Principles Of Operations Management
11th Edition
ISBN: 9780135173930
Author: RENDER, Barry, HEIZER, Jay, Munson, Chuck
Publisher: Pearson,
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Chapter 13, Problem 25P
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To explain: The approach that is preferable.
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Winchester Hospital is a privately owned institution. The hospital is at full capacity, but the governing board would like to see an increase in revenue. They’ve tasked you, the hospital administrator, with finding ways to accomplish this. If you are able to raise revenue, the board will provide you with a significant year-end bonus. Currently, 50% of Winchester’s rooms can be converted from having one bed to having two beds, allowing for more patients to be admitted. Doctors, nurses, and other hospital staff are firmly against this move, especially because additional hiring is not planned. These stakeholders make up the vast majority of the hospital workforce. Evaluate this situation using both the utilitarianism and individualistic (ethical egoism) approaches. Define each approach and describe how each would resolve the decision. What would you expect the outcome of each decision to be? Support your conclusions with facts from the situation.
Southeastern Airlines's daily flight from Atlanta toCharlotte uses a Boeing 737, with all-coach seating for 120 people.In the past, the airline has priced every seat at $140 for theone-way flight. An average of 80 passengers are on each flight.The variable cost of a filled seat is $25. Aysajan Eziz, the newoperations manager, has decided to try a yield revenue approach,with seats priced at $80 for early bookings and at $190 for bookingswithin 1 week of the flight. He estimates that the airline willsell65 seats at the lower price and 35 at the higher price. Variablecost will not change. Which approach is preferable to Mr. Eziz?
Majestic Corporation provides call-center ordering services for Essential Oils magazine. Majestic receives an annual fee of $200,000 for providing such services and is also eligible to receive a performance bonus up to
$65,000 if the average customer wait times are below certain thresholds at the end of the year.
Using historical results as well as current expectations, Majestic estimates the chances of achieving the different performance bonuses as shown in the table here.
Assume there are NO revenue constraints, and the entity uses the expected value approach to record variable consideration when recognizing revenue during the period. Which is the amount of the performance bonus
management can recognize in the transaction price?
Average wait times Performance Bonus % Chance of Achieving
$65,000
15%
< 1 minute
< 2 minutes
< 3 minutes
< 4 minutes
< 5 minutes
$45,000
$25,000
$5,000
0
10%
50%
20%
5%
a. Management would include the variable consideration in the transaction price in the…
Chapter 13 Solutions
Principles Of Operations Management
Ch. 13 - Make the case for, and then against, this pricing...Ch. 13 - Prob. 1DQCh. 13 - Why are SOP teams typically cross-functional?Ch. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQ
Ch. 13 - Prob. 10DQCh. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Prob. 13DQCh. 13 - Prob. 14DQCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - The president of Hill Enterprises, Terri Hill,...Ch. 13 - Prob. 4PCh. 13 - Prob. 5PCh. 13 - Prob. 6PCh. 13 - Consuelo Chua, Inc., is a disk drive manufacturer...Ch. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Southeast Soda Pop, Inc., has a new fruit drink...Ch. 13 - Ram Roys firm has developed the following supply,...Ch. 13 - Jerusalem Medical Ltd., an Israeli producer of...Ch. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Dwayne Cole, owner of a Florida firm that...Ch. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Evaluate the various configurations of operating...Ch. 13 - Prob. 2CSCh. 13 - After researching revenue (yield) management in...Ch. 13 - The Magic used its original pricing systems of...Ch. 13 - Prob. 1.3VC
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