University of Toronto Department of Economics ECO 204 2010 - 2011
Sayed Ajaz Hussain Lecture 1
Ajaz Hussain. Department of Economics. University of Toronto (St. George)
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Today
About ECO 204
(Single-Variable) Functions (Single-Variable) Calculus (Single-Variable) Unconstrained Optimization (Single-Variable) Concave and Convex Functions
Ajaz Hussain. Department of Economics. University of Toronto (St. George) 2
Instructor:
Office Room 212, Economics Department 150 St. George Street Office hours Thursdays 1 – 3 pm or by appointment E-mail sayed.hussain@utoronto.ca
Ajaz Hussain. Department of Economics. University of Toronto (St. George) 3
Teaching Assistants
Head TA: Asad Priyo E-mail: asad.priyo@utoronto.ca Please
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Department of Economics. University of Toronto (St. George) 12
Ahead ..
Functions: notation
3 Classes of Optimization Problems Unconstrained Optimization Interior Solution Boundary Solution How to solve unconstrained optimization problems Concave and convex functions
Ajaz Hussain. Department of Economics. University of Toronto (St. George) 13
A Motivational Example
Source: HBS Case The Prestige Telephone Company
Prestige Telephone Company Average intercompany billing capped at $82,000/month Ri = Pi Qi “Inter company” Pi = $400/hr. → Qi = 205 hours/month “Commercial” PC = $800/hr
Other Services
Prestige Data Services
Commercial Customers
Ajaz Hussain. Department of Economics. University of Toronto (St. George)
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A Motivational Example
Exhibit 1: The Prestige Telephone Company January 2003 February 2003 March 2003 Intercompany Hours Commercial Hours Total Revenue Hours Service Hours Available Hours Total Hours 206 123 329 32 223 584 181 135 316 32 164 512 223 138 361 40 143 544
Ajaz Hussain. Department of Economics. University of Toronto (St. George)
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Commercial Demand Curve
See Excel Model 1.1 In March 2003 PC = $800, QC = 138 hours In March 2003, management feels: $800 PC ↑ by $200 → 30% ↓ QC PC ↓ by $200 → 30% ↑ QC
138
Commercial Hours
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Commercial Price
Ajaz Hussain. Department of Economics. University of Toronto (St. George)
Commercial Demand Curve and
One assumption that should be clearly analyzed is that the collection period is of 30 days net. Not always customers have the ability and willingness to pay off their debts in 30 days, some may take more time, and some could incur in bad debt.
1. a) i) The content of the table is about Canada’s economic and financial situation divided into four sectors: real sector, fiscal sector, financial sector, and external factor. Each of the four sectors is divided into smaller categories. For example: real sector is divided into national accounts, production index, labor market, prices indices. The other three factors are also divided into smaller categories just like the real sector. In addition, this table has the most recent GDP to show the success of Canada’s economy. The overall goal of the data is to show Canada’s recent economic situation.
For years 1983-1985, additional corporate assessment expense was given. This would lower Polymold’s earnings on their income statement. Another piece of data that was given is research and development expense. Without the CAD/CAM investment, research and development expense is $130,000. This is double to $260,000 without the CAD/CAM investment. This would lower earnings. We are also given the savings that the investment would yield. Without the CAD/CAM investment, there would still be savings – but not as much as with the CAD/CAM investment, which is due to the depreciation of the equipment and tax credits.
Question 1: Using budget data, how many motors would have to be sold for Waltham Motors Division to breakeven?
Why did Hampton repurchase a substantial fraction of its outstanding common stock? What is the impact of this repurchase on Hampton's financial performance? Critically assess Hampton's dividend policy. Do you agree with Mr. Cowin's proposal to pay a substantial dividend in December?
Customers must use the internet to fill out an online form to address their complaints or service needs. These forms are processed by employees in your department. Currently the turnaround time on any given form is between four to eight hours. This creates a number of other customer complaints. Project Call Center is designed to reduce this turnaround time by 75% by creating and staffing a call center in Tampa. Building acquisition, building renovations, building fit out, IT system upgrades, and hiring and training of staff are estimated to cost $8.5 million dollars. This $8.5 million dollars can be paid evenly in any two quarters in the next year. In addition, seven new employees will need to be hired at $40,000 burdened labor costs per year to staff the call center. Management of this project could easily be done with the current in-house staff. Most of the work of this project would be outsourced and will have minimal impact on day-to-operations.
This paper analyzes Rock Solid Industrial Parts, Inc. using the McKenzie 7-S Model to clarify some of the key issues facing the company today and also identify the key to success for the company in the next few years. The analysis concerns the elements of strategy, structure, systems, staff, skills, style, and shared values that are important to the organizational performance. Based on the analysis, some changes need to be made to align with company 's needs to achieve its business objectives. The analysis provides recommendations for the implementation of new modern IT solutions to accelerate the growth of the business. Rock Solid Industrial Parts, Inc. will move forward in the industry with IT solutions for their business needs.
This haevily disguised case is set in the “nature “woodstoves business in 1986. It is not based on The Vermont Castings Company. The issue is product line strategy based on product line profitability.
(Saskatchewan Ministry of the Economy,
The Automotive Component and Fabrication Plant (ACF) was the original plant site for Bridgeton Industries, a major supplier of components for the domestic automotive industry. It manufactured fuel tanks, manifolds, doors, muffler/exhausts and oil pans. All its products were sold to Big Three domestic automobile manufactures. Competition was from local suppliers and other Bridgeton plants. The plant well grew and developed as far as the market dominated by U.S automobile manufactures. It became less effective when foreign competition and scarce, expensive gasoline caused domestic loss of market share. Throughout the 1980s, the ACF experienced serious cutbacks due to this
Wriston’s Detroit plant is no longer a viable operation due to long-term capital underinvestment and product-process mismatch. It is recommended that the plant be phased out of operations over a five-year period with production and staff gradually shifted to a new plant to be built in the Detroit area. Further, it is also recommended that division accounting procedures and evaluation mechanisms be modified to allocate revenues/costs allowing for the synergistic benefits of Detroit’s products, and to recognize inherent manufacturing complexities, respectively. Issues Detroit’s production is unique when compared to other Wriston plants. Runs are typically lowvolume, involve significant set-up time, and vary significantly due to the sheer
computer was in operation. Salaries of the programming staff that provided service to clients and
Q1. Based on the 2004 statement of profit and loss data, do you agree with Water’s decision to keep product 103?
Using the intercompany-billing rate per hour of $400 and the intercompany demand of 205 hours we calculate revenue and expenses.
Ballard Integrated Management, Inc., provides support services in the field of housekeeping, maintenance, and food services to a variety of corporations. BIMS has a vast list of clientele which include 22 “Fortune 100” businesses. These businesses include midsized firms, major universities, medical centers, and large regional airports. BIMS employs more than 452 full and part-time people, made up of both hourly and exempt staff.