As the city’s oldest home furniture supply company, we have long been the area’s most reliable source for quality products with exceptional service. Although we’ve faced increased competition lately from low cost, big-box retailers, we have successfully used our locally constructed products and family-owned status to differentiate our brand and maintain a market leadership position. In fact, we have done so well that I have noticed our newest Dining Table line has sold out for two consecutive quarters. Currently, we have a standard quarterly purchase order for 200 Dining Tables and have been selling them at a retail price of $625 each.
In speaking with our cost accountants I have learned our quarterly cost structure for Dining Tables is C(Q) = 4,500 + Q2, and our sales director informed me quarterly demand is Q = 2,090 – 3P.
Having sold out in two consecutive quarters, I am debating an increase to the purchase order quantity to meet demand. However, I also believe we should raise the price to on the tables as they are clearly a popular item of which consumers may pay a higher price.
I would like your team to please analyze the current situation and provide your guidance on our future purchase order quantity and potential for an increased price point. Of course, while we value unit sales, total profit is of the utmost importance.
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