...Assignment 2: Operations Decision Coretta Brown Emmanuel Obi ECO550 May 12, 2014 Operation Decisions are affected by numerous of things. Operation decisions are made according to what is happening within the environment the organization is located in. Decisions are made every day to keep the organization operating. Most organizations start from the top making decisions and send the decisions down the organization chains to achieve the goals the organization wants to accomplish. 1. Outline a plan that will assess the effectiveness of the market structure for the company’s operations. Note: In Assignment 1, the assumption was that the market structure [or selling environment] was perfectly competitive and that the equilibrium price was to be determined by setting QD equal to QS. You are now aware of recent changes in the selling environment that suggest an imperfectly competitive market where your firm now has substantial market power in setting its own “optimal” price. Lean Cuisine & Healthy Choice Executive Summary: Today everyone wants to be in shape and eat healthy. Living a healthy lifestyle with the meals provided will prevent obesity for all ages. Healthy ways of eating will be the service provided with healthy products to consumers’. The healthy products will be helping consumers’ live a healthy lifestyle without spending large amounts. Setting a price that consumers’ will be willing to pay without a doubt is a goal. Giving people hope that they can live...
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...Pizza Hut Case Analysis For years now Pizza Hut, Inc. has been the leader of the pizza industry. We have been privileged to have had the opportunity to perform research on advancements we can make to maintain this reputation. Based upon our Economic Analysis we have decided to not launch the BIGFOOT pizza. The following gives a detailed analysis, offers alternatives to improving the Pizza Hut experience, and gives reasons why we came to this conclusion. Economic Analysis: First off, we appreciate the opportunity to have had an important role in Pizza Hut's latest product development, BIGFOOT. As you know, over the past five years market shares for the industry have changed much more drastically than in recent years. Our market share has been stagnant, and sales are down 10% this year in relation to last year's numbers. During the same period, Little Caesars made a strong push and they have continued to grow. Little Caesars' "two for one" marketing approach was effective in infiltrating the "mom's night off" segment, and is seen by customers as a great value. This is adding direct competition into our niche market share. Little Caesars is surely not making headway with the pizza connoisseurs, but it has effectively targeted a market in which Pizza Hut does not currently have a strong presence. 50% to55% of this market is made up of family dining situations. Our marketing team has conducted multiple data analyses on ways in which we can gain market share from Little...
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...ECO 550 Imagine that you work for the maker of a leading brand of low-calorie, frozen microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent and Dependent Variables tutorial, located at Option 1 Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets. QD = 20,000 - 10P + 1500A + 5PX + 10I (5,234) (2.29) (525) (1.75) (1.5) R2 = 0.85 n = 120 F = 35.25 Your supervisor has asked you to compute the elasticity’s for each independent variable. Assume the following values for the independent variables: Write a four to six (4-6) page paper in which you: 1. Compute the elasticity’s for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticity’s for the business in terms of short-term and long-term pricing strategies. Provide a rationale in which you cite your results. 3. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further assume that the price changes are 100, 200, 300, 400...
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...Stopping Outshopping Rebecca Jude Strayer University Health Services Strategic Marketing August 17, 2014 Becky Foster Stopping Outshopping In the case study, Scarlett Hospital, a 350 bed not for profit provider of medical and surgical services, was presented a dilemma of the possibility of losing patients. The transportation infrastructure improvements have caused the top executives of Scarlett Hospital to consider the impact a new highway system may have on the facility. Easier access to the larger city of Salem and its healthcare institutions brings the threat of potential loss of consumers to Scarlett Hospital. Timothy Rogers, the president and CEO of Scarlett Hospital, us trusted with the decision of what is the best strategy for the hospital to remain competitive with the larger facilities in Salem. Mr. Rogers’ feels his philosophy to deliver the highest quality of medical care possible will continue to help Scarlett Hospital compete in the more competitive environment. Mr. Rogers has been with Scarlett Hospital for 14 years prior to the merger between two competing hospitals. With having previous experience facing challenges from other healthcare institutions, I feel Mr. Rogers and Scarlett Hospital are prepared to compete with the more easily accessible institutions of Salem. Complacency Complacency is the self-satisfaction especially when accompanied by unawareness of actual danger or deficiencies; it can be an instance of usually unaware or uninformed...
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...Question 1 The primary objective of a for-profit firm is to ___________. Selected Answer: Correct Answer: 5 out of 5 points maximize shareholder value maximize shareholder value Question 2 5 out of 5 points The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers? Selected Answer: Correct Answer: innovation theory of profit innovation theory of profit Question 3 5 out of 5 points The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn? Selected Answer: Correct Answer: Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return. Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return. Question 4 To reduce Agency Problems, executive compensation should be designed to: Selected Answer: Correct Answer: 5 out of 5 points create incentives so that managers act like owners of the firm. create incentives so that managers act like owners of the firm. Question 5 The ____ is the ratio of ____ to the ____. Selected Answer: Correct Answer: 5 out of 5 points coefficient of variation; standard deviation; expected value coefficient of variation; standard deviation; expected value Question 6 5 out of 5 points The primary difference(s) between the standard deviation and the coefficient of...
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...Question 1 5 out of 5 points | | | Which of the following will increase (V0), the shareholder wealth maximization model of the firm: V0∙(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t + Real Option Value.Answer | | | | | Selected Answer: | Decrease the required rate of return (ke). | Correct Answer: | Decrease the required rate of return (ke). | | | | | Question 2 5 out of 5 points | | | A Real Option Value is:Answer | | | | | Selected Answer: | An opportunity to implement a new cost savings or revenue expansion activity that arises from business plans that the managers adopt. | Correct Answer: | An opportunity to implement a new cost savings or revenue expansion activity that arises from business plans that the managers adopt. | | | | | Question 3 5 out of 5 points | | | To reduce Agency Problems, executive compensation should be designed to:Answer | | | | | Selected Answer: | create incentives so that managers act like owners of the firm. | Correct Answer: | create incentives so that managers act like owners of the firm. | | | | | Question 4 5 out of 5 points | | | The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?Answer | | | | | Selected Answer: | Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return. | Correct Answer: | Saturn sold cars below the prices of Honda...
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...Automotive Production Levels By Mansi Teraiya Submitted to: Dr. Vandana Mahajan Managerial Economics and Globalization 09/09/2012 1) Brief History of Toyota Motors Toyota Motor Corporation (TMC) is a Japanese multinational automaker headquartered in Toyota, Aichi, Japan. Into 2010, Toyota employed 200,734 people worldwide and was the second largest automobile manufacturer by production. Toyota is the ninth largest company in the world by Revenue. In July, 2012 the company reported that it had manufactured its 200 millionth vehicle. The company was founded by Kiichiro Toyoda in 1937 as a spin off from his father’s company Toyota Industries to create automobiles. 2) Demand Supply Analysis for Toyota Motors To demonstrate the relation between supply and demand of TM worldwide let us focus on production and sales data of TM for last few years. Below are the two tables for TM Production and Sales. From the sales and production data above, we can see that the overall production of TM cars is consumed in the market more than 90% by the consumers. We can observe that there is constant increase in production and sales till year 2008. In 2008, there was an economic slowdown in the world, which impacted production and sales of Toyota motors. From 2010 and 2011 figures, we can see that TM has done well to recover from the recession and we can see that their sales is more than their production in these years. Factors affecting Demand-Supply of TM: At a particular price...
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...Assignment 1: Making Decisions Based on Demand and Forecasting Managerial Economics and Globalization, ECO550 Making Decisions Based on Demand and Forecasting A market demand analysis is used to help understand how much consumer demand there is for a given product or service. This type of analysis will help determine if a business can successfully enter a market and generate enough revenue and profit to maintain the business. One must identify the market and the growth potential. Domino’s Pizza was incorporated in 1963 and has been franchising since 1967. A traditional Domino’s store is located in shopping centers and/or strip malls with appropriate parking for delivery vehicles and walk-in customers for carry-out services. The initial investment of a traditional store is approximately $119,500 (low estimation). To determine if a Domino’s Pizza can be opened in Morehead City, North Carolina one must estimate consumer demand for this area. Some of the variables that can be considered are population, price of pizza, and income per household. The population of Morehead City is 8,780 people; let’s assume that 40% are eating pizza, so the demand will be 3,512 people want pizza. Considering there are 365 days in a year we can assume that nine households are eating pizza each day, with an average of 3 people in the household let’s assume they normally order two pizzas, a total of 18 pizzas per day. The average income of a household in Morehead...
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...ECO 550 Assignment #3 Game Theory and Monopolies by ECO 550 Assignment #3 1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt. Driver 2 Left Right Driver 1 Left 0,0 -1000 -1000 Right -1000, -1000 0,0 a. Does either player have a dominant strategy? No. A Dominant Strategy is “a strategy that results in the best outcome or highest payoff to a given player no matter what action or choice the other player makes” (Farnham, 2010, p. 233). In a situation such as this, there has to be cooperation, or the consequences could be deadly. b. Is there Nash equilibrium in this game? Yes, if both drivers chose either left or right, there would be equilibrium, since they are “choosing their best strategy, given the actions of the other players,” (p. 234). c. Why this game is called a cooperative game? Given the consequences of life and death, cooperation is needed by both drivers to achieve the optimal outcome. Both drivers must choose either Left or Right, so communication and cooperation are needed. 2. Using the chart, Figure 1. below, answer the following questions. a. What is the firm’s Total Revenue? This...
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...Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is $70, and the price of the firm's output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm's fixed cost is “high enough” so that the firm's total costs exceed its total revenue. The marginal cost of the last unit is $30. 1. Briefly describe the details of the fictitious business that you created for this assignment. Light Up the Sky, Inc. is a company that manufactures luminescent kites. This company has been in business for the past 10 years and during this time has established itself as a high quality manufacturer of these kites. Even though this company appeals to a small fraction of the entire kite industry, they had been able to maintain a 20% profit margin. Due to the lagging economy, their profit margin dropped below the breakeven point and they are now considering shutting down production. 2. Assess the current environmental scan factors. Determine the factors that will have the greatest impact on plant operations and management’s decision to continue or discontinue operations. When considering whether or not to continue operations, there are several factors to consider. First is to perform a market analysis...
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...Demand Estimate 1 Today, there are thousands of different frozen foods in North America, which provide us with the nutrients we need, this has become a large part of our diet. The demand estimation of a leading brand of low calorie, frozen microwavable food is based on the following demand equation for its product using data from 26 supermarkets for the month of April. QD= -5200 -42P + 20PX + 5.2I + 0.2A + 0.25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2=0.55 N=26 F=4.88 Q= quantity demand P= price of the product =$500 PX= Price of leading competitor’s product =$600 I= Monthly average income = $5500 A= monthly advertising expenditures =$10,000 M = number of microwave ovens sold =5,000 Calculation of elasticity of each independent variable The following is the elasticity for each independent variables by computing of regression equation when P=500, C=600, I=5500, A=1000 and M= 5000. QD = -5200 – 42(500) + 20(600) + 5.2(5500) + 0.2(10000) + 0.25(5000) = 17650 Elasticity equation is E= variable coefficient x variable initial value / QD Price Elasticity Ep = -42(500/17650) = |1.19| Cross price elasticity Epx = 20(600/17650) = 0.68 Demand Estimate 3 Income elasticity Ei = 5.2(5500/17650) = 1.62 Advertise expenditure elasticity Ea = 0.2(10000/17650) = .11 Number of microwave sold elasticity Em = .25(5000/17650) = 0.07 Price elasticity is -1.19, which indicates a 1% increase in the price of the product, effects the quantity demanded to decrease by...
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...Assignment 5 Valerie Lagana Strayer University Eco550 – Economics for Managers September 5, 2011 Question: Describe the changing economic variables in China that influenced McDonald’s expansion strategies. The main changing economic variables in China that influenced McDonald’s Expansion were the increase in GDP and the economic stimulus package. In 2007, the increase in GDP showed a level of strong jobs in China as well as increase income for the Chinese (Farnham, 2010). This allowed the Chinese to spend more money on eating out at restaurants which gave McDonald’s a great opportunity for expansion. In addition, the Chinese government had a stimulus package after the economy dropped in 2008. The stimulus package included building more highways which allowed the Chinese to be accessible to the drive through window opportunity that McDonalds was able to offer as part of their expansion. Question: What factors led to the Mexican currency crisis and peso devaluation in 1994? The factors that led to the Mexican currency crisis and peso devaluation were the Appreciation of the exchange rate, falling interest rates, and the foreign savings. The appreciation of the exchange rate resulted in a decrease in savings with an increase in investment due to the expansion of credit without any federal regulations (Farnham, 2010). The falling interest rates were a result of the appreciation of the exchange rate attracting private capital via privatization of banks and free trade...
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...Assignment #2 – Market Structure: Monopoly and Monopolistic Competition ECO550: Economics for Managers Assignment 2 Office building maintenance plans call for the stripping, waxing, and buffing of ceramic floor tiles. This work is contracted out to office maintenance firms, and both technology and labor requirements are very basic. Supply and demand conditions in this perfectly competitive service market in New York are: |QS = 2P - 20 |(Supply) | | | | |QD = 80 - 2P |(Demand) | where Q is thousands of hours of floor reconditioning per month, and P is the price per hour. |A. |Algebraically determine the market equilibrium price/output combination. | When calculating for equilibrium, QS = QD 2P – 20 = 80 – 2P 4P = 100 P = 25 When substituting the value of P in the equation for supply and demand, we calculate the value of Q as QS = 2P – 20 QS = 2*25 – 20 QS = 30 Equating both supply and demand and solving it for Q 2p+2p=80+20 4p = 100 P = $25 Q = 30 (thousands of hours) |B. |Use a graph to confirm your answer. | ...
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...Domino’s Pizza Demand and Forecast ECO550 Rigo Benitez Dr. Atia Yasmeen Strayer University Demographics and Independent Variables Analysis Domino’s Pizza is planning to open a store in Annandale, VA, a median-size town about 10 miles outside of Washington D.C. Domino’s Pizza will do a demand and forecast to determine if it’s a good decision to open the store. The independent variables are population, mean household income, and pizza price as the independent variable. Annandale’s census population was 41,008 at the 2010 census, down from 54,994 in 2000 due to the splitting of the western part form Wakefield and Woodburn CDP's. The population and household income should help determine if people are willing to pay the pizza price and how much is the demand for pizza. The population helps determine the demand for pizza because of the law of the demand, the larger population the larger the demand. The household income will help also because the more disposable income the more people will buy a common good. Pizza is a common good that people will buy more often if they have more disposable income. The following chart display the variables used to determine pizza demand. Testing Coefficient of Determination Analysis Using Data Regression Analysis tools on Excel, the following results are used to determine the pizza demand in Annandale and if Domino’s Pizza should go ahead with the decision open the store. Domino’s Pizza Final Analysis to Open the Store The...
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...Shutter Or Not To Shutter Wonder Widgets Inc. Xxxx xxxx Dr. James xxxxx ECO550 Managerial Economics and Globalization February 20, 2014 Strayer University Overview Wonder Widgets, Inc. designs and manufactures widgets for use in various commercial manufacturing facilities. Wonder Widgets has been in business since 2004 with a steady and reliable group of core customers. Recently however, costs of raw materials have risen reducing the profitability of the company. The board of directors has become concerned and requested an independent valuation of the company with recommendations for increasing profits or cutting losses and shutting down the plant. Current Environment Environmental scanning must be used to determine factors used to continue operations or close the plant. BusinessDictionary.com (2014) defines environmental scanning as “careful monitoring of an organization’s internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans.” The customer environment is stable and has been for many years. However, pricing has not increased significantly in the last 5 years. With the cost increase in raw material looming and the narrow profit margin, a decision must be made on how to absorb or pass on those costs. With pressure from the Wonder Widget stakeholders increasing, absorption of those costs in the profit margin is the least likely scenario. Passing those costs along to the customer...
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