Question  Respond to the following in a minimum of 175 words and in the required format: 1. Reflect on your professional or personal world and the broad concept of Quantitative Analysis you have been introduced to. Describe an example of a situation where you used, or should have used, an equation to make a quantitative analysis to help understand the problem. Write out the equation used, and be sure to identify what each of the elements in the equation represents. Personal World and the Broad Concept of Quantitative Analysis 2. What was your decision using the equation in item 1? 3. What might the results have been had you not used the equation and made the decision you described in item 2? 4. How would you describe the effectiveness/value of using Quantitative Analysis?

Personal World and the Broad Concept of Quantitative Analysis

Question One

As a medium business owner, I am frequently required to set the prices for most of the products we sell. To do so, I often apply quantitative analysis to ensure that my prices are reasonable and appropriate. I usually use a pricing formula that considers the cost of the product, the expected profit margin, and the prices of the same products offered by competitors. It is essential to factor in the competitors’ prices to ensure that the prices are fair and do not deviate from the market prices (Basu, 2019). Using this approach has helped me and my business better evaluate price-related issues. The following is the formula I usually use to determine the prices of my products:

Price = Cost + (Profit Margin × Cost) + Competitor Price

Where the cost is the initial cost of the product, the profit margin is the expected profit margin, and competitor price is the price of a similar product by competitors. Using this formula, I can always ensure optimal product prices and facilitate profit-making for my business. It also ensures that my prices do not deviate much from market prices.

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Question Two

I recently used the formula to determine the price of a lawnmower. Based on the initial cost, profit margin, and competitor prices, I determined the price of the lawnmower to be $700. With this price, the business will be able to compete efficiently with the competitors while also maintaining its ability to generate profit.

Question Three

If I had not used the formula, I believe I would have set a very high price for the lawnmower. Higher product prices usually result in fewer sales (Narendra et al., 2021). Additionally, there is a possibility that the price I would have set would have deviated a lot from the market prices, leading to the business losing customers.

Question Four

I believe quantitative analysis, especially in the business world, is very useful, and businesses should always consider using quantitative techniques to ensure they succeed. With quantitative analysis, businesses can make reasonable decisions regarding various aspects, including setting prices or determining their potential profit.

References

Basu, S. (2019). Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence. Journal of Economic Perspectives, 33(3), 3–22. https://doi.org/10.1257/jep.33.3.3

Nalendra, A. R. A., Winarno, S. H., Priadi, A., Hermawan, E., Purnomo, M. W., & Putra, A. S. (2021). The Effect of Goods Prices And Buyer Trust On The E-Commerce Sales System For Purchasing Goods Online. International Journal of Science, Technology & Management, 2(3), 561–567. https://doi.org/10.46729/ijstm.v2i3.235