings at $400; and 20 beginning skiers who value skis at $200 and ski bindings at $350. What is your maximum revenue if you charge a separate price for skis and bindings? $ What is your maximum revenue if you sell skis and bindings as a bundle? $

Answer 1

The maximum revenue if you charge a separate price for skis and bindings is $38,500, while the maximum revenue if you sell skis and bindings as a bundle is also $38,500.

Step-by-step explanation:

To calculate the maximum revenue if you charge a separate price for skis and bindings, you need to determine the price that each group of skiers is willing to pay for both skis and bindings. Then, you multiply this price by the number of skiers in each group. For advanced skiers, the price for skis and bindings is $675 ($400 + $275) and there are 20 advanced skiers. So, the revenue from this group is $13,500 ($675 * 20). Similarly, for intermediate skiers, the price is $700 ($300 + $400) and there are 20 intermediate skiers. So, the revenue from this group is $14,000 ($700 * 20). Finally, for beginning skiers, the price is $550 ($200 + $350) and there are 20 beginning skiers. So, the revenue from this group is $11,000 ($550 * 20). Adding up the revenues from all three groups, the maximum revenue if you charge a separate price for skis and bindings is $38,500 ($13,500 + $14,000 + $11,000).

To calculate the maximum revenue if you sell skis and bindings as a bundle, you need to determine the price that each group of skiers is willing to pay for the bundle. Then, you multiply this price by the number of skiers in each group. For advanced skiers, the price for the bundle is $675 ($400 + $275) and there are 20 advanced skiers. So, the revenue from this group is also $13,500 ($675 * 20). Similarly, for intermediate skiers, the price is $700 ($300 + $400) and there are 20 intermediate skiers. So, the revenue from this group is also $14,000 ($700 * 20). Finally, for beginning skiers, the price is $550 ($200 + $350) and there are 20 beginning skiers. So, the revenue from this group is also $11,000 ($550 * 20). Adding up the revenues from all three groups, the maximum revenue if you sell skis and bindings as a bundle is also $38,500 ($13,500 + $14,000 + $11,000).

Answer 2

$38500

Step-by-step explanation:

Given that;

Advance skiers number= 20

skis at $400

ski binding at $275

Intermediate skiers number = 20

skis at $300

ski binding at $400

Beginning skiers

skis at $200

ski binding at $350

For skis, the cost will be;

$400*20 + $300*20 +$200*20 = $8000+$6000+$4000=$18000

For ski binding the cost will be;

$275*20 + $400*20+$350*20 =$5500+$8000+$7000 =$20500

Total selling price = $18000+$20500=$38500