Production Operation Assignment

Assignment 6: PRICING a) Computation of Economic Value of an offering Mercedes Benz is launching its luxury SUV (called the CDL class) in a market dominated by Lexus GL. The CDL class uses diesel and obtains 25 miles per gallon. The Lexus model, priced at $48000, uses premium gasolene and obtains 20 miles per gallon. Both the models need to be serviced annually but the CDL being a diesel engine requires annual service that is costlier by $100. The life of a diesel engine is typically longer – hence the residual value of a 10 year old CDL is estimated to be $1600 higher than the Lexus. Assume (i) the average cost of premium gasolene to be $3. 0 per gallon (ii) the average cost of diesel to be $3. 25 per gallon (ii) the average customer drives 12000 miles per year and (iii) there is no time discount. What should be the price of the CDL such that the economic value of Benz CDL over Lexus GL (during a 10 year use horizon by a customer) is completely appropriated by Mercedes Benz? The economic value of CDL: Price of substitute=48000 Cost saving=(12000/20*3-12000/25*3. 25-100)=140 Revenue enhancing=residual value=1600+residual value of GL Use horizon=10 EV of CDL=48000+140*10+1600+residual value of GL=51000+residual value of GL The economic value of GL: Price of substitute=XCost saving=(12000/25*3. 25-12000/20*3+100)=-140 Revenue enhancing=residual value=residual value of GL Use horizon=10 EV of GL=X+(-140)*10+ residual value of GL=X-1400+residual value of GL To make (51000+residual value) equal (X-1400+residual value of GL) X should be 52400 So the price of CDL should be lower than 52400 dollars such that the EV of CDL is higher than GL. b) Breakeven Analysis Nokia has decided to manufacture a special edition cellphone called HiRide for the teen market next year that will be sold with Sprint’s wireless service. For this phone, Nokia’s variable manufacturing cost is $35 per phone.Fixed manufacturing costs amount to $20 million and advertising cos ts are expected at $6 million. Nokia will sell HiRide to retailers and pay its own salesmen a commission of $8 per phone sold to the retailers. The retail price (i. e. , price paid by the end customer) of the product is $120 and retail margin typically average about 10%. (i) What is the price at which Nokia sells to retailers? Assume that the price is X, thus: X*(1+10%)=120 X=$109 (ii) What is Nokia’s contribution per unit sales for HiRide? Contribution per unit= P-VC=109-(35+8)=$66 (iii) What is Nokia’s breakeven volume?BE volume=FC/contribution per unit=? (20000000+6000000)/66=393939. 4? 393940 (iv) Nokia’s actual sales in Year 1 turned out to be 375000 units. Since the product did not break even, Nokia’s product manager decided to reduce the commission offered to its salesmen in Year 2. Provided the sales volume, price, and other fixed costs remain the same as in Year 1, how much should be the new commission so that HiRide breaks even in Year 2? Assume that it is X, thus: The new contribution per unit would be 109-(35+X), which equals 74-X BE volume =375000=FC/ new contribution per unit=26000000/(74-X) So X =4. 76$

Contemporary issue related to a sociological theory Term Paper

Contemporary issue related to a sociological theory - Term Paper Example The society is made of individuals and the cultural and societal norms is based on the shared meanings and understanding of the individuals within the society. This indicates that the shared meanings create the values placed on objects that society purchases and consumes. This also directs the consumer behavior, by which the private owners take advantage of, monopolizing the production and the market for certain products, like cellular phones or internet connection. Marx’s theory of commodity fetishism explains how products are given their values, how it affects the structure of capitalism and how these values and the exchange of value affects the social structure existing in the society. Fetishism is defined as an unusual display of devotion or intense attachment towards a certain object believing that it possesses extraordinary abilities and power (Morrison, 2006). Marx argues that individuals tend to fixate on objects believing that they have inherent value, something that is extraordinarily powerful. This makes the object valuable, according to the value the society placed on it. Capitalism is seen to promote the values of objects according to the group that owns the means of production. The value of each product or service is based on how capitalist see the product’s value and how the masses would accept the product. One good example for this is when the sms became a worldwide phenomena. Aside from the benefits and features along with it, everybody was going gaga over texting. Everything has its price and value, but in a sociological approach such as marking strategies, these capitalists create the want and the need of their products in the market. By attacking the market in a psychological manner creating the want, the value of a service and product will be set by these capitalist. This is an advanced strategy in business. In addition to that,

To what extent are labour and capital really mobile within the EU Essay

To what extent are labour and capital really mobile within the EU - Essay Example hick (2005, 4) European Union would be rather considered as a ‘treaty-based, institutional framework that defines and manages political and economic cooperation among its 25 member states (Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom)’. On the other hand, it has been found that all member states tend to be influenced by specific social and financial phenomena like the following ones: ‘market globalization, the European single market, and European supranational institutions’ (Verdier, 2001, 227). The reference to the above phenomena is made by Verdier (2001) because these phenomena are mostly related with the following sectors of European Union: ‘labour market, capital market, electoral competition, and centre-local government relations’ (Ve rdier, 2001, 227). In accordance with the above the freedoms provided to the citizens of the member states can be limited under the influence of specific factors that can be related not only with the public sector but also with the private one (as it is represented by the multinational firms that participate in the development of globalization internationally). With a reference especially to the movement of persons and capital across the EU, it is stated by Malone (1999, 54) that ‘right from the outset, two of the fundamental objectives of the European Union (as it is called today) have been to facilitate the free movement of labour and the free movement of capital across member states’. On the other hand, the study of Donaghey et al. (2006) refers especially to the movement of persons (especially of workers) within the European Union. More specifically, it is noticed by the above researchers that ‘citizens of the EU have the right to work in another Member State and the right to reside there for that

Corporate Governance Article Example | Topics and Well Written Essays - 1250 words

Corporate Governance - Article Example Resource dependence theory posits that dependent directors are more resourceful through providing advice, communication channels to the external environment, legitimacy, and commitment preference but empirical studies have shown that there is no direct relation between dependence and financial performance. The conclusion is for an inclusion of independent directors on boards on CSR as they relate the changing needs of directors and is sensitive to social needs; provide more resources and legitimacy to the board. An inclusion of female and minority directors on boards advocating have increased with the reasoning based on equity and fairness, reflect racially, and gender diversity of employees, customers, and other stakeholders. Agency theory suggests the inclusion of minority and female directors that board diversity augments independence increasing ability to monitor management. Resource dependence theory supports the inclusion of female and minority directors on the basis that it in creases resources brought by each board members and augments access to external resources. Both agency and resource dependence theory and other theories are in favor of female and minority directors increasing CSR. An inclusion of stakeholder directors is advocated by resource dependence theory and not touched on by agency theory with the reasoning being employee directors increase board efficiency by incorporating company information. Stakeholder director inclusion leads to recognition of stakeholder issues; hence CSR.

Case study ( in search of second act) Example | Topics and Well Written Essays - 250 words

( in search of second act) - Case Study Example The cause of the observed turn of events as far as sales of the product are concerned is raising questions on whether the product is for fun or functionality. It is evident that consumer demands have gone beyond the basic it offers and there is an equal need to extend its application among the elderly and children. This calls for differentiation approach to improve the functionality of the product and expand its market size. There is a challenge to the managers of this company concerning the description of the product as either a toy or a software or robotic tool for learning through fun. It is therefore critical to evaluate the cost-benefit analysis of functional aspect of the product with focus on consumer and sustainable competitive advantage in the industry. It would be recommended that the product be improved in feature so that it would capture the emerging needs of the customer and the resulting rise in sales would boost the confidence of the

Pharmacology Case Study Example | Topics and Well Written Essays - 1250 words

Pharmacology - Case Study Example A study by Peng et al. (2004) on Pharmacokinetics and Pharmacodynamics of Imatinib in a Phase I Trial with Chronic Myeloid Leukemia Patients, found confirmed the findings of Reckmann et al. (2002) that the drug is absorbed immediately it is administered orally. Further, when they compared imatinib with AUC0-24 hours at steady-state and on day 1, there was a 1.5- to 3-fold drug accumulation after the dose is repeated once a day. Killock (2014) has found that after administration of 350 mg of imatinib at a normal state, the mean plasma trough concentration records at 570 ng/mL and above (about 1 _mol/L). This plasma concentration is more than the 50% inhibitory concentration that successfully inhibits proliferation of BCR-Abl–positive leukemic cells gotten from CML patients (Mitzuta et al. 2013). With imatinib, the relationship between the white blood cells reduction and PK parameters at normal circumstances indicate that the initial imatinib’s hematologic response depend s highly on the dose administered to the CML patient and in this case, a dose higher than 400mg is needed in order to have an optimum effect on white blood cells reduction (Al Ali et al. 2002). From the above information, it is clear that the action of imatinib is therefore different and advanced as compared to the older therapies whose pharmacodynamics and pharmacokinetics are different and present chances of many side effects that in most cases lead to discontinuation of medication therapy.

Poured Fire Analysis Essay Example for Free

Poured Fire Analysis Essay In the novel They Poured Fire on Us From the Sky, by Benson Deng, Alephonsion Deng, and Benjamin Ajak; Benson communicates a strong will to survive by using the device description. In the middle of the chapter â€Å"The Skulls Tree†, Benson describes the difficult experience he faced in the desert of Ajakageer. On his journey to Ethiopia, traveling through the desert of Ajakageer was the most dangerous part of his journey. Many of the thousands traveling to the camp in Ethiopia were ill and needed help. There was nothing they could, the only option they had was keep moving forward. Benson states, â€Å"At night, I was desperate for to have a good sleep and gain strength for the walking but I couldn’t because it was cold in the desert.† (78) This helps the reader understand the pain and misery of a Sudanese child that experienced this crucial journey. In the beginning of the chapter â€Å"The Gilo†, Benson describes what they had to do when the EPLA took over the camp. In the summer of 1991 the Ethiopian government was overthrown by some guerrilla fighters. The war once again reached them. They had to face the same problems they had. To survive, they must leave. Benson states, â€Å"The Sudan war had grown worse and spread farther. I longed to go home, but not like this-not running again, not back into battles. My beautiful homeland wasn’t a home in wartime. But to avoid conflict we agreed to leave their land and our lovely crops behind us.† This demonstrates that they were in serious danger. No matter where they went more problems caught up to them. They were lucky to get help. In order for them to survive they had to get rid and abandon there hope.