...Extension of the Snow Fun Ski Resort Problem Suppose that the operating cost of the snowmaking equipment is actually 30% higher than the owner had estimated, that is, $13,000 if the snowfall is heavy, $65,000 if it is moderate, and $117,000 if it is light. How will the increased operating cost affect the owner’s optimal decision? As shown above, the best decision now is to let the larger hotel run the ski resort and the profit is $45,000 Calculate the EVPI, and determine that maximum amount that could be paid for a perfect forecast. If the snowfall is more than 40”, the owner should operate the resort without a snowmaker (profit=$120,000, probability=40%). If the snowfall is between 20 to 40 inches or if it is less than 20 inches, the owner should let the larger hotel run the resort (profit=$45,000, probability=20%+40%=60%). EVPI = $120,000*0.40 + $45,000*0.60 = $75,000 Since the optimal profit without perfect information is $45,000, the maximum amount the owner can pay for perfect information is $75,000 - $45,000 = $30,000 1 Decision Tree Final Problem The NC Airport Authority is trying to solve a difficult problem with the over-crowded RaleighDurham airport. There are three options to consider: A. The airport could be totally redesigned and rebuilt at a cost of $8.2 million. The present value of increased revenue from a new airport is in question. There is a 70% chance this present value would be $11 million, a 20% chance present value would be $5 million, and a 10%...
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...different return distributions. Even within a single asset class the return distributions of assets are not alike. We assume that the return distributions of all risky assets are known and would like to choose the best asset to invest to, meaning that the risky assets are mutually exclusive investment alternatives. How to do this? The standard approach in financial theory and practice is to employ some portfolio performance measure to rank the various risky investments. Each portfolio performance measure calculates a score for each asset using its probability distribution of returns. The best asset to invest to is the asset with the highest score. The Sharpe ratio is a commonly used measure of portfolio performance. But because it is based on mean-variance theory, this measure can only be used in some restrictive cases, for example, when return distributions are normal. When return distributions are non-normal, the Sharpe ration can lead to misleading conclusions and unsatisfactory paradoxes, see Bernardo and Ledoit (2000) and Hodges (1998). There have been proposed numerous universal performance measures that, in one way or the other, are alternatives to the Sharpe ratio and try to take into account non-normality of return distributions. For some examples, see Sortino and Price (1994), Dowd (2000), Stutzer (2000), Keating and Shadwick (2002), Gregoriou and Gueyie (2003), Kaplan and Knowles (2004), and Ziemba (2005). The main drawback of many of these alternative performance measures...
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...1. Shaw and Barry distinguish two different forms of utilitarianism. What are these two forms? Briefly describe each and use examples. The two forms of utilitarianism that Shaw and Barry refer to are act utilitarianism and rule utilitarianism. The act utilitarianism states that we must ask ourselves what the consequences of a particular act in a particular situation will be for all those affected. If its consequences bring more net good than those of any alternative course of action, then this action is the right one and the one we should perform. Shaw and Barry talked about the theory of a woman on her death bed. She had $25,000 in cash under her bed and her dying wish was to give that to her nephew. Her nephew was a known drunk and would have squandered the money away. Another use for that money would be to give it to an orphanage where the money would have benefited the children for many years. If you use the act method, giving the money to the orphanage would have been the best thing to do because the most people would have benefited. But if you did this, would it be morally correct? This was not the dying woman’s wish. Rule utilitarianism maintains that the utilitarian standard should be applied not to individual actions but to moral codes as a whole. With the moral code, you would have to determine right from wrong. If you look at the sample given above about the dying woman’s wish to give her nephew the money, and you used the rule method, you would see that...
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...Evolutionary theory often emphasizes that human have adapted to their physical environment. One such theory hypothesizes that people should spontaneously follow a 24-hour cycle of sleeping and waking-even though they are not exposed to the usual pattern of sunlight. To test this notion, eight paid volunteers were placed (individually) in a room in which there were no light from outside and no clocks or other indications of time. They could turn the lights on and off is they wish. After a month in the room, each individual tended to develop a study cycle. Their cycles at the end of the study were as follows: 25, 27, 25, 23, 24, 25, 26, and 25. Using the 0 .5 level of significance, what should we conclude about the theory that 24 hours is the natural cycle? (That is, does the average cycling under these conditions differ significantly from 24-hour?) (a) Use the steps of hypothesis testing. (b) Sketch the distributions involved, (c) explain yourself to someone who has never had a course in statistics. (a) Steps of hypothesis testing 1. Restate the question as a research hypothesis and a null hypothesis about the populations. There are two populations Population 1: people who are given the experimental test for 24 hours is the natural cycle. Population 2: people who are given the experimental test in less than 24 hours is the natural cycle. The null hypothesis: µ = 24 The alternative hypothesis: µ ≠ 24 2. Define the features of the compared distribution Sample...
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...sturdy it can be seen that there are GB Tobacco Company exist, which try to push its “Gold” brand in to Malu’s market despite the moral, legal and ethical standards The seven – step procedure: • The facts: The facts are that Fiona Fuller, International Tobacco product Manager for GB Tobacco, has to produce a new firm’s growth strategy for the next ten years. The “Gold” brand faced with the decline of sales volumes in Western Europe and the US. GBT’s plans have run up against the Malu government policy according to which any import of cigarette products are forbidden. The main parties that get benefits are government, which owned cigarette monopoly, and tobacco farmers. However, the neighboring country Singlaw established the distribution through which EU brands have under control 20% of Malu’s cigarette market. The Malu’s government didn’t achieve the ban on advertising of “Gold” and didn't put special efforts to stop GBT from annual investments in 8 million dollars in it. Suppakorn Rachinda, “Gold” brand manager, introduced to Fiona...
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...Interpret Data • Editing/Quality assurance of data • Coding • Tabulation • Data Analysis Prepare the Research Report (proposal) • Structure • Scientific Reqirements/Theory/Models • Literature Confer Exhibit 3.1, page 50 Decision Problem and Research Problem Drivers for problem formulation: 1. Unaticipated change, basically in the environment of the focal firm (suppliers,competitors, customers) 2. Planned change (estimation, effects, outcome) 3. Serendipity (random ideas or information) Differetn Problem Levels: 1) Individual orientation, PSYCHOLOGY 2) Individual-individual, SOSIAL PSYCHOLOGY 3) Individual and group, ORGANIZATION THEORY, ORGANIZATION PSYCHOLOGY 4) Group/department, ORGANIZATION SOCIOLOGY 5) Inter-group, ORGANIZATION THEORY 6) Group/department and organization, ECONOMIC THEORY, PRINCIPAL-AGENT THEORY, ORGANIZATION THEORY 7) Organization/firm, ECONOMIC THEORY, BUSINESS ADMINISTRATION 8) Firm-firm, ECONOMICS OF ORGANIZATION, ECONOMIC THEORY, GAME THEORY 9) Firm and environment ECONOMIC THEORY, CONTRACT LAW, INDUSTRIAL ECONOMICS...
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...criticize the social and political institutions of their day. And, as a result, utilitarianism has long been associated with social improvement. The two forms of utilitarianism are act utilitarianism and rule utilitarianism. Act utilitarianism, utilitarianism in its most basic version, states that we must calculate what the consequences are of a particular act in a particular situation, and what it will be for all those affected. And, if its consequences bring more total good than those of any alternative course of action, then this action is the right one and the one we should inform. Rule utilitarianism maintains that the utilitarian standard should be applied not to individual actions but to moral codes as a whole. The rule utilitarian asks what moral code, or set of morals, a society should adopt to maximize happiness. The principles that make up that code would then be the basis for distinguishing right actions from wrong actions. Same as any other theory, these theories can be thought to contain flaws- i.e. not being able to predict the future and this uncertainty can lead to unexpected results making the utilitarian look unethical as time passes because his choice did not benefit the most people as he predicted. What do economists mean by the “declining marginal utility of money?” In economics, marginal utility can be defined as a change in total satisfaction derived from the purchase of one additional or incremental unit of a specific good or service, all...
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...Commencing in 2004, the organization adopted a forced ranking performance appraisal system. Careful evaluation of this assessment process suggests that the compulsory classification of an arbitrary number of employees has resulted in several unintended consequences while raising ethical concerns. The following topics relative to the utilization of a forced distribution system have been evaluated. The proposed benefits of forced distribution. The impact of forced ranking on employees and managers. The results of a forced ranking model on employee retention. Application of ethical theory to the forced ranking model. SWOT Analysis. Conclusion. This review of the forced ranking methodology will assess the moral and ethical implications of the model. Additionally, it will evaluate the impact on the organization, as well as the individuals employed by the firm. The Proposed Benefits of Forced Distribution "Performance evaluation systems are one of the most pervasive and important human resources systems in organizations today" (Baldwin, Blume, and Rubin, 2009, p. 77). Supporters of the forced distribution model claim that it has a...
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...Hypothesis testing begins with a statement and assumption that determines the population of the mean, (Lind, 2011, p.288.). The five steps listed in Lind are as follows: 1. State null and alternate hypothesis 2. Select a level of significance 3. Identify the test statistic 4. Formulate a decision rule 5. Take a sample and arrive at decision However in McClave, 2011, pages 324 and 325 the steps for testing of a hypothesis are listed as “Elements of a Test of Hypothesis” and instead of five steps they list seven. The seven steps from McClave are listed as follows: 1. Null hypothesis: A theory about the specific values of one or more population parameters. The theory generally represents the status quo, which we adopt until it is proven false. The theory is always stated as Ho: parameter = value. 2. Alternative (research) hypothesis (Ha): A theory that contradicts the null hypothesis. The theory generally represents that which we will adopt when sufficient evidence exists to establish its truth. 3. Test statistic: A sample statistic used to decide whether to reject the null hypothesis. 4. Rejection region: The numerical values of the test statistic for which the null hypothesis will be rejected. The rejection region is chosen so that the probability α is that it will contain the test statistic when the null hypothesis is true, thereby leading to Type I error. The value of α is usually chosen to be small...
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...PROGRAMME STRUCTURE FOR ISBE (PG) |S No |Subject |Credit | |1. |Business Statistics |3 | |2. |Operations & Optimization Research |3 | |3. |Economics for Managerial Decision Making – II |2 | |4. |Management Information System & KM |2 | |5. |Human Resource Management |2 | |6. |Financial Management |2 | |7. |Executive Communication |6 | |8. |National Economic Planning – I (Presentation Only) |2 | |9. |National Economic Planning - II |2 | BUSINESS STATISTICS (As per University...
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...global market share. The firm engages in the recording, producing, and distribution of music, mainly through CDs. EMI is a British based company, but North America is the largest market for the music industry. CD buyers have low brand awareness and loyalty. They typically don’t even know the music company that is producing the product. Brand awareness for the artist is very high and will drive the purchase decision almost exclusively. Buyers will seek out a store to purchase the music they desire. However, brand loyalty is low, with many “one hit wonders” that are #1 sellers one year, then gone the next. CDs are durable goods. They last a long time, but people’s tastes for music may change and, thus, categorizes them as a non-durable good. In this case, it is more about music than the actual CD. The location of the purchase decision has changed dramatically with a significant number of people using the Internet to illegally share music files. EMI and its recording artists do not receive any compensation from music file sharing. Those music consumers who remain have shifted from music stores to mass marketers. The market for CDs in the United States is splintered into different genres, with Rock, Rap/R&B, and Country as the top 3 in that order, comprising 60% of the US market. Demographics show that the greatest loss has been in ages 15-29, who have adopted online sites as their primary distribution. Ages 45+ have shown substantial growth, which may be due to lower...
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...NATIONAL UNIVERSITY Syllabus Department of Management Detailed Syllabus Second Year Four-Year B.B.A. (Honours) Course Effective from the Session : 2009–2010 National University Syllabus for 4 years B. B. A. Honours Course Subject : Management Second Year (Honours) |Subject Code |Subject Title |Marks |Credit | | |Business Communication and Report Writing (In English) |100 |4 | | |Computer and Information Technology |100 |4 | | |Taxation in Bangladesh |100 |4 | | |Business Statistics (In English) |100 |4 | | |Macro Economics |100 |4 | | |Human Resource Management |100 |4 | | |Viva-Voce |100 |4 | | |Total = ...
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...available information related to the case and performing the following steps: Putting all of the information in the case together to produce a coherent picture or a “map” of the situation Evaluating the actions and plans of the subject , identifying and describing business problems Recommending a coordinated plan of action to correct business problems Providing a justification or rationale for the recommended plan of action Philip Pun, First Term 2011/2012 4 GLOBAL VIEW OF THE WORK OF CA 1. 2. The Organizational Context: Goals, Structure, & Environment The “Focal” System of the Case: Goals, Structure and Performance 3. Analysis of the Problem (or GAP Analysis) 4. Analysis of the Alternatives Involved 5. Recommendations Every...
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...social science, and social science is the studies of the behaviors of human being unlike other social science such as philosophy, sociology, political science, anthropology etc. There are many definition of economics, the earliest definition were usually in term of wealth such as the one by Adam Smith who defined economic as: an inquiry into the nature and causes of wealth of the nation. Later on J.S Mill defined economics as the practical science of production and distribution of wealth. Davenport defined economics as the practical science that treats phenomena from the stand point of price. Prof. pigou in his own definition describes the subject as having a lot to do with welfare while Alfred marshal defined economics as a study of mankind in the ordinary business life. Lord Lionel C. Robbins defined economics as ‘the science which studies human behaviors as a relationship between ends and scarce means which have alternative uses’. It can therefore be safely said that economic is the study of production, distribution, exchange and consumption of goods. And is the study of how society decides what, how and for whom to produce. Economic is divided into two main branches: microeconomic and macroeconomic. MICROECONOMIC Microeconomics deals with the behavior of individuals economic units. These units include consumers, workers, investors, owners of land, business firm:- in fact, any individual or entity that...
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...We make all kinds of choices every day. How much should we spend on gas? What is the best route to work? Which roommate should take care of washing the dishes? Etc. Economics is not just about money; it is about weighing different choices or alternatives. For example: - our decisions about whether it should be us or our roommate who should be the one to clean up or do the dishes, whether we should spend an hour a week volunteering for a worthy charity or send them a little money via our cell phone, or whether we should take a job so we can help support our siblings or parents or save for our future are all economic decisions. In many cases, money is merely a helpful tool or just a veil, standing in for a partial way to evaluate some of the goals we really care about and how we make choices about those goals. Managerial Economics can be defined as amalgamation of economic theory with business practices so as to ease decision-making and future planning by management. Managerial Economics assists the managers of a firm in a rational solution of obstacles faced in the firm’s activities. It makes use of economic theory and concepts. It helps in formulating logical managerial decisions. The key of Managerial Economics is the micro-economic theory of the firm. Managerial Economics is a science dealing with effective use of scarce resources. It guides the managers in taking decisions relating to the firm’s customers, competitors, and suppliers as well as relating to the internal functioning...
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