Question

Topic: Staffing Characters: Barbara, the controller of Atex, Inc., a small manufacturing company Sam, the controller of Smith, Inc., a small manufacturing company Barbara is a controller of Atex, Inc., a small regional manufacturing company. During her four years of employment at Atex, she has worked her way up through the ranks. She has been the controller for the past year and has consistently received favorable evaluations. Barbara enjoys her work and is good at what she does. Atex, Inc., is close to finalizing a merger with Smith, Inc., a similar manufacturing company. The merger will be finalized in two weeks, on July 1. When the companies merge, various positions will be eliminated to avoid duplication of efforts in the merged company. A variety of positions will be cut, including manufacturing workers, office staff, and management positions. The decisions on personnel cuts will be announced August 1. Sam, the controller of Smith, Inc., has been with that company for less than a year. He is perceived favorably by management. The newly merged company will need only one controller, and Barbara has received unofficial confirmation that she will be the controller of the new firm and that Sam will be dismissed. Barbara has had significant responsibility for her parents during the past two years. Her father has terminal cancer, and the specialist has given him only six months to live. Her mother is emotionally distressed and needs special attention from time to time. In addition, after years of trying, Barbara has recently found out that she is pregnant. She plans to take a short maternity leave and then return to work full-time. Barbara realizes the time demands of her current and experted family and also the time demands of working as the controller of the newly merged company. She feels that she will be able to balance her personal and professional life in such a way that her job performance will not suffer. Yet, she wonders if she should make her boss aware of her responsibility to her parents and her pregnancy.

1.) What are the relevant facts of the situation?

2.) What are the ethical issues?

3.) What are the alternatives?

4.) What would you do and why?

Answer 1

To solve this question just input those variables which are to be used in logistic regression, as the question talks about using two variables only that is total loans and leases to total assets & total expenses/ total assets, so we will not input total cap/assets as an input variable in our excel, here we go

As one can see, we have taken only two variables , total exp/assets and total lns & leases/ assets in calculation, follwing steps have been followed to construct the above table

1. Assume logit= b0+ b1* independent variable1+ b2* independent variable 2 , take values of b0=0.1, b1=0.1, b2=0.1, note that these values of b0, b1 and b2 are just taken for calculation, one could assume any values here for bo , b1 and b2

2. Calculate exponential of logit in the next column by using exp (value in previous column)

3. Calculate probability by using formula, probability= exp (logit)/ { 1+ exp(logit)} in the next column

4. In next column, calculate log likelihood by using formula : financial condition value (i.e. 1 or 0) * LN( probability calculated in previous column) + (1- financial condition value)* LN( 1- probability calculated in previous column)

5. take the total of the column values of log likelihood

6. use solver function in excel to change this total by putting max value of 0 and changing the variable cells containing assumed values of b0, b1 and b2 , by clicking on solve, you will get actual values of b0, b1 and b2

which comes out to be b0=-14.72, b1=89.83, b2= 8.37

therefore you will get logit as

-14.72+ 89.83* Total exp/assets+8.37*Total lns & lsses/ assets

With values given in the question as total exp/ assets= 0.11 and total loans & leases/ assets= 0.6 , we get

logit as -14.72+ 89.83* 0.11+ 8.37*0.6= 0.1833

exp (logit) = 1.20

Probability= 0.546

Loglikelihood= 1*LN(0.546)+0*LN(1-0.546)= LN(0.546)= -0.605