Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 13, Problem 8PA
Geoff Gullo owns a small firm that manufactures “Gullo Sunglasses.” He has the opportunity to sell a particular seasonal model to Land’s Start, a catalog retailer. Geoff offers Land’s Start two purchasing options.
- Option 1: Geoff offers to set his price at $65 and agrees to credit Land’s Start $53 for each unit Land’s Start returns to Geoff at the end of the season (because those units did not sell). Because styles change each year, there is essentially no value in the returned merchandise.
- Option 2: Geoff offers a price of $55 for each unit, but returns are no longer accepted. In this case, Land’s Start throws out unsold units at the end of the season.
This season’s demand for this model will be
- a. How much would Land’s Start buy if it chose option 1? [LO13-1]
- b. How much would Land’s Start buy if it chose option 2? [LO13-2]
- c. Which option will Land’s Start choose? [LO13-2]
- d. Suppose Land’s Start chooses option 1 and orders 275 units. What is Geoff Gullo’s expected profit? [LO13-2]
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hill's Hardware Store is offering an incentive to customers. For every snowblowerr purchased at Hill's Hardware the customer will recieve a voucher for $25 off a future purchase. Each sale of a snowblower also includes complimentary maintenance. The maintenance can be performed by other vendors but most customers choose to have the maintenance done by Hill's Hardware. The snowblowers also include a one year warranty against any defects in workmanship without any additional charge to the customer. Assume you purchase a lsnowblower from Hill's Hardware. You leave the store with the snowblower and the voucher for $25 off a future purchase.
How many performance obligations does Hill's Hardware have for this transaction?
Question 18 options:
a)
1
b)
2
c)
3
Hair Zone manufactures a brand of hair-styling gel. It is considering adding a modifiedversion of the product—a foam that provides stronger hold. Hair Zone’s variable costs and prices to wholesalers are: Current Hair Gel New Foam Product Unit selling price 2.00 2.25 Unit variable costs . 85 1.25Hair Zone expects to sell 1 million units of the new styling foam in the first year after introduction, but it expects that 60% of those sales will come from buyers who normally purchase Hair Zone’s styling gel. Hair Zone estimates that it would sell 1.5 million units of the gel if it did not introduce the foam. If the fixed cost of launching the new foam will be $100,000 during the first year, should Hair Zone add the newproduct to its line? Why or why not?
The owner of a retail store that specializes in school supplies plans to buy TV ad time
during the broadcast of Wheel of Fortune, a game show that has a rating of 20. It
reaches 15,000 people in the primary target audience and a 30-second spot costs
$500. What is the cost per thousand (CPM) of the show?
1) $33
2) $133
3) $30
4) $23
5) $750
Dravinur Dnn
Chapter 13 Solutions
Operations Management
Ch. 13 - Which of the following is NOT true about the...Ch. 13 - A newsvendor orders the quantity that maximizes...Ch. 13 - Prob. 3CQCh. 13 - Suppose the newsvendor model describes a firms...Ch. 13 - Prob. 5CQCh. 13 - Prob. 6CQCh. 13 - A retailer has two merchandizers, Sue and Bob, who...Ch. 13 - Prob. 8CQCh. 13 - Which of the following changes in the in-stock...Ch. 13 - Prob. 10CQ
Ch. 13 - Prob. 11CQCh. 13 - Prob. 12CQCh. 13 - Prob. 13CQCh. 13 - Prob. 14CQCh. 13 - Dan McClure owns a thriving independent bookstore...Ch. 13 - Flextrola, Inc., an electronics systems...Ch. 13 - Monsanto sells genetically modified seed to...Ch. 13 - Fashionables is a franchisee of The UnLimited, the...Ch. 13 - Teddy Bower is an outdoor clothing and accessories...Ch. 13 - Prob. 6PACh. 13 - Goop Inc. needs to order a raw material to make a...Ch. 13 - Geoff Gullo owns a small firm that manufactures...Ch. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Prob. 11PA
Additional Business Textbook Solutions
Find more solutions based on key concepts
Many companies including Company OM tried to implement dynamic pricing in their ticketing system. The dynamic p...
Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
The Big Black Bird Company (BBBC) has a large order for special plastic-lined military uniforms to be used in a...
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
2. In what circumstances might a market-pull approach or a technology-push approach to new-product design be th...
OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
Mary Williams, owner of Williams Products, is evaluating whether to introduce a new product line. After thinkin...
Operations Management: Processes and Supply Chains (11th Edition)
What is precedent, and how does it affect common law?
Business in Action
What is precedent, and how does it affect common law?
Business in Action (8th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Misu Sheet, owner of the Bedspread Shop, knows his customers will pay no more than $120 for a comforter. Misu wants a 30% markup on selling price. What is the most that Misu can pay for a comforter? Assume Misu Sheet wants a 30% markup on cost instead of on selling price. What is Misu's cost? Round to the nearest cent.arrow_forwardA transfer-pricing method leads to goal congruence when managers: a. act in their own best interest and the decision is in the short-term best interest of the company b. act in their own best interest and the decision is in the long-term best interest of the manager's subunit c. act in their own best interest and the decision is in the long-term best interest of the company d. always act in their own best interestarrow_forwardPower O Exponential Logarithmic O Polynomial QUESTION 9 If you try different startinng values for the changing cells and obtain different solutions: you can be confident there is no solution you can keep the best solution you have found and hope that it is indeed optimal O there must be a mistake in your objective function O there must be a mistake in one of your constraints QUESTION 10 In pricing models (i.e., Example 7.1), elasticity of demand is an input with specifies the: sensitivity of price to changes in demand O sensitivity of demand to changes in price range of demand lovolarrow_forward
- The Company has the oppotunity to introduce a new product. The sales manager believes that the firm could sell 5,000 units per year at 14 per unit for 5 years. The production manager has determined that machinery costing 60,000 and having a 5 year life and no salvage value could be required. The machinery will have an annual fixed cash operating costs of 4,000. Variable cost per unit will be 8. Straight-line depreciation is to be used for both book and tax purposes. The tax rate is 40% and the firm's cost of capital is 14%. What is the Net Present Value of the Investment?arrow_forwardA store is having a promotion where every item is on sale for 20% off. This means that the discounted price is ___% of the original price. You pay sales tax of 6.2% for the discounted price. This means the price with tax is ___% of the discounted price. Item A has an original price of $83vAfter applying the discount and tax, how much do you pay to purchase Item A? You buy another item as well. Reducing the price to account for the 20% discount, and then adding in the 6.2% tax, you end up paying $79bfor Item B. What was the original price of Item B?arrow_forwardLomotan Piggery grows pigs to sell to a meat processing company. It is known for a fact that its peak season is during the first quarter of the year. Lomotan Piggery has checked the demand for pigs for the past three years which is shown below: Demand for Pigs at Lomotan Piggery: Demand (1,000s) per Quarter Year Q1 Q2 Q3 Q4 Total 2011 47 43 41 39 170 2012 48 46 38 44 176 2013 49 44 46 37 176 Total 144 133 125 120 522 What are the quarter 3 forecasts for 2014 using linear trend?arrow_forward
- Cost Planning; Gasoline Prices In June 2008, when gasoline prices were at an all-time high(more than $4 per gallon), Chrysler Motor Company promoted its Jeep vehicle with the offer of either$4,500 off the price of the vehicle or the guarantee that the buyer would not pay more than $2.99 pergallon of gas for the next 3 years (the details of the guarantee could vary by dealer).Required1. Assume that the Jeep vehicle you are interested in gets 15 mpg combined city/highway and that at thetime of purchase, you expected gasoline prices to average $5 per gallon over the next 3 years. How manymiles would you have to drive the vehicle in the next 3 years to make the guarantee more attractive thanthe $4,500 discount?arrow_forwardJacqueline Mulvaney makes bespoke corsages. She is about to attend an important show in London. She thinks that if the market is favorable, she can sell deluxe corsages at $75 each. However, if the market is not good, she will only sell 35 at $65 each. Jacqueline also makes a simple-range of corsages. If the market is positive, she can sell 80 simple corsages at $45 each, whereas if the market is not good, she will only sell 60 at $38 each. To produce either set of corsages costs about the same and she only has time to make one range. If Jacqueline feels that there is a 0.5 chance of the show going well, which range of corsages should she make based on the EMV?arrow_forward"If the demand for a good decreases when a consumer's income rises, the demand for that good must decrease when its price rises". This statement is valid for Nora's demand for cheese. This statement is not valid for Chris' demand for pasta. Q1 a) Using an appropriate model with a diagram, explain in detail Nora's demand for cheese.arrow_forward
- Andrew Thomas, a sandwich vendor at Hard Rock Cafe's annual Rockfest, created a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd) States of Nature (demand) Average $12,000 $9,000 $8,100 Big Small $22,000 -$2,000 Alternatives Large Stock Average Stock Small Stock $12,000 $6,000 $9,000 $4,000 The probabilities associated with the states of nature are 0.20 for a big demand, 0.45 for an average demand, and 0.35 for a small demand a) The alternative that provides Andrew Thomas the greatest expected monetary value (EMV) isarrow_forwardThe Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent on the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): (bold and underline is answer/ --- = needs answer) State of Nature Low Demand Medium Demand High Demand Decision Alternative s1 s2 s3 Manufacture, d1 -20 40 100 Purchase, d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.40, P(s2) = 0.40, and P(s3) = 0.20. Do not round your intermediate calculations. (a) Use a decision tree to recommend a decision. Purchase Component Part (b) Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. Enter your answer in thousands dollars. For example, an answer of $200 thousands should be entered as 200,000. Gorman should attempt to obtain a better estimate of…arrow_forwardCASE 4: PROJECTING SALES USING MOVING AVERAGE The sales (in thousands) of a particular beverage of a popular milk tea shop for each quarter of the following months and trend values were found using moving averages as follows: Actual Sales (in thousands) Year Quarter Trend 4 3 4 24 1 2 30 30 3 60 31 4 20 35 1 20 40 50 45 3 80 50 4 40 54 7 1 40 57 62 3 92 4 1 LO COarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY