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Pizza King (PK) and Noble Greek (NG) are competitive pizza chains.  PK believes there is a 30%...

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Operations Management

Pizza King (PK) and Noble Greek (NG) are competitive pizzachains.  PK believes there is a 30% chance that NG willcharge $8 per pizza, a 50% that NG will charge $10 per pizza, and a20% chance that NG will charge $12 per pizza.  If PKcharges price p1 and NG charges price p2, PK will sell 100 + 25(p2– p1) pizzas. It costs PK $6 to make a pizza. PK is consideringcharging $7, $8, $9, $10, or $11 per pizza.  To maximizeits expected profit, what price should PK charge for a pizza?

Answer & Explanation Solved by verified expert
3.7 Ratings (363 Votes)
1 For price 7 Number of pizzas sold by PK 03100 258 7 05100 2510 7 02100 2512 7 375 875 45 170 Cost of pizza 6 Expected profit 170 7 6 170 2 For price 8 Number of    See Answer
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