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OP3213/5260.1: Spreadsheet based Optimization Instructor: Ramesh G. Kini Nonlinear Optimization for PPM Systems' Pricing & Product Mix Problem-A (the first of 2 notes based on a HBS case: ref. 9-191-079, by Jonathan Eckstein, and its solution) Synopsis of the Case: The case is mostly about how upstream changes (specifically in component costing and the prices at which these components are transferred downstream, and in resource allocation, accordingly) affect the downstream product division's pricing and volume decisions, and also their profitability. PPM systems has two product-lines, BioScan and GeoScan, and uses two scarce components (a signal processing chip, which is procured from an outside supplier, and a sensor module, made in-house by the sensor manufacturing department, which is upstream of the two product divisions). Demand for each of the two products is given by a downward sloping demand curve (we have seen versions of this in the case of Simon Pies, and Genessee Wire and Cable, if...

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