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BFT 214/3 Engineering Economics Assignment -1 Do problems in the textbook (SWK); by hand and using Microsoft Excel. Problem Nos. 2-13, 2-14, and 2-15. 2-13. A large company in the communication and publishing industry has quantified the relationship between the price of one of its products and the demand for this product as Price = 150 – 0.01 x Demand for an annual printing of this particular product. The fixed costs per year (i.e. per printing) = RM50,000 and the variable cost per unit = RM40. What is the maximum profit that can be achieved if the maximum expected demand is 6,000 units per year? What is the unit price at this point of optimal demand? 2-14. A large wood products company is negotiating a contract to sell plywood overseas. The fixed cost that can be allocated to the production of plywood is RM800,000 per month. The variable cost per thousand board feet is RM155.50. The price charged will be determined by p = RM600 – (0.05)D per 1,000 board feet. a) For this situation, determine the optimal monthly sales volume for this product and calculate the profit (or loss) at the optimal volume. b) What is the domain of profitable demand during a month? 2-15. A company produces and sells a consumer product and able to control the demand for the product by varying the selling price. The approximate relationship between price and demand is 2,700 5,000 − , for 𝐷 > 1 𝐷 𝐷2 where p is the price per unit in RM and D is the demand per month. The company is seeking to maximize its profit. The fixed cost is RM1,000 per month and the variable cost (𝑐𝑣 ) is RM40 per unit. 𝑝 = RM38+

a) What is the number of units that should be produced and sold each month to maximize profit? b) Show that your answer in a) maximizes profit.