Dermaplus Analysis Essay

establish on a rigorous analysis of the entropy provided, this musical theme provides details with respect to the gain-maximizing honest daily take substance for DermaPlusTM for for each one possible reference-based price of $50, $100, and $150 per unit identified by the consultant. The estimated judge daily gain at each price leave also be provided. All unit and price values study been rounded to the nearest whole number or dollar.Information in terms of the recommended average daily production cleverness in units for the neighboring 12 months will be provided in order to set the size of it of the plants unionized workforce. The assumption is the quantity of units identified apply to set the size of the workforce will maximize daily profit.A summary and recommendations to management will follow the analysis.Profit-Maximizing Average routine achievement Capacity & Expected ProfitBiomed operates in a absolutely competitive market and has no degree of price setting pow er. In this case of DermaPlusTM, the government sets the price of the product. In order to determine the profit maximizing output in the short-run for this market, each price aim provided by the consultant must be equal to the short-run borderline follow.Total profit is deliberate from subtracting the combined arrive fit(p) and unsettled be from the total revenue generated. Total costs are derived from the fixed cost of $9,000 in addition to calculating the average variable cost formula provided by the regression analysis multiplied by the increasing average daily production capacity calculated at each price aim.The regression analysis provided by Selwyn based on the data collected is statistically significant greater than a 99% self-assurance aim based on the p-value with a high correlation betwixt the dependent and independent variables at 95%Refer to Appendix I for the detailed calculations for profit-maximizing average daily production capacity and expected profit. determine Level = $50 per unitIf the government sets the price of DermaPlusTM at this level, BioMeds profit maximizing average daily production capacity is 342 units. At this level of output, total revenue generated is $17,100 per day. The total cost of producing this level of output based on total fixed and variable costs is $17,349. BioMed incurs a dismissal of $249 per day when the price is set at $50 per unit.If the price is set at $50 per unit by the government, BioMed should quiesce continue to produce this product if production is set at 342 units. Based on the shutdown rule, BioMed can sell at a loss for the next twelve months as the selling price at $50 per unit is greater than the minimum average variable cost of $22.47.monetary value Level = $100 per unitThe profit-maximizing average daily production capacity at $100 per unit is 407 units. At this level of production, total revenue generated per day is equal to $40,700 with a total cost of $22,125. This level of daily p roduction will yield a profit of $18,575.Price Level = $150 per unitAt $150 per unit, the profit-maximizing average daily production capacity is 456 units. Total revenue generated at this level is equal to $68,400 at a total cost of $28,210. A profit of $40,190 per day is achieved when pricing is set at this level.Recommended Average Daily Production Capacity 12 Months Based on Price UncertaintyThe recommended average daily production capacity will be calculated development the expected price based on the probability distribution calculated by the outcome of the weighted averages. According to the consultant, there is a 5% chance of price being set at $50, a 20% chance of the price being set at $100, and a 75% chance of the price being set at $150. As a result, the price expected (Pe) based on the information from the consultant is $cxxxv per unit.At this expected price, the average daily production capacity should be set at 442 units generating at total revenue of $59,670 at a to tal cost of $26,219. At this level of production, profit should be maximized tractable a total profit of $33,451.