Edwina Haskell was an accomplished high school student who looked forward to attending Southern New England University (SNEU). SNEU was unique in that it operated on a trimester basis, its policy was to actively foster independent development among the students. Edwina’s mother and father each own their own small businesses. Soon after freshman orientation at SNEU, Edwina recognized a need among the students that could be the basis for developing a small business. Freshman students could not bring their cars on the campus. In effect, they were confined to the dorm; if they wished to travel, they had to take school-provided buses that operated on a fixed schedule. Further, the university’s cafeteria closed at eight in the evening. Students who wanted to have some food or snacks after 8:00 p.m. had to call local restaurants that delivered. The few restaurants in the neighborhood around SNEU that had delivery services often were late in their deliveries, and hot food, such as pizza, was frequently delivered cold.

Edwina felt that there was a niche market on the campus. She believed that students would be interested in ordering sandwiches, snacks, and sodas from a fellow student provided that the food could be delivered in a timely fashion. After talking with several students in her dorm complex, she believed that offering a package of a sandwich, a soda, and a small snack, such as potato chips, for $5 and a guaranteed delivery of 15 minutes or less would be a winner. Because her dorm complex consisted of four large adjoining buildings that house nearly 1,600 students, she felt that there would be sufficient demand to make the concept profitable. She talked about this concept with her roommates and with her parents. Her roommates were willing to help prepare the sandwiches and deliver them. She planned on paying each of them $250 per trimester for taking orders, making sandwiches, and delivering them. All three roommates, whom she knew from high school, were willing to be paid at the end of the trimester.

Edwina recognized that for this business plan to work, she would have to have a sufficient inventory of cold cuts, lettuce, tomatoes, soda, chips, and condiments to be able to meet student demands. The small refrigerators in the dorm rooms would not be sufficient. After talking to her parents, they were willing to help her set up her business. They would lend her $1,000 to buy a larger refrigerator to place in her dorm room. She did not have to repay this loan until she graduated in four years, but her parents wanted her to appreciate the challenges of operating a small business. They set up several conditions. First, although she did not have to pay back the $1,000 for the refrigerator for four years, she had to pay interest on this “loan.” She had to repay 3 percent of this loan each trimester. Further, they reminded her that although she could pay her friends at the end of the semester, she would need funds to buy the cold cuts, bread, rolls, soda, snacks, condiments, and supplies such as foil to wrap the sandwiches, plus plates and paper bags. Although Edwina was putting $500 of her own money into her business, her parents felt that she might need an infusion of cash during the first year (i.e., the first three trimesters). They were willing to operate as her bank—lending her money, if needed, during the trimesters. However, she had to pay the loan(s) back by the end of the year. They also agreed that the loan(s) would be at a rate of 2 percent per trimester.

Within the first three weeks of her first trimester at SNEU, Edwina purchased the $1,000 refrigerator with the money provided by her parents and installed it in her dorm. She also went out and purchased $180 worth of supplies consisting of paper bags; paper plates; and plastic knives, spoons, and forks. She paid for these supplies out of her original $500 personal investment. She and her roommates would go out once or twice a week, using the SNEU bus system to buy what they thought would be the required amount of cold cuts, bread, rolls, and condiments. The first few weeks’ worth of supplies were purchased out of the remainder of the $500. Students paid in cash for the sandwiches. After the first two weeks, Edwina would pay for the food supplies out of the cash from sales.

In the first trimester, Edwina and her roommates sold 640 sandwich packages, generating revenue of $3,200. During this first trimester, she purchased $1,710 worth of food supplies. She used $1,660 to make the 640 sandwich packages. Fortunately, the $50 of supplies were condiments and therefore would last during the two-week break between the trimesters. Only $80 worth of the paper products were used for the 640 sandwich packages. Edwina spent $75 putting up posters and flyers around the campus promoting her new business. She anticipated that the tax rate would be approximately 35 percent of her earnings before taxes. She estimated this number at the end of the first trimester and put that money away so as to be able to pay her tax bill.

During the two weeks off between the first and second trimester, Edwina and her roommates talked about how they could improve business operations. Several students had asked about the possibility of having warm sandwiches. Edwina decided that she would purchase two Panini makers. So at the beginning of the second trimester, she tapped into her parents’ line of credit for two Panini grills, which in total cost $150. To make sure that the sandwiches would be delivered warm, she and her roommates spent $100 on insulated wrappings. The $100 came from cash. The second trimester proved to be even more successful. The business sold 808 sandwiches, generating revenue of $4,040. During this second trimester, the business purchased $2,100 worth of food supplies, using $2,020 of that to actually create the 808 sandwich packages. They estimated that during the second trimester, they used $101 worth of supplies in creating the sandwich packages.

There was only a one-week break between the second and third trimesters, and the young women were quite busy in developing ideas on how to further expand the business. One of the first decisions was to raise the semester salary of each roommate to $300 apiece. More and more students had been asking for a greater selection of warm sandwiches. Edwina and her roommates decided to do some cooking in the dorms so as to be able to provide meatball and sausage sandwiches. Edwina once again tapped into her parents’ line of credit to purchase $275 worth of cooking supplies. One of the problems they noticed was that sometimes students would place calls to order a sandwich package, but the phones were busy. Edwina hired a fellow student to develop a website where students could place an order and select the time that they would like a sandwich package to be delivered. The cost of creating and operating this website for this third trimester was $300.

This last semester of Edwina’s freshman year proved to be the most successful in terms of sales. They were able to fulfill orders for 1,105 sandwich packages, generating revenue of $5,525. Edwina determined that the direct cost of food for these sandwich packages came out to be $2,928.25. The direct cost of paper supplies was $165.75. At the end of her freshman year, Edwina repaid her parents the $425 that came from her credit line that was used to purchase the Panini makers and the cooking utensils.

1. Prepare balance sheets for the end of each semester. (unfortunately there is no graphic to it)

Bob Davidson is a 46-year-old tenured professor of marketing at a small New England business school. He has a daughter, Sue, age 6, and a wife, Margaret, age 40. Margaret is a potter, a vocation from which she earns no appreciable income. Before she was married and for the first few years of her marriage to Bob (she was married once previously), she worked at a variety of jobs, mostly involving software programming and customer support. Bob’s grandfather died at age 42; Bob’s father died in 1980 at the age of 58. Both died from cancer, although unrelated instances of that disease. Bob’s health has been excellent; he is an active runner and skier. There are no inherited diseases in the family with the exception of glaucoma. Bob’s most recent serum cholesterol count was 190. Bob’s salary from the school where he works consists of a nine-month salary (currently $95,000), on which the school pays an additional 10 percent into a retirement fund. He also regularly receives support for his research, which consists of an additional two-ninths of his regular salary, although the college does not pay retirement benefits on that portion of his income. (Research support is additional income; it is not intended to cover the costs of research.) Over the 12 years he has been at the college his salary has increased by 4 to 15 percent per year, although faculty salaries are subject to severe compression, so he does not expect to receive such generous increases into the future. In addition to his salary, Bob typically earns $10,000 to 20,000 per year from consulting, executive education, and other activities. In addition to the 10 percent regular contribution the school makes to Bob’s retirement savings, Bob also contributes a substantial amount. He is currently setting aside $7,500 per year (before taxes). The maximum tax-deferred amount he can contribute is currently $10,000; this limit rises with inflation. If he were to increase his savings toward retirement above the limit, he would have to invest after-tax dollars. All of Bob’s retirement savings are invested with TIAA–CREF (Teachers Insurance and Annuity Association-College Retirement Equities Fund; home page: www.tiaa-cref.org), which provides various retirement, investment, and insurance services to university professors and researchers. Bob has contributed to Social Security for many years as required by law, but in light of the problems with the Social Security trust fund he is uncertain as to the level of benefits that he will actually receive upon retirement. (The Social Security Administration’s website is www.ssa.gov.) Bob’s TIAA-CREF holdings currently amount to $137,000. These are invested in the TIAA long-term bond fund (20 percent) and the Global Equity Fund (80 percent). The Global Equity Fund is invested roughly 40 percent in U.S. equities and 60 percent in non-U.S. equities. New contributions are also allocated in these same proportions. In addition to his retirement assets, Bob’s net worth consists of his home (purchase price $140,000 in 1987; Bob’s current equity is $40,000); $50,000 in a rainy-day fund (invested in a short-term money market mutual fund with Fidelity Investments); and $24,000 in a Fidelity Growth and Income Fund for his daughter’s college tuition. He has a term life insurance policy with a value of $580,000; this policy has no asset value but pays its face value (plus inflation) as long as Bob continues to pay the premiums. He has no outstanding debts in addition to his mortgage, other than monthly credit-card charges. Should Bob die while insured, the proceeds on his life insurance are tax free to his wife. Similarly, if he dies before retirement, his retirement assets go to his wife tax free. Either one of them can convert retirement assets into annuities without any immediate taxation; the monthly income from the annuities is then taxed as ordinary income. Bob’s mother is 72 and in good health. She is retired and living in a co-op apartment in Manhattan. Her net worth is on the order of $300,000. His mother-in-law, who is 70, lives with her second husband. Her husband is 87 and has sufficient assets to pay for nursing home care, if needed, for his likely remaining lifetime. Upon her husband’s death, Bob’s mother-in-law will receive ownership of their house in Newton, Massachusetts, as well as one-third of his estate (the remaining two-thirds will go to his two children). Her net worth at that point is expected to be in the $300,000−400,000 range. Bob’s goal is to work until he is 60 or 65. He would like to save enough to pay for his daughter’s college expenses, but not for her expenses beyond that point. He and his wife would like to travel, and do so now as much as his job and their family responsibilities permit. Upon retirement he would like to be able to travel extensively, although he would be able to live quite modestly otherwise. He does not foresee moving from the small town where he now lives. Bob has a number of questions about how he should plan for his retirement. Will the amount he is accumulating at his current rate of savings be adequate? How much should he be setting aside each year? How much will he have to live on when he retires? How long after retirement will he be able to live comfortably? What are the risks he faces, and how should his retirement planning take these risks into account?

You have recently graduated from school and have started your new job at a Consulting LLC. You have been given the following assignment. You are to present an investment analysis of a new residential income producing property an investor is considering purchasing. The asking price for the property is $1,200,000; rents are estimated at $201,000 during the first year and are expected to grow at 3.5% per year thereafter. Vacancies and collection losses are expected to be 11 percent of rents. Operating expenses will be 35% of effective gross income. A 70% loan can be obtained at 11% interest for 30 years. The property is expected to appreciate in value at 3% per year and will be sold in 5 years. You determine that the building represents 90% of value and would be depreciated over 39 years (use 1/39th per year). The potential investor indicates that she is in the 36% tax bracket and has enough passive income from other activities so that any passive losses from this activity would not be subject to any passive activity loss limitations. Capital gains from price appreciation will be taxed at 20% and depreciation recapture will be taxed at 25%. The discount rate is 14%. What is the investor’s expected before-tax internal rate of return on equity invested (BTIRR)?

What is the investor’s expected after-tax internal rate of return on equity invested (ATIRR)?

What is the first year debt coverage ratio?

What is the terminal capitalization rate?

*There is no balance sheet given in this problem*

A school psychologist wishes to determine whether a new anti-smoking film actually reduces the daily consumption of cigarettes by teenage smokers. The mean daily cigarette consumption is calculated for each of eight teenage smokers during the month before and the month after the film presentation, with the following results: MEAN DAILY CIGARETTE CONSUMPTION

SMOKER NUMBER BEFORE FILM (X1) AFTER FILM (X2)

1 28 26

2 29 27

3 31 32

4 44    44

5 35 35

6 20 16

7 50 47

8 25 23

A) Is there a significant difference in the number of cigarettes smoked before the film as compared to the number of cigarettes smoked after the film?

B) What does this NOT necessarily mean?

C) What might be done to improve the design of this experiment?

A school psychologist wishes to determine whether a new anti-smoking film actually reduces the daily consumption of cigarettes by teenage smokers. The mean daily cigarette consumption is calculated for each of eight teenage smokers during the month before and the month after the film presentation, with the following results: MEAN DAILY CIGARETTE CONSUMPTION

SMOKER NUMBER BEFORE FILM (X1) AFTER FILM (X2)

1 28 26

2 29 27

3 31 32

4 44 44

5 35 35

6 20 16

7 50 47

8 25 23

A) Is there a significant difference in the number of cigarettes smoked before the film as compared to the number of cigarettes smoked after the film?

B) What does this NOT necessarily mean?

C) What might be done to improve the design of this experiment?

6. A school system has a high rate of turn-over among new teachers. Specifically, 30% of the teachers that are hired leave within 2 years. The superintendent is concerned about the problem and institutes a program of teacher mentoring that he hopes will improve retention of the teachers. After the first 2 years of the program, he evaluates whether it is working by recording what happened with the 16 teachers who were hired at the start of the program. He finds that 3 of original 16 have left.

a. Complete the relevant hypothesis test, using α = .05.

b. Suppose that the mentoring program actually does improve retention to the point where the true probability of a teacher leaving is actually 10%. What was the power of the principal’s study? What does the number you compute mean in English? Explain the relevance (or lack of relevance) of your power calculation to your conclusion in part ‘a.’

Laura, a new graduate from Cornell Unversity’s School of Hotel Administration, could not believe her good luck. She was recently offered a new entrylevel position as an operations analyst at ARAMARK, one of the most admired U.S. companies, according to Fortune magazine (ARAMARK is a leader in professional services, providing award-winning food services, facilities management, and uniform and career apparel to health care institutions, universities and school districts, stadiums and arenas, and businesses around the world). The reason for Laura’s excitement was also because of the unique opportunity she was getting in her first assignment: she was going to Beijing during the 2008 Olympics to work for ARAMARK food services. Over the years, ARAMARK has provided food services to many large-scale events, including the last 13 Olympic Games. For example, during the 2004 Athens Olympics, ARAMARK worked with its partner, the Daskalantonakis Group (the leading Greek hospitality and tourism group), to provide meals for the largest Olympic Village in history. The Olympic Village in Athens hosted Summer Olympic and Paralympic Games participants, coaches, officials and Games personnel. ARAMARK and the Daskalantonakis Group served more than two million meals to participants, coaches, and officials throughout the 60-day duration of both the Olympic and Paralympic Games. Some of the other large-scale food service events managed by ARAMARK included serving over 340,000 motor fans who attended one of the biggest events in Spain last year: the Spanish Formula 1 Grand Prix in Barcelona. More than 1,100 ARAMARK employees served attendees more than 9,000 fruit dishes, 120,000 sandwiches, 40,000 hot dogs, and 40,000 cups of coffee during the three-day event. Some specialty gourmet dishes were also served, such as barbequed lamb steak, pumpkin and orange soup, and sole rolls with shrimp cream. While preparing for her job interview, Laura had become aware of the large scale of ARAMARK’s food service engagements. However, nothing had prepared Laura for the scale of the Beijing 2008 Olympics food service operations; Laura and all the other new employees had received a pre-event memo from their new boss, which stated that the ARAMARK team would be responsible for serving 3.5 million meals during the event (or 10,000 people per hour) that would not only pack a punch for peak performance but had to have the smells and tastes of home. The food service operations would have a staff of nearly 7,000—including some 230 chefs from 10 countries— to feed almost 65,000 athletes, coaches, officials, and members of the media throughout the Olympics. The memo further stated that ARAMARK’s biggest challenge would be to ensure that the food arrived at the right time, at the right temperature, and in the right quantities. In addition, dining during the Olympics would also be a social experience. Therefore, ARAMARK had to ensure that the athletes and visiting dignitaries got the highest quality service for a great experience. The memo also included a table (see Table 12.4), which listed some of the key inventories that needed to be managed to ensure that the food service operation was successful. After going through the memo and the attached table, Laura wondered if she should still feel lucky or she should start panicking. Her job was to support the assistant director in effectively managing inventory for the food service operations. She wondered if she could apply the concepts she learned about lean enterprise in her final semester operations management class to this first “real-world” job. Table 12.4 Inventory for 2008 Beijing Olympics Food Service Operations To serve a “world menu” of more than 800 recipes throughout the Games requires: • 93,000 pounds of seafood • 130 tons of meat • 38,000 pounds of pasta (dry) • 134,000 pounds of rice (about 20 million half-cup servings when cooked) • 743,000 (or 232 tons) potatoes • 800,000 (or 44 tons) eggs • 1 million apples • 936,000 bananas • 312,000 oranges • 684,000 carrots • Nearly 24 tons of onions • 50,000 pounds of mushrooms • 57,000 pounds of cheese • 190,000 loaves of bread • 5,500 pounds of butter • 16,000 pounds of tofu • 20,000 heads of lettuce All those ingredients will create a rotating menu of: • 320 hot main entrée dishes • 160 vegetable and potato dishes • 128 rice and pasta dishes • 400 different dessert, pastry, and bakery items

QUESTIONS

1. What are the unique aspects of inventory management in large-scale food services such as ARAMARK’s Olympic Games operations?

2. What lean production concepts can Laura apply in the above context? What challenges will she face?

3. What are the limits to applying lean principles in large food service operations such as ARAMARK’s Olympic Games operations?

Lafayette Public School System has three high schools to serve a district divided into five areas. The capacity of each high school, the student population in each area, and the distance (in miles) between each school and the center of each area are listed in the table below:

(Part a - 8 points) Formulate and list the linear program for the above problem to minimize the total student-miles traveled per day. You do NOT need to solve your listed linear program.  

(Part b - 2 points) If Capedot High School will be closed to conserve the school system’s resources and its budget, how will you efficiently revise your linear program to cope with this school closing?

Please use Word or something to write your answer and show work. Thank you very much! :D

Suppose college graduates earn $20 an hour and high school graduates earn $10 an hour. Suppose too that the marginal product of college graduates at Johnson Tools is 5 hammers per hour, while the marginal product of high school graduates is 4 hammers per hour (regardless of the number of each type of worker employed).

a. What is the least-cost production method for producing 100 hammers in an eight-hour day?

b. What if the marginal product of high school graduates was instead 2?

c. What is the critical difference in productivity (in percentage terms) at which the type of worker hired changes?

   When the marginal product of high school graduates is  percent of the marginal product of college graduates.

In the 21st century the relationships amongst the various levels of government in what is known as Federalism, has changed radically since the founding of the republic. What is Federalism and why is our government founded on such a principle, and what are the implications of such a principle for public administrators responsible for the efficient and effective delivery of public and quasi-public goods and services in a dynamic political economy?