QuestionApple Inc. (not the computer) is located in Washing

06 May QuestionApple Inc. (not the computer) is located in Washing

Posted at 14:29h in 2Past Paper by Past Papers

Question

Apple Inc. (not the computer) is located in Washington state. They want to produce apples on newly required land or they could do nothing. The new apples will be gala and granny smith. Some industry publications has released the following data:
Granny smith demand

Gala demand Weak Strong
Weak .10 .40
Strong .20 .30

Revenue projections shows an annual contribution to profit of $15000 if Apple Inc. only produces gala apples and demand is weak for gala apples. However, $50,000 can be earned if only gala apples are produced and demand is strong. If Apple Inc. only plants granny smith apples, then $10,000 can be earned if demand is weak, and $70,000 if demand is strong.

If Apple Inc. produces both apples, then look at the following table:

Granny smith demand
Gala demand Weak Strong
Weak $13,000 $45,000
Strong $17,000 $55,000

What is the decision to be made and how much is the profit contribution for all options? Show all your work using the excel add in. Show all branch solutions.

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