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Sir, pls provide one example for how you prepared the profit table in given example. I did not understand that
I am not sure which table you mean.
We don’t have an OpenTuition Revision Kit.
If you are meaning the link to “Revision Kit Live”, then I go through the workings in the lectures.If you mean the example in our free lecture notes, then I go through all the workings in the free lectures that go with this chapter.
Yes, sir it’s revision kit live, there is no lecture available for uncertainty example.
The revision kit is having answer for examples. The table I am talking about is also there in answer as below
Contract size. Demand
10. 20. 30.10. 100 100 100
20. 10 200 200
30. (80). 110. 300The above profit table, how the figure came can u pls explain for 1 or 2 from above
Sorry, as you will see from my reply to your other question, I have now realised the notes that you are referring to 🙂
If they contract to purchase 10, then they can only ever sell 10 (whatever the demand is) and so the profit is 10 x ($20 – $10) = $100
If the contract to purchase 20, then if the demand is 20 or 30 they will sell the 20 they bought and the profit will be 20 x ($20 – $10) = $200.
However, if they purchase 20 and the demand is only 10, then they will have paid out 20 x $10 = $200 to buy the goods. The revenue will be 10 x $20 = 200 for the 10 that they sell, plus 10 x $1 = $10 from the scrap. So the total revenue will be 210 and therefore the profit will be 210 – 200 = $10.If they purchase 30 and the demand is only 10. Then the cost of the 30 is 30 x $10 = $300.
The revenue will be (10 x $20) + (20 x $1) = $220. So a loss of $80.I hope that all makes sense 🙂
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