J&L Packaging, Inc.: Cash-to-Cash Conversion Cycle Case Study

Jake and Lilly Gifford founded J&L Packaging, Inc. (J&LP) in 1995 after graduating from the University of Cincinnati. Jake earned a degree in robotics and mechanical engineering, while Lilly graduated with a degree in computer science. They met at the university while working on an information systems course project and married immediately after graduation. Their privately held firm manufactured cardboard packaging and boxes for computer devices such as personal computers, keyboards, replacement hard drives, servers, and so on. Many of their packages were high-end boxes with glossy finishes and the company’s logo on the box. Last year, J&L Packaging, Inc. sales were $106 million.

J&LP Packaging provided many services with their products, such as box and packaging design engineering and consulting, embossing and foil guidance, barcode advice, cartons that fold and collapse for easy storage, and a variety of colors and box strengths. In 2010, J&LP began to research the sustainability issues regarding boxes in the reverse logistics supply chain.Their research lead to a change in production technologies to accommodate up to 100 percent recycled fiber content and solar panels on the roofs of their two U.S. factories. They also hired an engineer to lead the company’s efforts to become a “Green Cycle”-certified manufacturer.

J&LP recently purchased and installed an ISOWA FALCON state-of-the-art, four-color, high-speed flexo box machine with an extensive zero defects quality control system. This box cutting and fabrication machine is manufactured in Kasugai, Japan, by the ISOWA Corporation (www.isowa.com). There are several videos of this automated machine in operation on YouTube,” for example https://www.youtube.com/watch?v5XofTns666Aw.

J&LP’s financial information for last year follows. It is assumed the business operates 300 days per year. One note in J&LP financial statement states that the $4,906,000 of inventory does not include $886,000 in inventory allowances for excess, cancelled orders, and obsolete inventories. The note goes on to say, “Inventory management remains an area of focus as we balance the need to maintain strategic inventory levels to ensure competitive lead times versus the risk of inventory obsolescence because of changing technology and customer requirements. The box and packaging business is a dynamic industry that must quickly accommodate customer requirements, changes in forecasts, and new findings from research and development on product features and options.” The following data (in thousands of dollars $) is provided.

1. Should we consider services in the cash-to-cash conversion cycle computations?
2. How will you handle the $886,000 in obsolete inventory?
3. What is the total cash-to-cash conversion cycle for J&L Packaging, Inc. for last year?
4. What are your conclusions and final recommendations?

I do not want someone to simply answer the questions for me. I want to make sure I am doing it correctly.

Specifically, I would like help with question #3

The formula provided for cash-to-conversion is:

ARDS= Accounts receivable value/Revenue per day

APDS=Accounts payable value/Revenue per day

Revenue per day (R/D) =Total revenue/Operating days per year

Cash-to-cash conversion cycle =IDS+ARDS-APDS

Here's what I got:

Inventory days’ supply (IDS) =

Average total inventory/ Cost of goods sold per day=4,906+886=5792

Cost of goods sold per day (CGS/D) = 31,725/300 Days per year= 105.75

Cost of goods sold value/ Operating days per year

5792/105.75=54.77

IDS=54.77

IDS+ARDS= the firms receivable cycle is 80.08

ARDS= Accounts receivable value/ Revenue per day =7,593/300=25.31

APDS= Accounts payable value/ Revenue per day =9,338/300=31.13

APDS =31.13, which is how many days the firm has to pay back its bill.

Which means the firm receives it payments, “receivables” 48.95 days later.

Is this right? Help!

Read, and write a 1-page reaction on a single topic 400 WORD or more WITH YOUR opinion about the topic -Which you choose and whether you support or reject the idea you should use this word : I will discuss the ....... because I believe it is ......... > I also agree or desagree with the book that ......

Finding Growth and Profitability in Bookselling: Barnes & Noble and Amazon

Barnes & Noble and Amazon were the bookselling industry’s leading companies. Yet Barnes & Noble’s revenues were declining by 10 percent per year, and in the second quarter of 2015, Amazon had lost more than $0.4 billion dollars (see Exhibit 11.1). The bookselling industry was experiencing vast technological change with the introduction of e-books and tablets, and Barnes & Noble and Amazon had to figure out what to do next.

Data source: Quarterly financial reports Exhibit 11.1 Financial Performance of Major Booksellers, 2nd Quarter 2015 Barnes & Noble and the Superstore Leonard Riggio, Barnes & Noble’s founder, believed shopping was a recreational activity. Relying on the philosophy that people bought books based on emotion, he transformed bookselling into a giant industry.1 Too poor to attend college full time, Riggio had worked during the day as a clerk in the New York University bookstore. In 1965, he created a campus bookstore of his own. During the next six years, he established four other bookstores on campuses in New York City. In 1971, Riggio bought Barnes & Noble, then an unprofitable New York textbook seller, and in 1974 he opened a Barnes & Noble annex in Manhattan where he aggressively marketed low-priced books that had been returned to publishers. By 1986 he owned 142 college bookstores and 37 Barnes & Noble’s stores. When he bought B. Dalton from Dayton-Hudson, Barnes & Noble became the largest U.S. bookseller. Barnes & Noble’s main competitor had been Borders, an Ann Arbor, Michigan, chain.2 At the time, Walden Books was a part of Borders. Kmart had bought Walden in 1984. In the late 1980s, B. Dalton and Walden owned more than 600 mall-based stores. Borders pioneered the concept of the bookstore as a superstore. Barnes & Noble was an aggressive follower. The son of a professional boxer, Riggio learned from his father to be quicker on his feet and more nimble than his opponents. 203

Barnes & Noble acted more quickly than Borders and expanded more rapidly than Borders. The superstores had a special atmosphere. They were meant to serve as gathering places for people. They tried to get people to linger with comfortable seating, coffee to drink, and late-night hours. Some stores were decked out like small or full-scale libraries. Most had comfortable chairs and writing tables. They hosted readings by famous authors and other events. They played pleasant jazz and classical music in the background. The stores made an effort to build a sense of community. Advertisements featured pictures of literary greats like Hemingway and Virginia Woolf. Barnes & Noble, in particular, tried to create a literary climate. It paid a great deal of attention to décor, layout, furniture, display, signage, and selection of books. The special atmosphere meant that customers spent time browsing, and of course, the more time they spent browsing, the more they bought. Customers bought twice as much merchandise at a superstore as at a mall-based store. Barnes & Noble chose about 50,000 titles to display at each superstore. Local managers adapted the rest of their selections to local tastes. The result was that the typical store offered about 175,000 titles packed into 30,000 square feet. The competition between Barnes & Noble and Borders was fierce. They were in a race to see which would expand most rapidly. Both feared that Walmart and massmarket retailers would take away their business. Kmart spun off Walden in 1995 because it could not keep up. In that year, Barnes & Noble and Borders captured about one-quarter of the U.S. market for books, with Barnes & Noble having a market share of about 15 percent and Borders having a market share of about 10 percent.3 The focus of both companies was on aggressive expansion. The number of superstores in the United States kept growing. It jumped to nearly 800 in the mid1990s. Many independent bookstores could not keep up and folded. Barnes & Noble and Borders were focused on the competition between them and their commitment to continued expansion. When Amazon.com began operations in 1995, neither company paid much attention.4 Barnes & Noble’s goal was to expand at a pace of about 100 new stores per year. Yet by 1997, the estimate was that there were several hundred online booksellers operating on the Web and that, by 1998, they already had captured 2 percent of the adult book market.5

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Amazon and Internet Commerce Jeff Bezos, the founder of Amazon, was a summa laude graduate of Princeton in 1986 with a degree in computer science.6 He had worked for a telecom start-up and a hedge fund. Seeking to begin a business of his own, he examined 20 possibilities for Internet commerce before settling on bookselling. He understood the opportunities in books to be high because the industry was very fragmented and because Internet selling offered many advantages over conventional book stores, including enabling larger selection, greater inventory turnover, higher sales per square foot, and higher sales per operating employee. Bezos moved from New York City and started his business in Seattle, Washington, to take advantage of the software talent and proximity to Ingram’s large bookstore and electronics wholesale warehouse in Oregon. Before building its own warehouse complex, Amazon relied on Ingram. There also happened to be no state taxes on retail purchases in the state of Washington, which made Internet sales more competitive with retail. To begin operations, Amazon had to innovate. It had to pioneer in the development of software for Internet shopping. It created the look and feel of an Internet shopping site that now has become common. It provided information about the books it sold, posted author interviews, offered free book reviews, and gave links to other sites and features. Amazon spent vast sums of money on research and development (R&D), in 1999 obtaining a patent for its oneclick technology, which allowed customers to order from its site with a simple click of the mouse instead of going through several steps. In contrast to a physical store, which had fixed times when it opened and closed, Internet shopping could take place at any time of the day. The venture capital firm Kleiner Perkins Caufield & Byer invested $8 million dollars in Amazon to help it get started, and the business grew rapidly. In less than a year, Amazon had nearly $1 million in sales. Repeat customers provided more than 50 percent of its business, and the average transaction was greater than $50. Technical and business books made up a high percentage of the early orders. The company went public in 1997, and its market capitalization rose to $560 million on the first day. Bezos suddenly was a multimillionaire because he owned 42 percent of the stock. Investors continued to have confidence in Amazon’s business model year after year, although Amazon did not report that it was profitable, and it was not clear when it would be. The company stayed afloat by means of the positive cash flow it generated. Customers paid Amazon with credit cards; Amazon collected the sale price within a few days from the credit card company, but it was weeks before it paid its suppliers. Barnes & Noble launched its own book-selling website in the spring of 1997.7 The website featured personalized book recommendations and deep discounts every bit as good as Amazon’s on most items. Barnes & Noble used its brand name to capture leadership in the general interest and fiction categories. Because of its

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warehouses and greater experience in shipping books, it tried to beat Amazon’s delivery times. It built new warehouses, in Atlanta and Reno, which it added to its existing warehouse in New Jersey to ensure prompt distribution. It also built its own version of the one-click technology, which it called “express lane” ordering. However, the company was not able to seamlessly integrate brick-and-mortar operations with the Internet, which permitted Amazon to make the claim that it, not Barnes & Noble, was “earth’s biggest bookstore.”8 Since 1970, Barnes & Noble’s slogan had been that it was the “world’s biggest bookstore.” Barnes & Noble sued, arguing that Amazon was not a bookstore at all, but a book broker. Amazon, in turn, counter-sued, and it sought an injunction against Barnes & Noble for stealing its one-click technology. In 1999, Barnes & Noble had an IPO, which spun off BarnesAndNoble.com, its online business, as a separate company. Bertelsmann, a German mass media corporation, owned 36 percent of the new company, Barnes & Noble owned 36 percent, and 36 percent of the shares were sold to the public. One month before the spin-off, Amazon took a number of aggressive steps to counter any success that BarnesAndNoble.com might have by adding 1.5 million more titles to those it already listed, introducing a personalized book recommendation service, and starting to sell bestsellers at a 50-percent discount. The 50-percent discount was especially galling to BarnesAndNoble.com, which was forced to match the discount and thus sell books at cost. Amazon’s aggressive moves had their desired effect. The stock of BarnesAndNoble.com climbed just 27 percent on the first day of the IPO, a huge disappointment in an era when stocks routinely doubled or tripled the initial asking price. Amazon was beating BarnesAndNoble.com on the most important Internet criterion: “eyeballs.”9 It had 8.4 million registered Internet customers compared to BarnesAndNoble.com’s 1.7 million, and its Internet market share was 75 percent whereas BarnesAndNoble.com’s was 15 percent. Barnes & Noble made an offer to buy Amazon’s Oregon supplier, Ingram’s Book Group in 1998, only to be rebuffed because of antitrust scrutiny

The FedEx Survey Feedback Action (SFA) program is one example. SFA includes an anonymous survey that allows employees to express feelings about the company and their managers, and to some extent about service, pay and benefits. Each manager then has an opportunity to use the results to help design a blueprint for improving workgroup engagement and commitment.

SFA has three phases. First, the survey itself is a standard, anonymous questionnaire given each year to every employee. The questions are designed to gather information about what helps and hinders employees in their work environment. Sample items include:

• “I can tell my manager what I think” and
• “My manager tells me what was expected”

A workgroup’s survey results are compiled and sent anonymously to the manager.

The second phase is a feedback session between the manager and his or her workgroup. The goal here is to identify specific concerns or problems, examine causes for these problems, and devise action plans to correct the problems.

The feedback meeting should lead to a third, “action plan” phase. This produces a list of actions that the manager will take to address employees concerns and boost results. It includes:

• What is the concern?
• What’s your analysis?
• What’s the cause? And
• What should be done?

THE FEDEX GUARANTEED FAIR TREATMENT PROCESS

FexEx’s Guaranteed Fair Treatment Process (GFTP) is sort of a turbocharged grievance process. It goes beyond most grievance procedures in several ways, perhaps most notably in that an appeal can go all the way to FedEx’s top executives. The effect is twofold:

1. Complaints don’t get a chance to accumulate;
2. All managers think twice before acting unfairly

GFTP is available to all permanent FedEx employees. It covers concerns regarding matters such as disputed performance reviews, disciplinary actions and terminations.

Employees use Guaranteed Fair Treatment Process packets, available from the HR department, to file GFTP complaints. These include a fact sheet listing the complainant’s name and work history, a GFTP tracking sheet to track the complaint at each step, management’s rationale (for instance, in terms of applicable policies and procedures); a write-up from the HR department; space for key documents (termination letters, and so on) and space for backup information including witness statements. The employee must try to resolve the problem with his or her supervisor before filing a GFTP appeal.

GFTP contains three steps.

1. In step one, Management Review, the complainant submits a written complaint to a manager, senior manager or managing director, within seven calendar days of the occurrence of the eligible issue. Then the manger, senior manager and managing direction of the employee’s group review all relevant information; hold a telephone conference and/or meeting with the complainant; make a decision to either uphold, modify or overturn management action; and communicate their decision in writing to the complainant.
2. If turned down in step one, then in step two, Officer Complaint, the complainant submits a written complaint to an officer (VP or senior vice president) of the division within 7 calendar days of the step one decision.
3. Finally (if necessary), in step three, Executive Appeals Review, the complainant submits a written complaint within seven calendar days of the step two decision to the Employee Relations department. This department investigates and prepares a GFTP case file for the appeals board executive review. The appeals board – the CEO, the COO, the chief personnel officer and senior vice presidents, then reviews all relevant information and makes a decision to either uphold, overturn or initiate a board of review or to take other appropriate action. The appeals board’s decision is final.

Questions:

1. Based on the FedEx case provided to you, what do you think is FedEx’s Employee Relations Strategy? Draft the strategy in your own words

2. What communication channels does FedEx use to be one of “Fortune Magazine’s 100 Best Companies to Work For”? List them all and identify if it is upward or downward communication.

3. Based on FedEx Guaranteed Fair Treatment process, what two (2) Employee Discipline Guidelines do you feel that FedEx has most likely adapted as part of their Employee Relations policies and procedures? Be sure to use evidence from the case to support your answer.

4. How does FedEx incorporate employee rights in their practices? Refer to two (2) points in the case and explain them to justify your answer.

5. Describe examples of employee involvement portrayed at FedEx. How do these practices help FedEx be one of the best companies to work for?

6. As a result of the ongoing pandemic due to the novel coronavirus (COVID-19), organizations such as FedEx are going through significant and unexpected change.

1. Unfortunately, as a result of the pandemic, FedEx has determined that they must decrease the amount of employees in their organization. Describe two (2) issues that organizations will face as a result of decreasing the amount of employees.

2. Referring to the issues you identified in part (a), as FedEx’s Employee Relations Manager, describe how you will ensure effective Employee Involvement strategies as a result of these issues

3. The role of the HR Department is critical during organizational change. Identify two (2) important HR roles. Describe how you, as Employee Relations Manager, will ensure these roles are carried out at FedEx during the current pandemic.

Project Scope Management Questions Only

1. On a project to develop an inventory control system, the project manager is working on creating the scope management plan. He realizes that this plan must include items such as how the WBS will be created and how the scope of work will be accomplished and measured. All of the following statements are true about the scope management plan except:

A. It will not change after approval.

B. It may be based on organizational forms or templates.

C. It will be impacted by other parts of project planning.

D. It documents how scope will be iterated and controlled.

2. You are the project manager on an information technology project on which you and the sponsor have already approved the scope. While having lunch with a customer representative working with him on a software project, an information specialist on your team learns a simple alteration in the display would be a great addition to the project. The information specialist installs the change with no negative effect on the project schedule and at no additional cost. What action should be taken?

A. The information specialist should be told that his behavior was unacceptable, as it may have negatively affected the overall project.

B. The project manager should create a change control form and have the customer approve the change since the change has already been made.

C. The information specialist should be recognized for exceeding customer expectations without affecting project cost or schedule.

D. The project manager should add an activity to the project management plan with no associated time.

3. As a project manager, you are using a number of tools and techniques that are part of the Define Scope process. You will be carrying out this process with the help of the customer, the team, and other stakeholders. Which of the following is not part of this process?

A. Product analysis

B. Facilitation

C. Alternatives analysis

D. Inspection

4. Which of the following best describes the Validate Scope process?

A. It ensures the deliverable is completed on time, ensures customer acceptance, and shows the deliverable meets specifications.

B. It is an output of Control Quality, occurs before Define Scope, and ensures customer acceptance.

C. It ensures customer acceptance, shows the deliverable meets specifications, and provides a chance for differences of opinion to come to light.

D. It provides assurances that the deliverable meets the specifications, is an input to the project management plan, and is an output of Control Quality.

5. The cost performance index (CPI) on the project is 1.13, and the benefit-cost ratio (BCR) is 1.2. The project scope description was created by the team and stakeholders. Requirements have been changing throughout the project. No matter what the project manager has tried to accomplish in managing the project, which of the following is he most likely to face in the future?

A. Having to cut costs on the project and increase benefits

B. Not being able to measure completion of the product of the project

C. Making sure the customer approved the project scope

D.

Having to add resources to the project

6. During project planning, it becomes apparent that factions within the client's company have significantly different views on how the project should be structured and how the deliverables should be defined. Which of the following is the best thing to do?

A. Ask the client when they will be in agreement on the project requirements.

B. Work with leadership from each area to collaboratively engineer a mutually acceptable solution.

C. Make sure the terms and conditions of the contract are clear.

D. List the consequences of changes in the requirements section of the contract.

7. The call center’s response time has increased in recent months, resulting in numerous complaints from dissatisfied customers. Several employees have quit their jobs in the call center, as they were tired of dealing with disgruntled callers. You have been working with the business analyst and stakeholders on a project chartered to understand the problem and to determine a solution. There are diverging opinions, but through facilitation and analysis work you have a clear picture of what is desired, and have balanced and prioritized stakeholders’ needs. Which of the following would be the best place to record this information?

A. Project scope statement

B. Affinity diagram

C. Issue log

D. Requirements documentation

8. On an agile software development project, the project manager asks business stakeholders to create user stories, which will be used in the development and testing of the new application. The main purpose of writing a user story is:

A. To document features or functions required by stakeholders

B. To communicate progress

C. To perform what-if analysis

D. To create a record of issues encountered on the project

9. Alternatives analysis occurs in which parts of the scope management process?

A. Initiating and scope definition

B. Scope definition and scope control

C. Initiating and scope verification

D. Scope planning and scope definition

10. During acceptance testing on a customized scheduling software project, it is determined that, in order to provide value to the customer, several additional features and functions must be added. This change in scope will also impact the estimated time and cost to complete the project. You conclude that to facilitate these additions, the project baseline must be adjusted. Which of the following best describes when the baseline can be changed?

A. When the project sponsor determines it is appropriate

B. Only under emergency conditions

C. With approved changes

D. The original baseline is always maintained throughout the project

11. During acceptance testing on a customized software project, it is determined that, in order to provide value to the customer, several additional features and functions must be added. This change in scope will be assessed in integrated change control to determine possible impacts on other aspects of the project. As a result of this change in scope, any of the following are likely to change except:

A. Project charter

B. Cost baseline

C. Requirements traceability matrix

D. Schedule baseline

12. You are working to identify all of the points where your project scope requirements interact with existing system components so that you can develop requirements. Which tool are you using?

A. Context diagram

B. Bar chart

C. Networking

D. WBS

13. The Collect Requirements process entails the elicitation and documentation of requirements from all stakeholder groups. These requirements may be categorized into subsets, including business requirements, quality requirements, stakeholder requirements, and technical requirements. Business requirements include:

A. Training and rollout plans

B. Why the project was undertaken

C. What stakeholders want to gain from the project

D. Project requirements

14. You are managing a project that is anticipated to have far-reaching impact throughout the organization. It is considered critical that the team capture requirements of all stakeholder groups before the executing processes are begun. You and the team have used document analysis, interviews, surveys, questionnaires, and several facilitated requirements sessions, resulting in an abundance of requirements from stakeholders. Which of the following is the best way to prioritize these requirements for inclusion in the project scope description?

A. Multicriteria decision analysis

B. Affinity diagramming

C. Voting

D. Mind mapping

15. It is critical to define requirements during planning on a project. The greater the number of stakeholders, the more difficult it is likely to be to define all requirements, and to then get agreement from all stakeholders on which requirements should go into the project management plan. As a project manager, you can best resolve the differences between the requirements of one stakeholder and those of another by making which of these statements?

A. There are many points on which we agree. I am certain if we focus on them, we will find a solution.

B. This discussion is getting too heated. Let's regroup to solve the problem tomorrow.

C. I have made the decision to resolve the problem this way.

D. Let's look at why there is a difference of opinion on the requirements.

16. A project has just started the second phase, in which work packages are being created. A new team member has completed his work packages for this phase, and has asked the project manager to validate the scope of his work packages. The team member is anxious to have the customer see his work packages. The project manager, although confident in this new team member, wants the team member to gain confidence after the customer sees his work packages. When should the Validate Scope process be done?

A. At the beginning of the project

B. At the end of the project

C. At the end of each phase of the project

D. During the planning processes

17. The graphic designer on the project recommends a blue background for the marketing materials, while the customer strongly argues for red. The graphic designer explains that, in color psychology, blue is more calming and is likely to generate a better reaction from potential buyers. A decision must be made today. How should this requirements conflict be resolved?

A. Get a consensus of outside experts.

B. Use red.

C. Compromise between the two options and use purple.

D. Use blue.

18. You have a signed project charter and a scope management plan, and are in the process of creating a project scope statement. You have asked the team for input to ensure the project scope statement is complete. However, the team is struggling with defining the scope. Which of the following best describes the problem?

A. The project objectives were not identified before the project scope statement was begun.

B. The team is working on the project scope statement without the benefit of organizational process assets.

C. The team is in the Define Scope process and needs the project scope statement as an input.

D. A WBS was not completed before the project scope statement was begun.

19. To manage a project effectively, work should be broken down into small pieces. Which of the following does not describe how far to decompose the work?

A. Until it can be realistically estimated

B. Until it has a meaningful conclusion

C. Until it can be done by one person

D. Until it cannot be logically subdivided further

20. The project manager and team have finalized the WBS for their bridge construction project. It took a lot of time and many meetings to break the scope of this large project into manageable pieces. As they worked through this process, the team identified additional requirements that were incorporated into the WBS document. All the following are outputs of the Create WBS process except:

A. Updates to the requirements documentation

B. Scope baseline

C. WBS dictionary

D. Change requests

21. All of the following are parts of the scope baseline except the:

A. Scope management plan

B. Project scope statement

C. WBS dictionary

D. Work breakdown structure

22. A project manager is concerned about the amount of gold plating that has occurred on past projects. All the following would not be of use in controlling gold plating except:

A. A risk management plan

B. A project charter

C. A work breakdown structure dictionary

D. A staffing management plan

23. The process of scope definition is key to a successful project. All the following come after the Define Scope process except:

A. Plan Resource Management

B. Estimate Activity Durations

C. Collect Requirements

D. Estimate Costs

24. The scope management processes are generally completed in which order?

A. Validate Scope, Collect Requirements, Define Scope, Create WBS

B. Define Scope, Validate Scope, Collect Requirements, Create WBS

C. Collect Requirements, Define Scope, Create WBS, Validate Scope

D. Create WBS, Collect Requirements, Define Scope, and Validate Scope

25. The best way to gain an understanding of how a business process is performed, in order to identify requirements, is to:

A. Read the job description/training manual description of how to perform the work.

B. Ask the manager of employees who perform the work.

C. Observe an employee performing the work.

D. Ask an employee who regularly performs the work.

CASE 2-3: Starnes-Brenner Machine Tool Company: To Bribe or Not to Bribe?

The Starnes-Brenner Machine Tool Company of Iowa City, Iowa, has a small one-man sales offi ce headed by Frank Rothe in Latino, a major Latin American country. Frank has been in Latino for about 10 years and is retiring this year; his replacement is Bill Hunsaker, one of Starnes-Brenner’s top salespeople. Both will be in Latino for about eight months, during which time Frank will show Bill the ropes, introduce him to their principal customers, and, in general, prepare him to take over. Frank has been very successful as a foreign representative in spite of his unique style and, at times, complete refusal to follow company policy when it doesn’t suit him. The company hasn’t really done much about his method of operation, though from time to time he has angered some top company people. As President Jack McCaughey, who retired a couple of years ago, once remarked to a vice president who was complaining about Frank, “If he’s making money—and he is (more than any of the other foreign offi ces)—then leave the guy alone.” When McCaughey retired, the new chief immediately instituted organizational changes that gave more emphasis to the overseas operations, moving the company toward a truly worldwide operation into which a loner like Frank would probably not fi t. In fact, one of the key reasons for selecting Bill as Frank’s replacement, besides Bill’s record as a top salesperson, is Bill’s capacity to be an organization man. He understands the need for coordination among operations and will cooperate with the home offi ce so that the Latino offi ce can be expanded and brought into the mainstream. The company knows there is much to be learned from Frank, and Bill’s job is to learn everything possible. The company certainly doesn’t want to continue some of Frank’s practices, but much of his knowledge is vital for continued, smooth operation. Today, Starnes-Brenner’s foreign sales account for about 25 percent of the company’s total profi ts, compared with about 5 percent only 10 years ago. The company is actually changing character, from being principally an exporter, without any real concern for continuous foreign market representation, to having worldwide operations, where the foreign divisions are part of the total effort rather than a stepchild operation. In fact, Latino is one of the last operational divisions to be assimilated into the new organization. Rather than try to change Frank, the company has been waiting for him to retire before making any signifi cant adjustments in its Latino operations. Bill Hunsaker is 36 years old, with a wife and three children; he is a very good salesperson and administrator, though he has had no foreign experience. He has the reputation of being fair, honest, and a straight shooter. Some back at the home offi ce see his assignment as part of a grooming job for a top position, perhaps eventually the presidency. The Hunsakers are now settled in their new home after having been in Latino for about two weeks. Today is Bill’s fi rst day on the job. When Bill arrived at the offi ce, Frank was on his way to a local factory to inspect some Starnes-Brenner machines that had to have some adjustments made before being acceptable to the Latino. government agency buying them. Bill joined Frank for the plant visit. Later, after the visit, we join the two at lunch. Bill, tasting some chili, remarks, “Boy! This certainly isn’t like the chili we have in America.” “No, it isn’t, and there’s another difference, too. The Latinos are Americans and nothing angers a Latino more than to have a ‘Gringo’ refer to the United States as America as if to say that Latino isn’t part of America also. The Latinos rightly consider their country as part of America (take a look at the map), and people from the United States are North Americans at best. So, for future reference, refer to home either as the United States, States, or North America, but, for gosh sakes, not just America. Not to change the subject, Bill, but could you see that any change had been made in those S-27s from the standard model?” “No, they looked like the standard. Was there something out of whack when they arrived?” “No, I couldn’t see any problem—I suspect this is the best piece of sophisticated bribe taking I’ve come across yet. Most of the time the Latinos are more ‘honest’ about their mordidas than this.” “What’s a mordida ?” Bill asks. “You know, kumshaw , dash , bustarella , mordida ; they are all the same: a little grease to expedite the action. Mordida is the local word for a slight offering or, if you prefer, bribe,” says Frank. Bill quizzically responds, “Do we pay bribes to get sales?” “Oh, it depends on the situation, but it’s certainly something you have to be prepared to deal with.” Boy, what a greenhorn, Frank thinks to himself, as he continues, “Here’s the story. When the S-27s arrived last January, we began uncrating them and right away the jefe engineer (a government offi cial)— jefe , that’s the head man in charge—began extra-careful examination and declared there was a vital defect in the machines; he claimed the machinery would be dangerous and thus unacceptable if it wasn’t corrected. I looked it over but couldn’t see anything wrong, so I agreed to have our staff engineer check all the machines and correct any fl aws that might exist. Well, the jefe said there wasn’t enough time to wait for an engineer to come from the States, that the machines could be adjusted locally, and we could pay him and he would make all the necessary arrangements. So, what do you do? No adjustment his way and there would be an order canceled; and, maybe there was something out of line, those things have been known to happen. But for the life of me, I can’t see that anything had been done since the machines were supposedly fi xed. So, let’s face it, we just paid a bribe, and a pretty darn big bribe at that—about $1,200 per machine. What makes it so aggravating is that that’s the second one I’ve had to pay on this shipment.” “The second?” asks Bill. “Yeah, at the border, when we were transferring the machines to Latino trucks, it was hot and they were moving slow as molasses. It took them over an hour to transfer one machine to a Latino truck and we had ten others to go. It seemed that every time I spoke to the dock boss about speeding things up, they just got slower. Finally, out of desperation, I slipped him a fi stful of pesos. and, sure enough, in the next three hours they had the whole thing loaded. Just one of the local customs of doing business. Generally, though, it comes at the lower level where wages don’t cover living expenses too well.” There is a pause, and Bill asks, “What does that do to our profi ts?” “Runs them down, of course, but I look at it as just one of the many costs of doing business—I do my best not to pay, but when I have to, I do.” Hesitantly, Bill replies, “I don’t like it, Frank. We’ve got good products, they’re priced right, we give good service, and keep plenty of spare parts in the country, so why should we have to pay bribes? It’s just no way to do business. You’ve already had to pay two bribes on one shipment; if you keep it up, the word’s going to get around and you’ll be paying at every level. Then all the profi t goes out the window—you know, once you start, where do you stop? Besides that, where do we stand legally? The Foreign Bribery Act makes paying bribes like you’ve just paid illegal. I’d say the best policy is to never start: You might lose a few sales, but let it be known that there are no bribes; we sell the best, service the best at fair prices, and that’s all.” “You mean the Foreign Corrupt Practices Act, don’t you?” Frank asks, and continues, in an I’m-not-really-so-out-of-touch tone of voice, “Haven’t some of the provisions of the Foreign Corrupt Practices Act been softened somewhat?” “Yes, you’re right, the provisions on paying a mordida or grease have been softened, but paying the government offi cial is still illegal, softening or not,” replies Bill. Oh boy! Frank thinks to himself as he replies, “Look, what I did was just peanuts as far as the Foreign Corrupt Practices Act goes. The people we pay off are small, and, granted we give good service, but we’ve only been doing it for the last year or so. Before that I never knew when I was going to have equipment to sell. In fact, we only had products when there were surpluses stateside. I had to pay the right people to get sales, and besides, you’re not back in the States any longer. Things are just done different here. You follow that policy and I guarantee that you’ll have fewer sales because our competitors from Germany, Italy, and Japan will pay. Look, Bill, everybody does it here; it’s a way of life, and the costs are generally refl ected in the markup and overhead. There is even a code of behavior involved. We’re not actually encouraging it to spread, just perpetuating an accepted way of doing business.” Patiently and slightly condescendingly, Bill replies, “I know, Frank, but wrong is wrong and we want to operate differently now. We hope to set up an operation here on a continuous basis; we plan to operate in Latino just like we do in the United States. Really expand our operation and make a long-range market commitment, grow with the country! And one of the fi rst things we must avoid is unethical . . .” Frank interrupts, “But really, is it unethical? Everybody does it, the Latinos even pay mordidas to other Latinos; it’s a fact of life— is it really unethical? I think that the circumstances that exist in a country justify and dictate the behavior. Remember, man, ‘When in Rome, do as the Romans do.’” Almost shouting, Bill blurts out, “I can’t buy that. We know that our management practices and relationships are our strongest point. Really, all we have to differentiate us from the rest of our competition, Latino and others, is that we are better managed and, as far as I’m concerned, graft and other unethical behavior have got to be cut out to create a healthy industry. In the long run, it should strengthen our position. We can’t build our future on illegal and unethical practices.” Frank angrily replies, “Look, it’s done in the States all the time. What about the big dinners, drinks, and all the other hanky-panky that goes on? Not to mention PACs’ [Political Action Committee] payments to congressmen, and all those high speaking fees certain congressmen get from special interests. How many congressmen have gone to jail or lost reelection on those kinds of things? What is that, if it isn’t mordida the North American way? The only difference is that instead of cash only, in the United States we pay in merchandise and cash.” “That’s really not the same and you know it. Besides, we certainly get a lot of business transacted during those dinners even if we are paying the bill.” “Bull. The only difference is that here bribes go on in the open; they don’t hide it or dress it in foolish ritual that fools no one. It goes on in the United States and everyone denies the existence of it. That’s all the difference—in the United States we’re just more hypocritical about it all.” “Look,” Frank continues, almost shouting, “we are getting off on the wrong foot and we’ve got eight months to work together. Just keep your eyes and mind open and let’s talk about it again in a couple of months when you’ve seen how the whole country operates; perhaps then you won’t be so quick to judge it absolutely wrong.” Frank, lowering his voice, says thoughtfully, “I know it’s hard to take; probably the most disturbing problem in underdeveloped countries is the matter of graft. And, frankly, we don’t do much advance preparation so we can deal fi rmly with it. It bothered me at fi rst; but then I fi gured it makes its economic contribution, too, since the payoff is as much a part of the economic process as a payroll. What’s our real economic role, anyway, besides making a profi t, of course? Are we developers of wealth, helping to push the country to greater economic growth, or are we missionaries? Or should we be both? I really don’t know, but I don’t think we can be both simultaneously, and my feeling is that, as the company prospers, as higher salaries are paid, and better standards of living are reached, we’ll see better ethics. Until then, we’ve got to operate or leave, and if you are going to win the opposition over, you’d better join them and change them from within, not fi ght them.” Before Bill could reply, a Latino friend of Frank’s joined them, and they changed the topic of conversation.

QUESTIONS 1. Is what Frank did ethical? By whose ethics—those of Latino or the United States?

2. Are Frank’s two different payments legal under the Foreign Corrupt Practices Act as amended by the Omnibus Trade and Competitiveness Act of 1988?

3. Identify the types of payments made in the case; that is, are they lubrication, extortion, or subornation?

4. Frank seemed to imply that there is a similarity between what he was doing and what happens in the United States. Is there any difference? Explain.

5. Are there any legal differences between the money paid to the dockworkers and the money paid the jefe (government official)? Any ethical differences?

Handout Question 1:

Stokes Bay Fishing Corporation manufactures and sells fishing boats. The CEO of the company, Keith Jones, has been fishing since he was a young boy and is very excited to be the majority owner of a successful fishing-related business. All of the company’s sales come from two products: the Fish Hauler and the Trolling Deluxe. Both are 16-foot aluminum boats. The Fish Hauler is a basic boat built with the minimum required components necessary for a successful outing and sells for $12,000. The Trolling Deluxe sells for $14,500 and is built for the luxury-minded outdoors person; it includes adjustable padded seats, moveable storage boxes, and rod holders, among other conveniences, to make the trip more comfortable. The boats are sold to retailers who then usually add an outboard motor and a trailer before selling to the consumer.

Stokes Bay Fishing Corporation management is meeting to discuss recent financial results and to plan for the future. John Singh, the sales manager, has been successful in convincing Keith to keep the boats close in price, basing his argument on the fact that the boats are the same size and about the same weight. In fact, he argues, each boat has the same seating capacity and is used for essentially the same purpose. Keith, however, is concerned. He has reviewed the financial results for the boating business and is confused by the results. Keith has noticed that while sales volume is increasing, profits are decreasing (as a percent of sales). Keith has consulted with his production manager, Jeff Knowles, who told him that he is doing his best to manage production costs but is challenged by the fact that the proportion of Trolling Deluxe boats manufactured and sold is growing at a far greater rate than the Fish Hauler.

Keith has asked his CFO, Janet Costa, for financial data regarding the sales and manufacturing activities for the past year. The following is what Janet provided.

Stokes has been applying variable overhead on the basis of direct labour hours. For the past year, factory overhead was $640,000 and total direct labour hours for the year were18,600. The hourly rate for direct labour hours is $22. Also, sales and administrative expenses for the year totalled $984,000.

Keith has hired a financial consultant, Sue Wong, to analyze the activity of the past year, and to help management to understand the deteriorating profit results. Sue specializes in the application of activity-based costing (ABC) in small manufacturing businesses. The focus of her work was to determine key activities, cost drivers, and related costs in the business. Sue has found several overhead activities and related costs, and the associated cost drivers. She has also determined the amount of each activity consumed by the two products. This information is presented below.

Activities and Cost Drivers:

            Factory Overhead

Activities and Cost Drivers:

            Factory Overhead

Financial data for the two products, based on ABC analysis:

Required:

1. Calculate unit cost using the current process costing system. Calculate gross and net operating income generated for the company by the two products.
2. Calculate activity rates, rounding to the nearest dollar.
3. Calculate unit cost using activity-based costing, and recalculate gross and net operating income generated by the two products.
4. Based on the results above, what advice would you give to Keith regarding his observation of increasing volume but decreasing profit?

Please can someone double-check my answers?

1) A ball with a mass of 0.15 kg has a velocity of 5m/s. It strikes a wall perpendicularly and bounces off straight back with a velocity of 3 m/s. The ball underwent a change in momentum of?

1.20 kg*m/s

2) What braking force is supplied to a 3,000 kg car traveling with a velocity of 35 m/s that is stopped in 12 seconds?

F=8750 N

3) A 0.1 kg baseball is thrown with a velocity of 35 m/s. The batter hits it straight back with a velocity of 60 m/s. What is the magnitude of the average impulse exerted on the ball by the bat?

9.5 N*s

4) A 1 kg object is moving with a velocity of 6 m/s to the right. It collides and sticks to a 2 kg object moving with velocity of 3 m/s in the same direction. How much Kinetic energy is lost in the collision?

3J

5) A 2 kg mass moving with a velocity of 7 m/s collides elastically with a 4 kg mass moving in the opposite direction at 4 m/s. The 2 kg mass reverses direction after the collision and has new velocity of 3 m/s. What is the velocity of the 4 kg mass?

1 m/s

6) A mass of 3 kg is attached to a massless spring with a force constant 500 N/m. The mass rests on a horizontal frictionless surface. The system is compressed a distance of 30 cm from the springs initial position and then released. The momentum of the mass when the spring passes its equilibrium position is?

8660.25m/s

7) Can an object have energy without having momentum? Explain.

Yes an object can have energy without having momentum. For example, a rock that is at the top of a cliff has potential energy since it's not moving but there is no momentum.

8) Can an object have momentum without having energy? Explain.

No object that has momentum also has energy. This is because if the velocity is not then the kinetic energy is also not 0 momentum is a vector, but energy is a scalar.

9) An object of mass 2 kg has a linear momentum of 6 kg. m /s. What is this objects Kinetic energy?

9J

10) A box with a mass of 2 kg accelerates in a straight line from 4 m/s to 8 m/s due to the application of a force whose duration is 0.5 seconds. Find the average strength of this force?

16N

11) A 45 kg. girl is sitting on a seesaw 0.6 m from the balance point. How far, on the other side, should a 60 kg. boy sit so that the seesaw will remain in balance?

0.45m

12) A solid cylinder consisting of an outer radius R1 and an inner radius R2 is pivoted on a frictionless axle as shown. A string is wound around the outer radius and is pulled to the right with a force F1 = 3N. A second string is wound around the inner radius and is pulled down with a force F2 = 5N. If R1 = 0.75 m and R2 = 0.35m, what is the net torque acting on the cylinder?

-0.5Nm

15) An object of mass 0.5 kg., moving in a circular path of radius 0.25 m, experiences a centripetal acceleration of constant magnitude 9 m/s2 . What is the objects angular speed?

6 rad/sec

16) An object, originally at rest begins spinning under uniform angular acceleration. In 10 seconds, it completes an angular displacement of 60 rad. What is the value of its angular acceleration?

1.2 rad/s^2

17) The moment of Inertia of a solid uniform sphere of mass m and radius R is given by the equation I = (2/5) mR2 . Such a sphere is released from rest at the top of an inclined plane of height h= 10 m, length L, and the incline angle Ω. If the sphere rolls without slipping, find the linear speed at the bottom of the incline.

11.83m/s

18) An object spins with angular velocity 10 rad/s. If the objects moment of Inertia increases by a factor of 2 without the application of an external torque, what will be the object’s new angular velocity?

1/2 angular velocity (w)

19) A 0.05 kg ball is thrown upward from the ground with an initial velocity of 30 m/s. At its maximum height, the magnitude of the balls acceleration is?

9.80 m/s^2

20) A 15 Newton force is applied to a mass M that is adjacent to a wall, as shown. If the mass is 2 kg, the force that the wall exerts on the mass is equal to?

15N

1. Read the following description: Charlotte and Chandler are expecting their first child in two months. They have been told they are having a boy. They live in a rural part of Mississippi. They have been together as a couple for a little over a year. They are not married and both are not sure whether or not they would like to be in the future. The couple lives together in a small, one bedroom house. Charlotte is 21 years-old and is a student at the local community college. She had a full-time job at a retail store that she recently quit. She is considered a good student, as usually makes As and Bs. She plans to continue to pursue her degree after the baby is born. Chandler is 22 years-old, and never finished high school. He has no plans to earn his GED and he works odd-jobs within the construction field. Although neither of them had health insurance, Charlotte signed up for Medicaid benefits when she found out she was pregnant. Now on Medicaid, she routinely sees her OB/GYN. Both Charlotte and Chandler are emotionally close to their own parents. They both come from middle class families. All of their parents work and are not able to financially contribute to the couple’s income on a regular basis. Although their parents are emotionally supportive to them, they don’t give them a lot of guidance about how to handle things in life or how to deal with their situation as a couple. Charlotte and Chandler have been arguing a lot over money and role expectations. Chandler takes on extra jobs to earn more money. Charlotte doesn’t like him taking extra jobs because it takes away from the time they can spend together. Charlotte wants Chandler to stay home with her more as she feels lonely and sad due to the changes that are occurring to her body and her life. Chandler spends more time away from the house to get away from the negativity he feels when he is around Charlotte. This leads Charlotte feeling even lonelier. She reacts by fighting with Chandler when he is home, which drives him further away. Both feel they are under tremendous stress that the other one doesn’t understand. Although Charlotte wants to stop, she has continued to smoke cigarettes throughout the pregnancy. She also worries about gaining too much weight. She often skips meals and eats snacks throughout the day including chips, crackers, and cheese. She also drinks large amounts of Mountain Dew. She has stopped taking her prenatal vitamins since they make her feel more nauseated. Her doctor has informed her that she needs to take care of herself better by getting rest, eating well, and watching her blood pressure. The doctor is unaware of her unhealthy habits. He has been concerned that Charlotte has not gained weight throughout the pregnancy like expected. She in turn is hoping that the baby will be born early so that she won’t have to gain as much weight or go through the pain of labor that she is anticipating. Neither, Charlotte or Chandler, are prepared for when the baby comes home. Both are the youngest in their own families and have very limited experience with newborns and children in general. Neither has taken a child preparation class or read any books about parenting. They both think they will “wing” it, but are really depending on their own mothers to guide them. When asked about caregiving, neither of them has made any realistic plans for the near future.

From what you have learned this semester (coming from e-text and Power Points), compose a 2-3 page typed report (single-spaced, no larger than a 12 point font) that addresses the following:

Discuss infant mortality rates and main causes of death during infancy. Identify the protective factors (things are favorable for healthy development) for this child based on the hypothetical couple description above

Identify the risk factors (things that are unfavorable for healthy development) for this child based on this hypothetical couple description above.

Discuss how the factors you identified are related to infant mortality rates.

Identify what other things must be considered that the hypothetical description did not address.

State your opinion on whether or not you think this child would live to see his first birthday. Explain/support your position.

Calculate (i)Cost of Production and Profitability Statement .(ii) Cash flow Statement.(iii)Calculate the cost of Capital; (iv) NPV of the Project;(v)DSCR.

Zinc Unit Installed Capacity    First Year Second Year    Third Year…
   Tonnes    1000000 750000 800000    1000000

SRevenue Projection : Zinc is expected to be sold at Rs per ton Rs2.1 lakh.

Cost of the Project: The cost of the project works out as below:
a) Fixed Assets or Long Term Loan: Rs 3145 crores
b) Working Capital : The working capital requirements were Rs 431 crores at 75% capacity; Rs 459.73 crores at 80% capacity and Rs 574.67 crores at full capacity utilization. Interest rate for working capital were @12.5 %.
Means of Financing: The project would be financed by equity of Rs 942 crores and rest by term loan financing amounting to Rs 2203 crores . Interest on term loan was @11.50 %. The company’s share is listed in NSE . The risk-free rate of return is 8.00% assumed by the company and the market rate of return is 18%. The Beta of the company, as reported in the pink press was 1.17. Marginal tax rate of the company is @ 27 %. The project does not enjoy any tax exemption. It is expected the project will be implemented in an years time.

Life of the Project : For all estimation purposes life of the project would be 8 (eight) years. The project enjoys 2 (two)years moratorium in terms of repayment of instalment payment .

In rest of the six years, instalments of the principal will be paid uniformly. However interest payment will be from the first year of operation.

Salvage Value of the Project : Rs 310.

Manpower of the Project: Since company is already running a plant of similar type and of bigger capacity , the company is confident to draw competent human resources required for the project.

Availability of Raw Material : The company is in possession of mine rights of Zinc Mine , there will be no difficulty to obtain needed raw material .

Technology and Process Knowhow :The company will be using Bayer–Hall-Herout commercial technology, for the production of Zinc.

Fuel Usage: To ensure reliable low-cost power for the units operations and to achieve self-sufficiency of energy needs, the company proposes to set up captive power plants (CPPs) to cater to the power requirements of its smelters and mines. Besides a large part of coal for the CPPs is high GCV imported coal. The price of coal since remains to be volatile the company is examining critically ,setting up installed thermal captive power plants (CPPs). As of now it would buy power from outside.

Risk Analysis- an indicative list only :(a)Changes in the market prices of Zinc, could adversely affect the results of operations;(b)Operating results are affected by movements in exchange rates; (c) The company’s energy requirements are met by power supply of electricity boards , any changes in the state government’s policy could increase production costs. (d) The company has to obtain a steady supply of Zinc ore at reasonable costs otherwise results of operations may be affected.

Domestic Industry Outlook: Domestic Zinc consumption has been witnessing strong growth spurred by investments and industrial growth. The outlook for future demand remains upbeat as economic activity in key Zinc consuming sectors continued to be fast paced. The company estimates with this capacity expansion its share in global market will be around 7%.

Project Implementation :A combination of cutting-edge technology-driven equipment and know-how of global mining experts will help us develop the mines. These initiatives will ensure high productivity levels at low costs, enabling us to maintain our position as one of the lowest-cost producers globally.

Revenues and Cost Structure (%)
Cost Components as % of Revenue
Raw Material    0.049
Salaries    0.034
Finance Cost 0.14
Depreciation    0.18
Power Fuel Water    0.050
Other Expenses 0.250
Sub Total .703