Karen Archer is the hiring manager for a coal mining company in Kentucky. Karen finds her job especially fulfilling because she knows how important employment in the mines is for the local community where few other job prospects exist. Recently, Karen learned that top management has been hiding some disturbing information on the levels of toxins in the air in the deeper parts of the mine. Although only a couple of people are exposed to the risk, which seems slight, Karen is very upset because she views the people she hires as family. Using the knowledge that you have about Karen, explain the cognitive dissonance that she is experiencing and two ways that Karen could alter her behavior or attitude to reduce the dissonance?

Karen Archer is the hiring manager for a coal mining company in Kentucky. Karen finds her job especially fulfilling because she knows how important employment in the mines is for the local community where few other job prospects exist. Recently, Karen learned that top management has been hiding some disturbing information on the levels of toxins in the air in the deeper parts of the mine. Although only a couple of people are exposed to the risk, which seems slight, Karen is very upset because she views the people she hires as family. Using the knowledge that you have about Karen, explain the cognitive dissonance that she is experiencing and two ways that Karen could alter her behavior or attitude to reduce the dissonance?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter7: Nonlinear Optimization Models

Section: Chapter Questions

Problem 63P

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The eTech Company is a fairly recent entry in the electronic device area. The company competes with Apple. Samsung, and other well-known companies in the manufacturing and sales of personal handheld devices. Although eTech recognizes that it is a niche player and will likely remain so in the foreseeable future, it is trying to increase its current small market share in this huge competitive market. Jim Simons, VP of Production, and Catherine Dolans, VP of Marketing, have been discussing the possible addition of a new product to the companys current (rather limited) product line. The tentative name for this new product is ePlayerX. Jim and Catherine agree that the ePlayerX, which will feature a sleeker design and more memory, is necessary to compete successfully with the big boys, but they are also worried that the ePlayerX could cannibalize sales of their existing productsand that it could even detract from their bottom line. They must eventually decide how much to spend to develop and manufacture the ePlayerX and how aggressively to market it. Depending on these decisions, they must forecast demand for the ePlayerX, as well as sales for their existing products. They also realize that Apple. Samsung, and the other big players are not standing still. These competitors could introduce their own new products, which could have very negative effects on demand for the ePlayerX. The expected timeline for the ePlayerX is that development will take no more than a year to complete and that the product will be introduced in the market a year from now. Jim and Catherine are aware that there are lots of decisions to make and lots of uncertainties involved, but they need to start somewhere. To this end. Jim and Catherine have decided to base their decisions on a planning horizon of four years, including the development year. They realize that the personal handheld device market is very fluid, with updates to existing products occurring almost continuously. However, they believe they can include such considerations into their cost, revenue, and demand estimates, and that a four-year planning horizon makes sense. In addition, they have identified the following problem parameters. (In this first pass, all distinctions are binary: low-end or high-end, small-effect or large-effect, and so on.) In the absence of cannibalization, the sales of existing eTech products are expected to produce year I net revenues of 10 million, and the forecast of the annual increase in net revenues is 2%. The ePIayerX will be developed as either a low-end or a high-end product, with corresponding fixed development costs (1.5 million or 2.5 million), variable manufacturing costs ( 100 or 200). and selling prices (150 or 300). The fixed development cost is incurred now, at the beginning of year I, and the variable cost and selling price are assumed to remain constant throughout the planning horizon. The new product will be marketed either mildly aggressively or very aggressively, with corresponding costs. The costs of a mildly aggressive marketing campaign are 1.5 million in year 1 and 0.5 million annually in years 2 to 4. For a very aggressive campaign, these costs increase to 3.5 million and 1.5 million, respectively. (These marketing costs are not part of the variable cost mentioned in the previous bullet; they are separate.) Depending on whether the ePlayerX is a low-end or high-end produce the level of the ePlayerXs cannibalization rate of existing eTech products will be either low (10%) or high (20%). Each cannibalization rate affects only sales of existing products in years 2 to 4, not year I sales. For example, if the cannibalization rate is 10%, then sales of existing products in each of years 2 to 4 will be 10% below their projected values without cannibalization. A base case forecast of demand for the ePlayerX is that in its first year on the market, year 2, demand will be for 100,000 units, and then demand will increase by 5% annually in years 3 and 4. This base forecast is based on a low-end version of the ePlayerX and mildly aggressive marketing. It will be adjusted for a high-end will product, aggressive marketing, and competitor behavior. The adjustments with no competing product appear in Table 2.3. The adjustments with a competing product appear in Table 2.4. Each adjustment is to demand for the ePlayerX in each of years 2 to 4. For example, if the adjustment is 10%, then demand in each of years 2 to 4 will be 10% lower than it would have been in the base case. Demand and units sold are the samethat is, eTech will produce exactly what its customers demand so that no inventory or backorders will occur. Table 2.3 Demand Adjustments When No Competing Product Is Introduced Table 2.4 Demand Adjustments When a Competing Product Is Introduced Because Jim and Catherine are approaching the day when they will be sharing their plans with other company executives, they have asked you to prepare an Excel spreadsheet model that will answer the many what-if questions they expect to be asked. Specifically, they have asked you to do the following: You should enter all of the given data in an inputs section with clear labeling and appropriate number formatting. If you believe that any explanations are required, you can enter them in text boxes or cell comments. In this section and in the rest of the model, all monetary values (other than the variable cost and the selling price) should be expressed in millions of dollars, and all demands for the ePlayerX should be expressed in thousands of units. You should have a scenario section that contains a 0/1 variable for each of the binary options discussed here. For example, one of these should be 0 if the low-end product is chosen and it should be 1 if the high-end product is chosen. You should have a parameters section that contains the values of the various parameters listed in the case, depending on the values of the 0/1 variables in the previous bullet For example, the fixed development cost will be 1.5 million or 2.5 million depending on whether the 0/1 variable in the previous bullet is 0 or 1, and this can be calculated with a simple IF formula. You can decide how to implement the IF logic for the various parameters. You should have a cash flows section that calculates the annual cash flows for the four-year period. These cash flows include the net revenues from existing products, the marketing costs for ePlayerX, and the net revenues for sales of ePlayerX (To calculate these latter values, it will help to have a row for annual units sold of ePlayerX.) The cash flows should also include depreciation on the fixed development cost, calculated on a straight-line four-year basis (that is. 25% of the cost in each of the four years). Then, these annual revenues/costs should be summed for each year to get net cash flow before taxes, taxes should be calculated using a 32% tax rate, and taxes should be subtracted and depreciation should be added back in to get net cash flows after taxes. (The point is that depreciation is first subtracted, because it is not taxed, but then it is added back in after taxes have been calculated.) You should calculate the company's NPV for the four-year horizon using a discount rate of 10%. You can assume that the fixed development cost is incurred now. so that it is not discounted, and that all other costs and revenues are incurred at the ends of the respective years. You should accompany all of this with a line chart with three series: annual net revenues from existing products; annual marketing costs for ePlayerX; and annual net revenues from sales of ePlayerX. Once all of this is completed. Jim and Catherine will have a powerful tool for presentation purposes. By adjusting the 0/1 scenario variables, their audience will be able to see immediately, both numerically and graphically, the financial consequences of various scenarios.
You want to take out a 450,000 loan on a 20-year mortgage with end-of-month payments. The annual rate of interest is 3%. Twenty years from now, you will need to make a 50,000 ending balloon payment. Because you expect your income to increase, you want to structure the loan so at the beginning of each year, your monthly payments increase by 2%. a. Determine the amount of each years monthly payment. You should use a lookup table to look up each years monthly payment and to look up the year based on the month (e.g., month 13 is year 2, etc.). b. Suppose payment each month is to be the same, and there is no balloon payment. Show that the monthly payment you can calculate from your spreadsheet matches the value given by the Excel PMT function PMT(0.03/12,240, 450000,0,0).
Sometimes we wish to analyze the effect of changing a parameter over a wide range of values. Performing changes over a wide range is known as parametric analysis. This can be accomplished by using the sensitivity analysis to establish the range above and below the current value, and then changing the current value to a number outside the current range to find a new range for this parameter. For example, consider the following model: minimize 5X1 + 8X2 subject to (1) 2X1 + 5X2 ≥ 910 (2) 4X1 + 3X2 ≥ 1092 (3) X1 + 9X2 ≥ 819 X1 , X2 ≥ 0 (a) Solve this model graphically. (b) From the graph, perform a sensitivity analysis on b2, the rhs
Is my solution correct and did I fully answer the questions? (see attachment for my solution) Question: There are three factories on Momiss River. Each emits two types of pollutants, labeled P1 and P2, into the river. If the waste from each factory is processed, the pollution in the river can be reduced. It costs $1,500 to process a ton of factory 1 waste, and each ton processed reduces the amount of P1 by 0.10 ton and the amount of P2 by 0.45 ton. It costs $2,500 to process a ton of factory 2 waste, and each ton processed reduces the amount of P1 by 0.20 ton and the amount of P2 by 0.25 ton. It costs $3,000 to process a ton of factory 3 waste, and each ton processed reduces the amount of P1 by 0.40 ton and the amount of P2 by 0.50 ton. The state wants to reduce the amount of P1 in the river by at least 125 tons and the amount of P2 by at least 175 tons. a. Use Solver to determine how to minimize the cost of reducing pollution by the desired amounts. Are the LP assumptions…
a wine maker has a stock of three different wines with the following characteristics Wine proofs acids(%) specific gravity stock(gallons) A 27 .32 1.70 20 B 33 .20 1.08 34 C 32 .30 1.04 22 A dry table wine should be between 30 and 31 degree proof, it should contain at least 0.25% acid and should have a specific gravity of at least 1.06. The wine maker wishes to blend the three types of wine to produce as large a quantity as possible of satisfactory dry table wine. However, his stock of wine A must be completely used in the blend because further storage would cause it to deteriorate. What quantities of wines of B and C should be made in the blend. Formulate this problem as LP model. a wine maker has a stock of three different wines with the following characteristicsWine proofs acids(%) specific gravity stock(gallons)A 27 .32 1.70 20B 33 .20 1.08 34C 32 .30 1.04 22 A dry table wine…
Robert is the owner of an automobile manufacturing company. He calls for a board meeting and tells his directors that he wants to build a car that lets the users experience power and exhilaration. He tells them that the car must allow his users to soar from 0-60 mph in about 4 seconds, with high quality leather interior and Bose sound systems. He also adds in that the price of the car must be affordable enough for anybody making a moderately high salary and desires to have a luxury car with a sporty feel. In addition to selling to consumers, Robert works with a team of sales agents who focus exclusively on Hertz, Avis and Enterprise car rental companies. To help agents perform more efficiently while in the field, Robert has equipped the sales agents with handheld devices with barcode readers and Internet connections to speed up inventory assessment needs of each client and accurately track current sales. Staying on the cutting edge is a key point of differentiation for Robert's…
Robert is the owner of an automobile manufacturing company. He calls for a board meeting and tells his directors that he wants to build a car that lets the users experience power and exhilaration. He tells them that the car must allow his users to soar from 0-60 mph in about 4 seconds, with high quality leather interior and Bose sound systems. He also adds in that the price of the car must be affordable enough for anybody making a moderately high salary and desires to have a luxury car with a sporty feel. In addition to selling to consumers, Robert works with a team of sales agents who focus exclusively on Hertz, Avis and Enterprise car rental companies. To help agents perform more efficiently while in the field, Robert has equipped the sales agents with handheld devices with barcode readers and Internet connections to speed up inventory assessment needs of each client and accurately track current sales. Staying on the cutting edge is a key point of differentiation for Robert's…
Choose Yes or No to indicate whether each of the following statements about the CONVEXITY OR CONCAVITY of an OBJECTIVE FUNCTION of convex programming problems is true. Objective function may exist and may be concave Objective function may exist and may be convex Objective function may exist and may be neither convex nor concave Objective function may exist and must be concave Objective function may exist and must be convex Objective function may exist and must be neither convex nor concave Objective function must exist and must be concave Objective function must exist and must be convex Objective function must exist and must be neither convex nor…
Mete makes his living buying and selling corn. On January 1, he has 50 tons of corn and 1000 TL. On the first day of each month Mete can buy corn at the following prices per ton. January: 300 TL, February: 350 TL, March: 400 TL, April: 500 TL. On the last day of each month Mete can sell corn at the following prices per ton: January: 250 TL, February: 400 TL, March: 350 TL, April: 550 TL. Mete stores his corn in a warehouse that can hold at most 1100 tons of corn. He must be able to pay cash for all corn at the time of purchase. How Mete can maximize his cash on hand at the end of April. Which of the following is the correct objective function for the given statement? Please use (Xi = Tons of corn purchased at the beginning of month i.; Yi = Tons of corn sold at the end of month i.)
Dataware is trying to determine whether to give a $10 rebate, cut the price $6, or have no price change on a software product. Currently, 40,000 units of the product are sold each week for $45 apiece. The variable cost of the product is $5. The most likely case appears to be that a $10 rebate will increase sales 30%, and half of all people will claim the rebate. For the price cut, the most likely case is that sales will increase 20%.a. Given all other assumptions, what increase in sales from the rebate would make the rebate and price cut equally desirable?b. Dataware does not really know the increase in sales that will result from a rebate or price cut. However, the company is sure that the rebate will increase sales by between 15% and 40% and that the price cut will increase sales by between 10% and 30%. Perform a sensitivity analysis (two-way data table) that could be used to help determine Dataware’s best decision.
Nicole, an athletic trainer, believes if she has evidence that her program of exercise works, she can recruit more clients. She is planning to conduct a study to determine if working out for one hour per day with her fitness program causes a person to lose weight. She will track the participants’ progress over a twelve-week period. Nicole mandates that her clients at the gym participate in her study, and she asks them to each find one friend who is not a member of the gym to also participate. Each of the participants weighs in at the start and again after the twelve-week period has ended. At the conclusion of the study, she will compare the results of both groups. Unfortunately, because she has not had any formal training in research methodology, she is not certain how to label the different components in her study or identify any potential flaws. Help Nicole with the following components of this study. Identify the following issues with the study described. Ethical Concerns…
Nicole, an athletic trainer, believes if she has evidence that her program of exercise works, she can recruit more clients. She is planning to conduct a study to determine if working out for one hour per day with her fitness program causes a person to lose weight. She will track the participants’ progress over a twelve-week period. Nicole mandates that her clients at the gym participate in her study, and she asks them to each find one friend who is not a member of the gym to also participate. Each of the participants weighs in at the start and again after the twelve-week period has ended. At the conclusion of the study, she will compare the results of both groups. Unfortunately, because she has not had any formal training in research methodology, she is not certain how to label the different components in her study or identify any potential flaws. Help Nicole with the following components of this study Identify the following factors. Independent Variable Operational Definition of…