Next, each item commitment quantity was calculated using its contribution margin and its total contribution in dollar to the revenue of the company. For e.g. if an item had a margin of $15 if sold, and $5 loss if not sold, the commitment value would be 0.75. Hence the optimal stock to keep would be three quarters of the probability of demand. If for instance, the corresponding error for 0.75 is 1.3, the optimal stock to keep for that item would be 1.3 * frozen forecast.
You can find the data for this case on the course website in a spreadsheet named: Midland Energy Resources Exhibits.xls. 1. For what purposes does Mortensen estimate Midland’s cost of capital? What would be the potential consequences of a too high estimate compared to the firm’s “true” cost of capital? What about a too low estimate?
Gloria Deal GB540-04: Economics for Global Decision Makers Unit 1 Assignment Timothy Terrell September 11, 2012 Problem #1:Using either a graph or table (Refer to page 22 for help with graphs and tables) use two goods to construct a production possibilities curve. Clearly explain what a variety of different points on the curve mean. What would make the curve expand or contract? Why is efficiency lost at the extremes, as when substantially more of one good and very little of another is produced? Type of Production | Production Alternatives | | A | B | C | D | E | Trucks | 0 | 2 | 4 | 6 | 8 | Cars | 30 | 27 | 21 | 12 | 0 | There would be 4.5 cars; .33 trucks, as determined from the table.
The bid-ask spread is also a cost to the dealer. Reducing the bid-ask spread would make prices more competitive and also lower costs. Section 2 Strategy # Description 15 Better .02 Match Depth All Full No Inv MgmtBid price is 0.02 more than the other dealers bid price. Ask price is 0.02 less than the other dealers ask price. 16 Inventory Management in Depth Cutoffs = 30 When the cum.
Guidelines for setting objectives-long term, short term, obtainable, financial objectives, realistic, quantifiable, who is responsible 5. Purpose of the Board of Directors 6. Business Model defined. Business model sets forth the economic logic for making profit in a business given the company’s strategy. OR The blueprint for delivering a valuable product that generates ample revenue to cover costs and yield a product. 7.
The category given the maximum point value in the Baldrige award is: Which of the following is not an assumption of the basic economic-order quantity model? Counting items to ensure an order is correct, is an example of approach actually schedules in detail each resource using the setup and runtime required for each order The assignment method is appropriate in solving problems that have the following characteristics Which of the following is not a principle of work-center scheduling? Which of the following according to Goldratt is not a component of production cycle time? According to Goldratt and Fox, a useful performance measure to treat inventory is Goldratt's rule of production scheduling include all but Which of the following would not be considered in deciding how far to minimum-cost schedule (crash) a project? The advantage(s) of the network planning models over the Gantt chart is (are) that The idea of the Value Density calculation is According to Hau Lee, which of
It’s good to respond to an emergency quicker because it may be a life or death situation. Provide new ideas When people volunteer for an organisation it means that there are more people in the organisation that can help out and also because there are more people it means that they may have a different idea of how to solve a situation so they can put their point forward and then the team can improve their skills in a different
Since PacifiCorp is not a publicly traded company, we must use valuation multiples from comparable firms to determine the value of the firm. As you can see in Exhibit 1, if we use the valuation multiples we arrive at an implied firm value of between $6,252 million (low end) and $9,289 million (high end). This means that our offer of $9.4 billion is right in line with the high end valuation of the company. We also used multiples to determine that the market value of equity was worth between $4,277 million and $5,904 million (see Exhibit 1). As stated earlier, we offered to pay $5.1 billion for the equity portion of the company.
We should perceive the opportunity cost as the return investors will expect to earn somewhere else when accepting similar risk. * Tax rate of 38% is chose as an average within the range 37.5% - 38.5%. Implicit assumptions in the WACC method * Firm will continuously rebalance its debt to keep a constant leverage ratio. Theoretically when calculating the weight in WACC, we should consider
The introduction of these hurdle rates leads to evaluating projects by their respective divisional WACC instead of the corporate WACC when calculating NPV, IRR and MIRR, and consequently different investment decisions for some projects. The capital budgeting process at the moment neither includes these divisional hurdle rates, nor a process of setting a higher cost of capital for riskier projects than for less risky projects within a division. To account for the difference in risk, the proposition was made to multiply a division’s beta with 0.9, 1 and 1.2 for projects of low, average and high risk, respectively. The resulting