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Chapter 4

Q. 4.7

A textile manufacturer can make the following products: trousers, jeans, shirts, skirts, and socks. The product costs of each item and competitor prices are listed as follows:

Product Product Cost Competitor Price
Jackets $20 $30
Jeans 18 16
Shirts 12 18
Skirts 26 40
Socks 4 2

a. What products should be in the product mix of the textile manufacturer?
b. What is the possible range of prices that the textile manufacturer could offer for the products in the product mix?


Verified Solution

a. The textile manufacturer should not make products with a product cost higher than the competitor’s price. Therefore, the company should only make jackets, shirts, and skirts.
b. The range of possible prices should be between the product cost and the
competitor’s price. Therefore, the prices should be in the following ranges

Product Price Range
Jackets $20–$30
Shirts $12–$18
Skirts $26–$40