Student
| | | | 5/9/2013 | BioMed - DermaPlus Business Analysis | | MEQA Assignment #2
Coach- Lowell Glenn
Word Count 1005
Kim DeDonato
MEQA Assignment #2
Coach- Lowell Glenn
Word Count 1005
Kim DeDonato |
Table of Contents
Assumptions …………………………………………………………………………………………… 2
Scope …………………………………………………………………………………………………… 2
Major Issues ……………………………………………………………………...……………………. 2
Analysis ………………………………………………………………………………………………… 3
Conclusion …………………………………...………………………………………………………… 3
Recommendations ……………………………...…………………………………………………….. 4
Assumptions
BioMed manufactures prescription topical cream called DermaPlusTM which is used for treating certain skin conditions. The main buyers of DermaPlusTM are hospitals and pharmacies. The topical cream category is extremely competitive and has led to BioMed’s market share to be small. Due to the size of BioMed’s market share they are unable to influence the market price.
We also must assume that the market of BioMed can be modeled as being perfectly competitive in equilibrium, allowing the use of the model’s profit maximizing criteria. The plant producing DermaPlusTM has been in operation for three years with no change in manufacturing equipment. The age of the equipment has not proven to have an impact on current or future production of DermaPlusTM based on the information provided. DermaPlusTM will be under a new reference-based pricing scheme which will allow the government to set the price of BioMed’s topical cream along with competing creams. The government will review the pricing every two years, leaving only the production and selling volume to be determined by the manufacturer.
We must assume the estimates for short-run cost functions to determine the profit-maximizing output level to be accurate based on previous calculations provided by BioMed. This information is also used to determine the optimal size for the new unionized workforce. As we have been advised the company is in a
Coach- Lowell Glenn
Word Count 1005
Kim DeDonato
MEQA Assignment #2
Coach- Lowell Glenn
Word Count 1005
Kim DeDonato |
Table of Contents
Assumptions …………………………………………………………………………………………… 2
Scope …………………………………………………………………………………………………… 2
Major Issues ……………………………………………………………………...……………………. 2
Analysis ………………………………………………………………………………………………… 3
Conclusion …………………………………...………………………………………………………… 3
Recommendations ……………………………...…………………………………………………….. 4
Assumptions
BioMed manufactures prescription topical cream called DermaPlusTM which is used for treating certain skin conditions. The main buyers of DermaPlusTM are hospitals and pharmacies. The topical cream category is extremely competitive and has led to BioMed’s market share to be small. Due to the size of BioMed’s market share they are unable to influence the market price.
We also must assume that the market of BioMed can be modeled as being perfectly competitive in equilibrium, allowing the use of the model’s profit maximizing criteria. The plant producing DermaPlusTM has been in operation for three years with no change in manufacturing equipment. The age of the equipment has not proven to have an impact on current or future production of DermaPlusTM based on the information provided. DermaPlusTM will be under a new reference-based pricing scheme which will allow the government to set the price of BioMed’s topical cream along with competing creams. The government will review the pricing every two years, leaving only the production and selling volume to be determined by the manufacturer.
We must assume the estimates for short-run cost functions to determine the profit-maximizing output level to be accurate based on previous calculations provided by BioMed. This information is also used to determine the optimal size for the new unionized workforce. As we have been advised the company is in a