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Hi John,
I’m struggling with the answer to the example given here.
Where demand is 10 and contract size is 20 – the profit is shown as 10. Should this not be (10)?
Where demand is 10 and contract size is 30 – the profit is shown as (80). Again, why not (120)?
And finally…
Where demand is 20 and contract size is 30 – the profit is shown as 110. Again, can you tell me how this has been worked out?Thanks
CarmelWhere demand is 10 and contract size is 20.
The demand gives a profit is 10 x (20 – 10 ) = 100
There are 10 not sold, and so they give a loss of 10 x (1 – 10 ) = 90
So the net profit is 100 – 90 = 10When demand is 10 and contract since is 30.
The demand gives a profit of 10 x (20 – 10) = 100
There are 20 not sold, and so they give a loss of 20 x (1 – 10) = 180
So a loss of 100 – 180 = 80/When demand is 20 and contact size is 30.
The demand gives a profit of 20 x (20 – 10) = 200
There are 10 units not sold, and so they give a loss of 10 x (1 – 10) = 90
So a profit of 200 – 90 = 110
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