Bundle: Managerial Economics: Applications, Strategies And Tactics, 14th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
14th Edition
ISBN: 9781337198196
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 1, Problem 7E
a)
To determine
To analyze the alternative of reducing shipping rates to reflect the reduction in expense.
b)
To determine
To explain the situation of increase in number of deliveries in some markets with a decrease in jet and diesel fuel.
c)
To determine
To explain the situation of purchasing long-term contracts to buy jet fuel and diesel at a fixed price.
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In 2012-2015, the price of jet and diesel fuel used by air freight companies decreased dramatically. As CEO of FedEx, you have been presented with the following proposals below to deal with the situation. Evaluate these alternatives in the context of the decision-making model.
Make long-term contracts to buy jet fuel and diesel at a fixed price for the next two years and set shipping rates to a level that will cover these costs.
In 2008–2009, the price of jet and diesel fuel used by air freight companies decreased dramatically. As the CEO of FedEx, you have been presented with the following proposals to deal with the situation: a. Reduce shipping rates to reflect the expense reduction. b. Increase the number of deliveries per day in some markets. c. Make long-term contracts to buy jet fuel and diesel at a fixed price for the next two years and set shipping rates to a level that will cover these costs. Evaluate these alternatives in the context of the decision-making model presented in the text.
a) If production is increasing at 3 kayaks per day when production is 40 kayaks per day, find the rate of increase in revenue. Show all steps.
b) Suppose each kayak costs $124 to make and the company needs a minimum of $840 per day to remain operable and avoid bankruptcy. Find a price at which you believe consumers would readily buy the kayaks and the minimum number of kayaks you would need to sell at this price to keep the company afloat. (Note: There are many combinations/options.)
c) Explain how you found your price and minimum number of kayaks from part b above. (Use a minimum of 3 sentences.)
d) Suppose after a few weeks the company is in the red. The company is not selling enough kayaks to stay operable and must file for bankruptcy unless something changes quickly. Write a script that you would use to pitch to the CEO and CFO explaining a change (or changes) that can be quickly implemented to generate the revenue the company needs to refrain from going under. (Use a minimum of 6…
Chapter 1 Solutions
Bundle: Managerial Economics: Applications, Strategies And Tactics, 14th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
Ch. 1 - One of the approaches for the Southern Company to...Ch. 1 - Prob. 2ECh. 1 - Prob. 3ECh. 1 - In the Southern Company Managerial Challenge,...Ch. 1 - Prob. 5ECh. 1 - Prob. 6ECh. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Prob. 1.1CECh. 1 - Prob. 1.2CE
Ch. 1 - Prob. 1.3CECh. 1 - Prob. 1.4CECh. 1 - Prob. 1.5CECh. 1 - Prob. 1.6CECh. 1 - Prob. 1.7CECh. 1 - Prob. 1.8CECh. 1 - Prob. 1.9CECh. 1 - As a value-maximizing aluminum company, should...Ch. 1 - Prob. 2.2CECh. 1 - Prob. 2.3CECh. 1 - Prob. 2.4CECh. 1 - Energy entrepreneur T. Boone Pickens has proposed...
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