...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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...ASSIGNMENT 1: OPERATIONS DECISION 2 The company that I am consulting is Simple Simon’s Pecan Pie Factory. Simple Simon’s has been producing pecan pies for thirty years and is an established and well-recognized competitor in the gourmet pie market. The company has two manufacturing plants in Tifton, GA and Charleston, SC, and ships its pies all over the world. Recently, I was contacted by the president of the company, Simon Fair, to make recommendations on how to turn around the company’s floundering operations. Over the last three years, Simple Simon has seen its market share fall and its revenue decline 15% each year. There have been several competitors that have entered the market within the last five years that have taken market share away from Simple Simon’s. With the current economic environment, the company faces some challenging decisions. Currently, the company employs 100 workers and produces 6000 pies per month. Each of the two factories is running at only 40% capacity, and the company has had to lay off 25 workers in the last 6 months. The firm’s fixed costs are high enough that they have caused total cost to currently exceed total revenue. The company must make a decision on whether to continue or cease operations. The first step in analyzing Simple Simon’s financial situation is to do an environmental scan of their operations. An environmental scan refers to patterns, trends, and relationships within an organization’s internal and external environment...
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...Assignment 1: Demand Estimation Assignment 1: Demand Estimation ECO550 Managerial Economics and Globalization January 29, 2014 1 2 Assignment 1: Demand Estimation Compute the elasticities for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2 = 0.55 n = 26 F = 4.88 Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables: Q = Quantity demanded P (in cents) = Price of the product = 500 PX (in cents) = Price of leading competitor’s product = 600 I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = 5,500 A (in dollars) M = = Monthly advertising expenditures = 10,000 Number of microwave ovens sold in the SMSA in which the supermarkets are located = 5,000 QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M QD = -5200 – 42P + 20(600) + 5.2(5500) + .20(10000) + .25(5000) = 26560 Ep = dQ/dP x P/Q dQ/dP = -42 p=5 q=26560 3 Assignment 1: Demand Estimation =(-42)*5/26560 -0.008 Epx = dQ/dPx x Px/Q =20*6/26560 0.005 dQ/dPx=20 Ei = dQ/dI x I/Q dQ/dI=5.2 =5.2*5500/26560 1.077 Ea = dQ/da x A/Q dQ/dA=.20 =0.2*10000/26560 0.075 Em = dQ/dm x M/Q dQ/Dm=.25 =0.25*5000/26560 0.047 Px = 6 q=26560 I = 5500 q=26560 A=1000 0 q=26560 M=5000 q=26560 Determine the implications for each...
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...ECO550 Week 3 Assignment 1 ECO 550 Part 1: QD = - 5200 – 42P + 20C + 5.2(I) + 0.20(A) + 0.25(M) By converting the cent values into dollars and by putting the values of Price, competitions, income, Advertisement and number of oven, we shall have the following demand. So 500 cents= 5 Dollar 600 Cents= 6 Dollars QD=-5200-42(5)+20(6)+5.2(5500)+0.2(10,000)+0.25(5000) QD = -5200-210+120+28600+2000+1250 QD = 26,560 units Ep ( Price elasticity of demand) Own price elasticity of demand (ep) = ∂Q∂P×PQ ∂Q∂P = -42, P = 5, Q = 26,560 Own Price elasticity (ep) = - 42 × 526,560 x 100= - 0.79 (approx.) EX (Cross Price elasticity-in terms of competitors’ products) Cross price elasticity (exy) = ∂Q∂Px×PQ ∂Q∂Px = 20, Px = 6, Q = 26,560 Cross price elasticity (exy) = 6 × 2026,560 x 100= 0.45 (approx.) EI (Income elasticity) Income elasticity (eI) = ∂Q∂I×IQ ∂Q∂I = 5.2, I = 5500, Q = 26,560 Income elasticity (eI) = 5.2 × 550026,560 = 1.077 (approx.) EA ( Advertisement elasticity) Advertisement elasticity (eA) = ∂Q∂A×AQ ∂Q∂A = 0.2, A = 10,000, Q = 26,560 Advertisement elasticity (eA) = 0.2 × 10,00026,560 = 0.075 (approx.) EM Supply elasticity Supply elasticity (eM) = ∂Q∂A×MQ ∂Q∂A = 0.25, M = 5,000, Q = 26,560 Suppply elasticity (eA) = 0.25 × 5,00026,560 = 0.047 (approx.) Part 2: Price elasticity of demand Price elasticity is -0.79. There is negative relationship between price and demand. However, the ratio is less than 1, which means that an increase...
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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...
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...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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...Operations Decision ECO550 Assignment 2 Lydia L. Brooks February 16, 2014 Operations Decision Introduction There are countless low calorie microwavable food options in the market today that are available for purchase. As people experience a higher income, they can afford a better lifestyle than was previously accessible; therefore, people’s cooking style has changed. Instead of using traditional cooking methods, people now use microwaves to cook. With this microwave usage rise, a rise in microwavable food items has also occurred. With so many diverse products available it is so very easy to find and purchase a healthy choice of microwavable food. A low-calorie or healthy selection of diet choice is one that includes a good source of protein; in addition to containing a minimum of 3 grams of fiber (to satisfy), and also has no more than 600 milligrams of sodium (Zelman, n.d.). Some of the manufacturer options are: Lean Cuisine and Healthy Choice. Both of them are major competitors in the frozen food market. Lean Cuisine, a part of Stouffer’s (which dates back to the 1920’s) was acquired by Nestlé 1981 and has since then expanded its market in the US, Canada and Australia. Lean Cuisine offers a wide variety of frozen foods and is one of the top choices for low calorie food (Nestle', n.d.). Healthy Choice, manufactured by ConAgra, is another principal low calorie frozen food supplier. They are Lean Cuisine’s biggest competitor. The market segment is decided...
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...Free eChapters (FALL 2012) eChapters offer students immediate access to the first few chapters of their textbooks while they are waiting for the print book to arrive. eChapters help students to keep up with required reading and assignments until they receive their course material, without having to pay expedited shipping costs. eChapters that are available from the publisher are attainable free of charge. How do students gain access to free eChapters? Not all courses or textbooks have eChapters available. For all courses where eChapters are available, the files are located in the student’s Blackboard course shell under the Student Center. Below is a list of courses with eChapters loaded into the course shells, giving students free access as of the first day of classes. * = eChapters are forthcoming Course ID ACC100 ACC206 ACC303 ACC304 ACC305 ACC306 Text Title Accounting Principles – 9th edition Accounting Principles – 9th edition Intermediate Accounting 14e Intermediate Accounting 14e Intermediate Accounting 14e Microcomputer Applications for Accounting Excel 2010 Microsoft® Excel 2010: A Case Approach, Complete, 1st Edition, copyright 2011 SOUTH WESTERN FEDERAL TAXATION 2012: COMPREHENSIVE, 36th ed. South-Western Federal Taxation 2013: Corporations, Partnerships, Estates and Trusts, 36th Edition Cost Accounting 13th 09 ed. Advanced Accounting 4th 10th ed. Auditing & Assurance Services 13th 10 ed. Core Concepts of Government and Not for Profit Accounting 2nd ed., 2011 ed ACC...
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