Super Auto Company rented a warehouse in Halifax, NS to store its engines valued at $500,000. The engines need to be shipped to the Montreal, QC, plant. The annual holding cost rate for auto engine has been estimated at 15%. There are five shipping companies available. Their delivery time and costs are listed in the table below. Which carrier is most economical?Carrier Delivery Time (Days) CostA 20 $500B 15 $800C 12 $1200D 8 $1600E 5 $200

Super Auto Company rented a warehouse in Halifax, NS to store its engines valued at $500,000. The engines need to be shipped to the Montreal, QC, plant. The annual holding cost rate for auto engine has been estimated at 15%. There are five shipping companies available. Their delivery time and costs are listed in the table below. Which carrier is most economical?Carrier Delivery Time (Days) CostA 20 $500B 15 $800C 12 $1200D 8 $1600E 5 $200

Name: Super Auto Company rented a warehouse in Halifax, NS to store its engi
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Description: Super Auto Company rented a warehouse in Halifax, NS to store its engines valued at $500,000. The engines need to be shipped to the Montreal, QC, plant. The annual holding cost rate for auto engine has been estimated at 15%. There are five shipping c

MARKETING 2018

19th Edition

ISBN:9780357033753

Author:Pride

Publisher:Pride

Chapter6: Target Markets: Segmentation And Evaluation

Section6.1: Family-owned Ski Butternut Targets Family Skiers

Problem 3VC: Located in the picturesque Berkshire Mountains of Western Massachusetts, Ski Butternut has been a...

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Located in the picturesque Berkshire Mountains of Western Massachusetts, Ski Butternut has been a family-owned, family-oriented ski destination for more than 50 years. The resort includes 22 trails for downhill skiing and snowboarding, two terrain parks for riding, and a dedicated area for snow tubing. Although Ski Butternut hosts some non-ski events during summer and fall, its business goes into high gear when snowy weather arrives, bringing skiers and riders from across Massachusetts, Connecticut, New York, and New Jersey. Matt Sawyer, Ski Butternuts director of marketing, says the primary target market has always been families with young children who are seeking affordable skiing. Everything from the snack-bar menus to the ski-shop merchandise is presented with families in mind. So that parents can have fun in the snow without worry, the resort has a Childrens Center for children who are too young to ski or have no interest. Fifth-graders are invited to ski for free when accompanied by an adult who buys an adult lift ticket. The resort also created two terrain parks for young snowboarders who were clamoring for a more exciting riding experience. Without the terrain parks, Sawyer says, these boarders would have asked their parents to take them to competing mountains in Vermont. Ski Butternuts research shows that first-timers are a particularly important segment, because they tend to have a strong allegiance to the resort where they learn to ski. First-timers typically visit the resort seven times before seeking out more challenging mountains. As a result, Ski Butternut has made teaching first-timers to ski or snowboard one of its specialties. For this market, the resort bundles ski or board rentals, lift tickets, and also offers a wide range of individual and group lessons for all ages and abilities at a value price. Because Ski Butternut has trails for different skill levels, beginners can challenge themselves by changing trails within the resort once they feel confident. Ski Butternut also targets seniors and college students. Knowing that weekends are the busiest period, the resort offers special midweek prices to attract seniors who have free time to ski on weekdays. College students are particularly value-conscious, and they often travel to ski resorts as a group. As a result, Ski Butternut offers weekend and holiday discounts to bring in large numbers of students who would otherwise ski elsewhere. Thanks to Facebook, Twitter, and other social media, students quickly spread the word about special pricing, which enhances Ski Butternuts ability to reach this key segment. In addition, the resort highlights discount pricing for families when targeting specific segments, such as scout troops, military personnel, emergency services personnel, and members of local ski clubs. Another segment Ski Butternut has selected for marketing attention is ski racers. The resort features professional coaching, lessons, and programs for ski racers in the age group of 8 to 20. Sawyer notes that these ski racers are extremely dedicated to training, which means theyre on the slopes as often as possible, a positive for the resorts attendance and revenue. To stay in touch with racers, Ski Butternut has a special website and a dedicated Facebook page. Sawyer conducts up to 1,200 customer surveys every year to better understand who his customers are and what they need. He also compares the results with skiers who visit mountains of a similar size in other areas. Digging deeper, he analyzes data drawn from the ski shops rental business to build a detailed picture of customers demographics, abilities, and preferences. Based on this research, he knows that the typical family at Ski Butternut consists of two children under age 18 who ski or ride, and at least one parent who skis. Because they can obtain so much information from and about their customers, Sawyer and his team are able to make better decisions about the marketing mix for each segment. By better matching the media with the audience, they get a better response from advertising, e-mail messages, and other marketing communications. As one example, they found that 15 percent of the visitors to Ski Butternuts website were using a smartphone to access the site. Sawyer has now created a special version of the site specifically for mobile use and created a text-message contest to engage skiers who have smartphones.16 What role do geographic variables play in Ski Butternuts segmentation and targeting?
Located in the picturesque Berkshire Mountains of Western Massachusetts, Ski Butternut has been a family-owned, family-oriented ski destination for more than 50 years. The resort includes 22 trails for downhill skiing and snowboarding, two terrain parks for riding, and a dedicated area for snow tubing. Although Ski Butternut hosts some non-ski events during summer and fall, its business goes into high gear when snowy weather arrives, bringing skiers and riders from across Massachusetts, Connecticut, New York, and New Jersey. Matt Sawyer, Ski Butternuts director of marketing, says the primary target market has always been families with young children who are seeking affordable skiing. Everything from the snack-bar menus to the ski-shop merchandise is presented with families in mind. So that parents can have fun in the snow without worry, the resort has a Childrens Center for children who are too young to ski or have no interest. Fifth-graders are invited to ski for free when accompanied by an adult who buys an adult lift ticket. The resort also created two terrain parks for young snowboarders who were clamoring for a more exciting riding experience. Without the terrain parks, Sawyer says, these boarders would have asked their parents to take them to competing mountains in Vermont. Ski Butternuts research shows that first-timers are a particularly important segment, because they tend to have a strong allegiance to the resort where they learn to ski. First-timers typically visit the resort seven times before seeking out more challenging mountains. As a result, Ski Butternut has made teaching first-timers to ski or snowboard one of its specialties. For this market, the resort bundles ski or board rentals, lift tickets, and also offers a wide range of individual and group lessons for all ages and abilities at a value price. Because Ski Butternut has trails for different skill levels, beginners can challenge themselves by changing trails within the resort once they feel confident. Ski Butternut also targets seniors and college students. Knowing that weekends are the busiest period, the resort offers special midweek prices to attract seniors who have free time to ski on weekdays. College students are particularly value-conscious, and they often travel to ski resorts as a group. As a result, Ski Butternut offers weekend and holiday discounts to bring in large numbers of students who would otherwise ski elsewhere. Thanks to Facebook, Twitter, and other social media, students quickly spread the word about special pricing, which enhances Ski Butternuts ability to reach this key segment. In addition, the resort highlights discount pricing for families when targeting specific segments, such as scout troops, military personnel, emergency services personnel, and members of local ski clubs. Another segment Ski Butternut has selected for marketing attention is ski racers. The resort features professional coaching, lessons, and programs for ski racers in the age group of 8 to 20. Sawyer notes that these ski racers are extremely dedicated to training, which means theyre on the slopes as often as possible, a positive for the resorts attendance and revenue. To stay in touch with racers, Ski Butternut has a special website and a dedicated Facebook page. Sawyer conducts up to 1,200 customer surveys every year to better understand who his customers are and what they need. He also compares the results with skiers who visit mountains of a similar size in other areas. Digging deeper, he analyzes data drawn from the ski shops rental business to build a detailed picture of customers demographics, abilities, and preferences. Based on this research, he knows that the typical family at Ski Butternut consists of two children under age 18 who ski or ride, and at least one parent who skis. Because they can obtain so much information from and about their customers, Sawyer and his team are able to make better decisions about the marketing mix for each segment. By better matching the media with the audience, they get a better response from advertising, e-mail messages, and other marketing communications. As one example, they found that 15 percent of the visitors to Ski Butternuts website were using a smartphone to access the site. Sawyer has now created a special version of the site specifically for mobile use and created a text-message contest to engage skiers who have smartphones.16 How is Ski Butternut applying behavioristic variables in its segmentation strategy? Explain your answer.
PM Computers assembles personal computers from generic components. It purchases its color monitors from a manufacturer in Taiwan; thus, there is a long and uncertain lead time for receiving orders. Lead time is normally distributed, with a mean of 25 days and a standard deviation of 10 days. Daily demand is also normally distributed, with a mean of 2.5 monitors and a standard deviation of 1.2 monitors. Determine the safety stock and reorder point corresponding to a 90% service level.
A shipment of parts valued at $75,000 needs to be shipped from Thunder Bay, ON to Edmonton, AB. They could be shipped by rail, taking 15 days at a cost of $1,575, or by truck, taking 4 days at a cost of $2,640. The annual holding cost rate for this type of item has been estimated at 22%. What option is more economical?
The Goodstone Tire Company produces a brand of tirecalled the Rainpath. The annual demand at its distributioncenter is 12,400 tires per year. The transport and handlingcosts are $2600 each time a shipment of tires is ordered atthe distribution center. The annual carrying cost is $3.75per tire.a. Determine the optimal order quantity and the minimumtotal annual cost.b. The company is thinking about relocating its distributioncenter, which would reduce transport and handling coststo $1900 per order but increase carrying costs to $4.50per tire per year. Should the company relocate based oninventory costs?
Solve the following problem Retail managament Digital Stereo systems stocks a certain digital playback device that costs $700 to stock and has annual sales of 250 units. The cost to place an order is $100, carrying cost rate is $15 per unit per year. A) Company the optimal inventory policy, specifying the maximum inventory level, the percentage of sales that can be met from stock on hand, and the maximum number of units on backorder.
Beach Republic Bank operates a network of automated teller machines (ATMs). Cash withdrawals at a particular ATM average approximately $80 per transaction. The average number of withdrawals per ATM is 120 per week. The bank estimates that it costs about $100 to fill the ATM each time regardless of the amount of cash that is added to the machine. Assume that the cost of capital for the bank is 10%, and there are 52 weeks in a year. What is the optimal cash filling policy and the associated total inventory ordering and holding cost? Suppose that the standard deviation of weekly number of withdrawals is 20 and the lead time to fill an ATM is half a week (3.5 days), how much cash should the bank allocate to an ATM to be 99% confident of not running out of money between deliveries? Given the information from parts a and b, what would the cost savings be for reducing the number of ATMs from 100 to 20? Discuss the pros and cons of pooling the cash inventory in this context.…
Gainesville Cigar stocks Cuban cigars that have variable lead times because of the difficulty in importing the product: lead time is normally distributed with an average of 6 weeks and a standard deviation of 2 weeks. Demand is also a variable and normally distributed with a mean of 200 cigars per week and a standard deviation of 25 cigars.a) For a 90% service level, what is the ROP?b) What is the ROP for a 95% service level?c) Explain what these two service levels mean. Which is preferable?
Gainesville Cigar stocks Cuban cigars that have variable lead times because of the difficulty in importing the product: Lead time is normally distributed with an average of 8 weeks and a standard deviation of 2 weeks.Demand is also a variable and normally distributed with a mean of 150 cigars per week and a standard deviation of 23 cigars. 95% service level, what is the ROP?
The Sofaworld Company purchases upholstery materialfrom Barrett Textiles. The company uses 45,000 yards ofmaterial per year to make sofas. The cost of ordering material from the textile company is $1,500 per order. It costsSofaworld $0.70 per yard annually to hold a yard of material in inventory. Determine the optimal number of yards ofmaterial Sofaworld should order, the minimum total inventory cost, the optimal number of orders per year, and theoptimal time between orders.
Gainesville Cigar stocks Cuban cigars that have variable lead times because of the difficulty in importing the product. Lead time is normally distributed with an average of 6 weeks and a standard deviation of 2 weeks. Demand is also variable and normally distributed with a mean of 200 cigars per week and a standard deviation of 25 cigars. a. For a 90% service level, what is the ROP? b. What is the ROP for a 95% service level?
Sam’s Auto Shop services and repairs a particular brand of foreign automobile. Sam uses oil filters throughout the year. The shop operates 52 weeks per year and weekly demand is 150 filters. Sam estimates that it costs $18 to place an order and his annual holding cost rate is $3 per oil filter. Currently, Sam orders in quantities of 680 filters. 1. Calculate the total annual costs associated with Sam’s current ordering policy. (round to 2 decimal places) 2. Calculate economic order quantity. (round to 2 decimal places) 3. Calculate total annual costs using the EOQ ordering policy. (Round to 2 decimal places.) 4. Calculate penalty costs Sam is incurring by using his current policy.(Round to 2 decimal places.) Note: the difference between the EOQ policy and any other policy is a penalty cost.