Question

A small Malaysian electronics company located in Cyberjaya has been making customized OEM WiFi AC1900 routers usíng OpenWRT for a large multinational company, Huawei since 2015. Excellent business growth droved the company to determine the price and hourly demand for its most popular premium AC1900 router. After a detailed study the company arrived atthe following equation: D 1300-p where p is the price in RM and D is the hourly demand Using creative labour and resources management, the company is able to maintain fixed cost at RM1,500h and variable costs at RM100h.

Answer 1

Answer

A) Given Demand function

$D=\sqrt{1300-p}$

So D^2=1300-p

P=1300-D^2

So TR = D*P=D*(1300-D^2)=1300D-D^3

TC=1500+100=RM1600/Hr

For Profit S=TR-TC=1300D-D^3-1600

For Optimal condition dS/dD=0

1300-3D^2=0

D=21 units

B) For breakeven

TR=TC

1300D-D^3=1600

so solving for D we get

D= 2 units or 36 units

since we need to reach at breakeven so we will choose D=2 units