Chapter 5

1. S=K (YZ) P A. K=100 Y=11,000 Z=1,200 P=20,000 B. Y,S,Z,P C. K. Use regression to estimate K. Log S=logK + logY + logX – logP To find the antilog of K, use the exponential logK. 5. Use Excel. Fill in the numbers. Look under 5 year moving average. Click on exponential smoothing tab. Look at the smoothing factor. Look at MSE for each mean squared errors. Use the MSE to choose the one that will give you the best focus and that would be the one with the smallest MSE. 6. A. Qd=18,000 + 0.4 (15,000) - 350 (50) + 90 (55) = 11,450 B. Qd = 18,000 + 0.4 (15,000) -350 (50) + 90 (50) = 11,000 Expected sales will fall when competitors reduce price. C. .7 (15,000) = 10,500 Qd = 18,000 + 0.4 (10,500) – 350 (50) + 90 (55) = 9,650 is the focus 9. Quarter 1, 2010 T=32: D11 = 1D21 = 0D31 = 0 Y = 8.25 + .125 (32) -2.75 (1) +.25 (0) + 3.5 (0) = 5.75
Chapter 6 2. Cummins could have established Internal Edges by setting up off setting payables in foreign currencies. As the dollars appreciates, these will become cheaper. As the dollar appreciates with price increase sales and revenue will decrease. It will be offset by the dollar falling cost for payables that are owed in those currencies. If there is an increase in
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the value of the dollar and there is a reduction in the value of the Euro or Yen this will have an effect of increasing the level of profits.

7. Boeing will then be forced to reduce its margins. Prices of Yen might remain unchanged. Increase pressure on Boeing margins.

9. Lower Unit labor costs and