The PRICING.xls Model

Pricing Automobiles

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In this model, you manufacture three automobile models, each with its own price structure and miles-per-gallon rating, at your five plants.

An increase in sales of any one model results in a small decrease in sales of the two others. Th models compete for production capacity in your five plants. Also, the federal government has imposed an upper limit on the avarage "fleet mileage" of your entire production, which makes sales of low-mileage cars more desirable.

You need to set the prices of the three models of automobiles so that profit is maximized at the five plants, while staying within the federal fleet gas mileage requirement of 24 miles per gallon.

Objective of Optimization:
The objective is to determine best price for each car to maximize profit while conforming to all regulations and constraints.


Marketing | Forecasting | Production | Demand Backlog | Uncertainty | Product Management | Sales |