Help me to understand formulae

[anna]

Hi,
Searching for the solver examples on the net I came across the example where
I find a formulae that I don’t understand and I just wonder if any one could
explain in very simple words the formulae is

=B14*MAX (B10, 0) ^$H$4

where b14 =Unit Profit
b10 =Units Produced
$H$4= Diminishing Profit Factor (0.9)

I can see that when I remove the Diminishing Profit Factor the result is
much higher but I don’t understand why it has been included on the first place
Thanks in advance
Anna

 

[Gary''s Student]

Hi anna:

It is just a way to model reduced profit. For example, if H4 were set to .5
and B10 was 16, the effect is the same as having B10 set to 4 with no factor

 

[anna]

Thanks Gary

Hi anna:

It is just a way to model reduced profit. For example, if H4 were set to .5
and B10 was 16, the effect is the same as having B10 set to 4 with no factor