A small town has two service stations, which sharethe town’s market for gasoline. The owner of Station A is debating whether to give away free glasses to her cus-tomers as part of a promotional scheme, and the owner of Station B is debating whether to give away free steakknives. They know (from similar situations elsewhere)that if Station A gives away free glasses and Station Bdoes not give away free steak knives, Station A’s share ofthe market will increase by 6 percent; if Station B givesaway free steak knives and Station A does not give awayfree glasses, Station B’s share of the market will increaseby 8 percent; and if both stations give away the respectiveitems, Station B’s share of the market will increase by3 percent.(a) Present this information in the form of a payoff tablein which the entries are Station A’s losses in its share ofthe market.(b) Find optimum strategies for the owners of thetwo stations.

A small town has two service stations, which sharethe town’s market for gasoline. The owner of Station A is debating whether to give away free glasses to her cus-tomers as part of a promotional scheme, and the owner of Station B is debating whether to give away free steakknives. They know (from similar situations elsewhere)that if Station A gives away free glasses and Station Bdoes not give away free steak knives, Station A’s share ofthe market will increase by 6 percent; if Station B givesaway free steak knives and Station A does not give awayfree glasses, Station B’s share of the market will increaseby 8 percent; and if both stations give away the respectiveitems, Station B’s share of the market will increase by3 percent.(a) Present this information in the form of a payoff tablein which the entries are Station A’s losses in its share ofthe market.(b) Find optimum strategies for the owners of thetwo stations.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section11.4: Marketing Models

Problem 30P: Seas Beginning sells clothing by mail order. An important question is when to strike a customer from...

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Seas Beginning sells clothing by mail order. An important question is when to strike a customer from the companys mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next catalog she receives. If a customer last placed an order four catalogs ago, there is a 4% chance she will order from the next catalog she receives. If a customer last placed an order five catalogs ago, there is a 2% chance she will order from the next catalog she receives. It costs 2 to send a catalog, and the average profit per order is 30. Assume a customer has just placed an order. To maximize expected profit per customer, would Seas Beginning make more money canceling such a customer after six nonorders or four nonorders?
Tonya Johnson is the Regional Manager for Old Town Buffets. Each of the five units she supervises is in a different town. Produce for each unit is purchased locally by each buffet manager. One day, Tonya gets a call from Danny Trevino, one of the buffet managers reporting to her. Danny states that one of the local produce suppliers he uses has offered Danny the use of season tickets to the local university football games. Danny likes football and would like to accept them. Would you allow Danny to accept the tickets? Why or why not? Would you allow your managers to accept a gift of any kind (including holiday gifts) from a vendor?
A purchasing agent for a particular type of silicon wafer used in the production ofsemiconductors must decide among three sources. Source A will sell the siliconwafers for $2.50 per wafer, independently of the number of wafers ordered. Source Bwill sell the wafers for $2.40 each but will not consider an order for fewer than3,000 wafers, and Source C will sell the wafers for $2.30 each but will not acceptan order for fewer than 4,000 wafers. Assume an order setup cost of $100 and anannual requirement of 20,000 wafers. Assume a 20 percent annual interest rate forholding cost calculations.c. If the replenishment lead time for wafers is three months, determine the reorderpoint based on the on-hand level of inventory of wafers
A purchasing agent for a particular type of silicon wafer used in the production ofsemiconductors must decide among three sources. Source A will sell the siliconwafers for $2.50 per wafer, independently of the number of wafers ordered. Source Bwill sell the wafers for $2.40 each but will not consider an order for fewer than3,000 wafers, and Source C will sell the wafers for $2.30 each but will not acceptan order for fewer than 4,000 wafers. Assume an order setup cost of $100 and anannual requirement of 20,000 wafers. Assume a 20 percent annual interest rate forholding cost calculations.b. What is the optimal value of the holding and setup costs for wafers when theoptimal source is used?
Rajan, a customer of Jacky's looking for a Radio set. Rajan is particularly interested in purchasing a Radio, according to Michelle, the sales manager for the consumer electronics department at the cheap retailer. He informs Jacky, the salesperson at the cheap store where he believes he will get the best bargain, that his old radio recently died and he is desperate to listen up on his favourite songs. The sooner he can purchase and receive a replacement radio, the better, he explains. Jacky is aware that in three and a half weeks, the model Rajan appears to prefer significantly more than the others will go on sale for 10% off. He suspects, though, that Rajan is not willing to wait that long and may seek employment elsewhere. Additionally, Jacky will get less commission on the discounted price. As a result, he concludes that notifying Rajan of the planned sale makes little sense. When Jacky informs Rajan that the radio set, in which he is interested is now unavailable and will not be…
Rajan, a customer of Jacky's looking for a Radio set. Rajan is particularly interested in purchasing a Radio, according to Michelle, the sales manager for the consumer electronics department at the cheap retailer. He informs Jacky, the salesperson at the cheap store where he believes he will get the best bargain, that his old radio recently died and he is desperate to listen up on his favourite songs. The sooner he can purchase and receive a replacement radio, the better, he explains. Jacky is aware that in three and a half weeks, the model Rajan appears to prefer significantly more than the others will go on sale for 10% off. He suspects, though, that Rajan is not willing to wait that long and may seek employment elsewhere. Additionally, Jacky will get less commission on the discounted price. As a result, he concludes that notifying Rajan of the planned sale makes little sense. When Jacky informs Rajan that the radio set, in which he is interested is now unavailable and will not be…
Rajan, a customer of Jacky's looking for a Radio set. Rajan is particularly interested in purchasing a Radio, according to Michelle, the sales manager for the consumer electronics department at the cheap retailer. He informs Jacky, the salesperson at the cheap store where he believes he will get the best bargain, that his old radio recently died and he is desperate to listen up on his favourite songs. The sooner he can purchase and receive a replacement radio, the better, he explains. Jacky is aware that in three and a half weeks, the model Rajan appears to prefer significantly more than the others will go on sale for 10% off. He suspects, though, that Rajan is not willing to wait that long and may seek employment elsewhere. Additionally, Jacky will get less commission on the discounted price. As a result, he concludes that notifying Rajan of the planned sale makes little sense. When Jacky informs Rajan that the radio set, in which he is interested is now unavailable and will not be…
Rajan, a customer of Jacky's looking for a Radio set. Rajan is particularly interested in purchasing a Radio, according to Michelle, the sales manager for the consumer electronics department at the cheap retailer. He informs Jacky, the salesperson at the cheap store where he believes he will get the best bargain, that his old radio recently died and he is desperate to listen up on his favourite songs. The sooner he can purchase and receive a replacement radio, the better, he explains. Jacky is aware that in three and a half weeks, the model Rajan appears to prefer significantly more than the others will go on sale for 10% off. He suspects, though, that Rajan is not willing to wait that long and may seek employment elsewhere. Additionally, Jacky will get less commission on the discounted price. As a result, he concludes that notifying Rajan of the planned sale makes little sense. When Jacky informs Rajan that the radio set, in which he is interested is now unavailable and will not be…
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each company sinks wells of the same size at the same time. If both companies sink wide wells, each will extract 2 million barrels in 6 months, but each company will receive profit of only GHC 1 million. On the other if each company sinks a narrow well, it will take a year for Clampett and TEXplor to extract their respective shares, but their profits will be GHC14 million apiece. Finally, if one company drills a wide well while the other company drills a narrow well, the first company will extract 3 million barrels and the second company will extract only 1 million barrels. In this case, the first company will earn profits of GHC 16 million and the second company will actually lose GHC 1million.1. Illustrate this using a normal form game. 2. Does either firm have a strictly dominant strategy? If yes, what is (are) these strategies? Explain your answer. 3. What strategy will each firm adopt? Explain your answer. 4. Does this game have a Nash equilibrium? Explain your answer5. Is…
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A patient consult a doctor to check up his ill health. Doctor examines him and advises him that he is having deficiency of two vitamins, vitamin A and vitamin D. Doctor advises him to consume vitamin A and D regularly for a period of time so that he can regain his health. Doctor prescribes tonic X and tonic Y, which are having vitamin A, and D in certain proportion. Also advises the patient to consume at least 40 units of vitamin A and 50 units of vitamin Daily. The cost of tonics X and Y and the proportion of vitamin A and D that present in X and Y are given in the table below. Formulate the model to minimize the cost of tonics (Table in picture attached)