preview

Essay about Caso Hamptonshire Express

Better Essays

9-698-053
REV: AUGUST 30, 2002

V.G. NARAYANAN
ANANTH RAMAN

Hamptonshire Express
Problem #1
Anna Sheen, upon graduating from a Boston-area university with a degree in journalism and operations research, returned to her hometown of Hamptonshire, Pennsylvania, to start a daily newspaper. The Hamptonshire Express emphasized local news which Sheen believed was not adequately covered by big-city newspapers such as the The Philadelphia Inquirer, Pittsburgh PostGazette, and The New York Times.
Sheen daily wrote stories and articles around news and feature material that she gathered from around town, and typeset the newspaper using desktop software and a PC leased from a large
Pittsburgh-area retailer. She estimated her lease cost …show more content…

# hours invested daily in creating the profile section for a particular day

# hours invested in creating the profile section on a given day

The function in Figure 1 can be expressed as a simple equation: D  500   h  500  50 h , where D is daily demand for The Hamptonshire Express, and h the number of hours Sheen has invested in creating the profile section.
As before, Sheen forecast demand for the following day’s newspapers every evening based on the quality of the profile section, and used her demand forecast to determine her stocking quantity.
a.

How many hours should Sheen invest daily in the creation of the profile section? Assume the opportunity cost of her time (based on other employment opportunities in Hamptonshire) to be $10 per hour. Try different values for h in the spreadsheet “Hamptonshire Express:
Problem #2.” (To make your life easier, optimal stocking quantity, Q, is computed by the spreadsheet based on the newsvendor formula for your choice of h .)

b.

What explains Sheen’s choice of effort level h ? Do not spend more than 10 minutes thinking about this question. (Hint: Sheen would choose h to equate marginal cost of effort with marginal benefit. The marginal cost of her effort is $10 per hour; that is, the opportunity cost of her time, the marginal benefit of her effort is

2

0.8 * 50

Get Access