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Pricing and Sales Volumes

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The following uses the files EXAM.XLS and Developing_Country_Pricing.PDF.

In this simulation, you are about start selling a new product, an MP3 player (YourPlayer). Management has provided you with a proforma income statement to help assess the viability of the product. They need your help to complete the income statement.

There are four decisions to make.
- Sample pricing was obtained from several places in the country. Use this data (on the second tab) to guide your selection of a sales price for your product. Enter this number in the highlighted cell D6.
- Sample sales volumes (the number of units sold in other regions) were also collected. Use this data (on the third tab) to guide you in how many you think you will sell. Enter this number in the highlighted cell D8.
- You have an opportunity to outsource. If you elect to outsource, change the highlighted cell D10 to 0.68 and the highlighted cell I16 to 25000.
- If you elect to outsource, you have select from a location in either the Philippines or Thailand. Summary statistics for the manufacturing expense of a similar product was collected monthly for the past five years. The expense fluctuates because of quality issues, availability of trained staff, and downtime. Using this data, select a manufacturing site.

Write a brief description of how you picked your pricing and sales volume.
Write a brief description of how you selected a site.

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Solution Summary

This solution guides selections of sales prices for a product, how many it will sell and whether it will be outsourced and where.

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SOLUTION STEPS

Write a brief (one page) description of how you picked your pricing and sales volume.

1. What is the landscape? Get a "big picture" of the pricing and volume distribution.
a. Calculate descriptive statistics (Mean ± SE) for price and volume. You can do this faster using the "Descriptive Statistics" function of Excel.
b. Use the "Histogram" function of Excel to construct a frequency table and plot it as a bar chart.

(see graphs in attachments .doc and .xls)

Note:
- Pricing distribution does not appear to be normally distributed while sales volumes does
- Mean pricing for all regions is ~ $66 ± $10
- Mean sales volume is 24 ± 4 hundreds of units

2. A closer picture of the market: Per region analysis
a. Descriptive statistics: there seem to be ...

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