Question

Hula Products has reintroduced the hula hoop to the world and faces a growing demand for its product in two distinct markets: the United States and Europe. Demand in these markets is:PU= 20 - .1QUand PE= 10 - .05QE.,where all quantities are expressed in thousands of units (i.e. QU = 50 means 50 thousand units). Hula can produce hoops at no cost.Hula has a capacity constraint and can produce a maximum of 95 thousand hoops. What would be the optimal quantity to sell in Europe (QE)?

Answer 1

Answer:

We sale 86 units in europe and 9 un the US to maximize revenue

Explanation:

Being revenue:

Qunatity EU x Price EU + Quantity US x Price US

we want to maximize this function:

$Q_e \times (10 - 0.05Q_e) + Q_{US} \times (20 - Q_{US})$

givne the constrain Qe + Qus = 95

we solve using excel solver

                        Europe     US        Total

1   Quantity    86            9      95

2   Price            5.7       11

3   Revenue 490.2 99    589.2

we maximize D3 changing cells B2 and C2