Due to the recent drop on oil price, the logistics cost for the standard printer
ID: 424651 • Letter: D
Question
Due to the recent drop on oil price, the logistics cost for the standard printer has decreased. This increases the profit margin of the standard printer by $2 per unit, but there is no change to the professional printer margin. What is the impact on the optimal product mix and profits? O There is no impact on the optimal product mix and the total profits. should produce more standard printers and the profits will increase. O The company should produce the same product mix, but the profit will down by $1500 O The company should produce the same product mix, but the profit will go up by $6000.Explanation / Answer
The company should produce more standard printer and the profits will increase.
As in such a case, even if the profit margin from professional printer won’t increase, larger production of standard printers and subsequent sale of those standard printers would help in increasing the profits.