M2, Each airline customer spends $480 per year to receive access to the VIP waiting area at the airport It costs theairline $12 in customer retention costs and $20 in costs to serve each customer. Over time, 30% ofairline customers churn from VIP status from one year to the next. Assume an interest rate of 10%. What isthe Customer Lifetime Value of a VIP airline customer?$168$784None of the above$176A commercial cleaning company spends an average of $400 per year, per customer, in supplies, promotions,and account maintenance. An average customer generates $950 in revenue per year. Assuming a discountrate of 8% and an annual retention rate of 70%, which of the following is the best estimate for the lifetimevalue of an average customer using the simplified customer lifetime value (CLV) equation?O $919O $1013$550O $1750

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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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If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.
Lemingtons is trying to determine how many Jean Hudson dresses to order for the spring season. Demand for the dresses is assumed to follow a normal distribution with mean 400 and standard deviation 100. The contract between Jean Hudson and Lemingtons works as follows. At the beginning of the season, Lemingtons reserves x units of capacity. Lemingtons must take delivery for at least 0.8x dresses and can, if desired, take delivery on up to x dresses. Each dress sells for 160 and Hudson charges 50 per dress. If Lemingtons does not take delivery on all x dresses, it owes Hudson a 5 penalty for each unit of reserved capacity that is unused. For example, if Lemingtons orders 450 dresses and demand is for 400 dresses, Lemingtons will receive 400 dresses and owe Jean 400(50) + 50(5). How many units of capacity should Lemingtons reserve to maximize its expected profit?
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?
The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon spawn during a 24-hour period and must be canned immediately. Tinkan has the following agreement with the salmon industry. The company can deliver as many cans as it chooses. Then the salmon are caught. For each can by which Tinkan falls short of the salmon industrys needs, the company pays the industry a 2 penalty. Cans cost Tinkan 1 to produce and are sold by Tinkan for 2 per can. If any cans are left over, they are returned to Tinkan and the company reimburses the industry 2 for each extra can. These extra cans are put in storage for next year. Each year a can is held in storage, a carrying cost equal to 20% of the cans production cost is incurred. It is well known that the number of salmon harvested during a year is strongly related to the number of salmon harvested the previous year. In fact, using past data, Tinkan estimates that the harvest size in year t, Ht (measured in the number of cans required), is related to the harvest size in the previous year, Ht1, by the equation Ht = Ht1et where et is normally distributed with mean 1.02 and standard deviation 0.10. Tinkan plans to use the following production strategy. For some value of x, it produces enough cans at the beginning of year t to bring its inventory up to x+Ht, where Ht is the predicted harvest size in year t. Then it delivers these cans to the salmon industry. For example, if it uses x = 100,000, the predicted harvest size is 500,000 cans, and 80,000 cans are already in inventory, then Tinkan produces and delivers 520,000 cans. Given that the harvest size for the previous year was 550,000 cans, use simulation to help Tinkan develop a production strategy that maximizes its expected profit over the next 20 years. Assume that the company begins year 1 with an initial inventory of 300,000 cans.
PROBLEM The management of the Book Warehouse Company wishes to apply the Miller-Orr model to manage its cash investment. They have determined that the cost of either investing in or selling marketable securities is $100. By looking at Book Warehouse’s past cash needs, they have determined that the variance of daily cash flows is $20,000. Book Warehouse’s opportunity cost of cash, per day, is estimated to be 0.03%. Based on experience, management has determined that the cash balance should never fall below $10,000. 1. How much is the cost per transaction?(Use a number, no decimal value, no commas, no currency, no space) * 2. How much is the return point based on the Miller-Orr model of cash management? (Use a number, no decimal value, no commas, no currency, no space) * 3. How much is the upper limit based on the Miller-Orr model of cash management?(Use a number, no decimal value, no commas, no currency, no space) * PLEASE ANSWER ALL QUESTIONS. THANKS!
You are the owner of Caché, a chain of women's clothing boutiques. Your state has a sales tax of 7%, and your city has an additional sales tax of 1.5%. Each quarter you are responsible for making these tax deposits to the city and state. Last quarter your stores had total revenue, including sales tax, of $488,250. a) How much of this revenue was sales (in $) and how much was sales tax (in $)? sales sales tax b) How much sales tax (in $) should be sent to the city? c)How much sales tax (in $) should be sent to the state?
A home improvement store sells hydrangea plants during the spring planting season. The hydrangeas cost the store $15 per unit, and sell to customers for $45, but any leftovers at the end of the season are salvaged to a local landscaper for $7/unit. A competitor has advertised that it guarantees 99% of customers find the product they’re looking for in stock. The competitor’s posted price for hydrangeas is $50, and they salvage to the same local landscaper for $7/ hydrangea plant. If the competitor’s advertised service level is correct for hydrangeas and they follow an optimal stocking policy, what does it imply their cost per hydrangea is?
Kpogas produces chairs and tables. Using economic forecast for the next month, Kpogas’ marketing manager has judged that during that period, it will be possible to sell as many chairs or tables as the company can produce. Management must now recommend a production target for next month. That is, how many chairs and tables should be produced if Kpogas’ management wishes to maximize next month’s profit contribution? Making this decision requires a consideration of the following key factors: ● Kpogas’s unit contribution margin is GH¢ 5,000 on each chair that is sold and GH¢ 4,000 on each table that is sold. ● Each product is put through Kpogas’s machining operations in both department A and department B. For next month’s production, the two departments have 150 and 160 hours available time, respectively. Each chair produced uses 10 hours of machining in department A and 20 hours of machining in department B, whereas each table produced uses 15 hours of machining in department A and 10…
PROBLEM The Seminole Company wishes to apply the Miller-Orr model to manage its cash investment. Seminole’s management has determined that the cost of either investing in or selling marketable securities is $200. By looking at Seminole Company’s past cash needs, they have determined that the variance of daily cash flows is $10,000. Seminole Company’s opportunity cost of cash, per day, is estimated to be 0.05%. Seminole management has figured, based on their experience dealing with the cash flows of the company, that there should be a cushion— a safety stock—of cash of $20,000. 1. How much is the variance of daily cash flows? (Use a number, no decimal value, no commas, no currency, no space) * 2. How much is the opportunity cost of cash, per day? (Use a number, must be in decimal form. eg. 6.3%/100, encode 0.063 , no commas, no currency, no space) * 3. How much is the cost per transaction? (Use a number, no decimal value, no commas, no currency, no space) * PLEASE ANSWER ALL QUESTIONS.…
alternatives big average small large stock $22000 $ 12000 $-2000 average stock $14000 $10000 $6000 small stock $9000 $8000 $4000 the probabilities associated with states of nature are 0.3 for a big demand, 0.5 for an average demand, and 0.2 for a small demand. how do you compute expected monetary value (EMV) and expected value of perfect value (EVPI) ? a) determine the alternative that provides andrew the greatest expected monetary value (EMV). b} compute the expected value of perfect information (EVPI). compute EMV AND EVPI?
Target is considering opening mini-Target stores in airports across the United States. Target knows that 25% of the items in its store account for 70% of the store's sales and expects that this Pareto relationship will hold for the mini-Target stores. The mini-Targets will each carry 50 items, but it's unknown at this point which 50 items will be stocked. The annual sales of a mini-Target is forecasted to be $500,000. Assume A items are top 20% of items sold, B items are the next 30% and C items are the bottom 50% of items sold. Turnover is expected to be for A items = 50, B items = 40 and C items = 10. 1. The top 20% of items in the min-Target store will account for what percent of sales? - 42.9% - 56.2% - 68.7% - 63.6% 2. What is the annual item sales expected to be for the 25th best selling product in the mini-Target store? - $113 - $4,510 - $437,500 - $76,350
Target is considering opening mini-Target stores in airports across the United States. Target knows that 25% of the items in its store account for 70% of the store's sales and expects that this Pareto relationship will hold for the mini-Target stores. The mini-Targets will each carry 50 items, but it's unknown at this point which 50 items will be stocked. The annual sales of a mini-Target is forecasted to be $500,000. Assume A items are top 20% of items sold, B items are the next 30% and C items are the bottom 50% of items sold. Turnover is expected to be for A items = 50, B items = 40 and C items = 10 1. The top 20% of items in the min-Target store will account for what percent of sales? A. 63.6% B. 68.7% C. 56.2% D. 42.9% 2. What is the annual item sales expected to be for the worst selling product in the mini-Target store? A. $145 B. $1,453 C. $13,905 D. $32,781

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