C Programming question part 3: The following program is an emergency hospital patient admitting process. This program needs a few changes to be sufficient for the hospital. The social security number needs to be encrypted. The hospital would like to do this by having you create a function will accept as input a properly formatted social security number. Then increment each digit by one. If the digit is "9" then make it a "0". Return a properly formatted social security number.
Then create a function that will do the opposite. This function will take an encoded social security number and convert it back into an unencrypted social security number. The de-encoded number is what this function will return.
For each patient, print their full name, their original social security number, their encoded social security number, and then their de-encoded social security number.
a.For each patient, print their full name, their original social security number, their encoded social security number, and then their de-encoded social security number.
#include
#include
#include
#include
using namespace std;
int main() {
char lname[][10]=
{"Johnson","Williams","Ling","Albin","Anderson","Baca","Birner","Dominguez","Aimino","Armstrong","Beard","Calderon","Carter","Chaname","
Chaney"}; char fname[][10] =
{"Fred","Betty","Hector","Ross","Jason","Elisa","Dalton","Javier","Ann","Addison","Cindy","Yamil","Thomas","Bryan","Kris"};
char middle[] =
{'N','L','X','L','O','L','M','B','S','T','J','C','P','D','Z'}; char
addr[][50] = {"2763 Filibuster Drive","701 Collage Avenue","1500
Raceway Lane","207 Daisy Avenue","1527 Lewis Road","25 Hunters
Lane","851 Applebe Court","1410 Waterford Blvd","2379 Runners
Way","46 Hawthorne Drive","1814 Constitution Ct","345 Cigar
Row","896 Pine Avenue","24 Blue Belt Drive","2589 College Court"};
cities[]={"Lakeland","Orlando","Tampa","Lakeland","Tampa","Lakeland","Orlando","Orlando","Lakeland","Lakeland","Orlando","Tampa","Tampa"
,"Lakeland","Orlando"};int zip[] =
{37643,31234,32785,32643,32785,32643,31234,31234,32643,32643,31234,32785,32785,32643,31234};
char gender[] =
{'M','F','M','M','M','F','M','M','F','M','F','M','M','M','F'}; char
dob[][11] =
{"05/27/1935","11/27/1971","10/17/2003","12/08/1990","11/25/1991","10/30/1992","09/22/1993","08/04/1994","07/11/1995","06/18/1996","05/2
8/1997","04/07/1998","03/12/1999","02/23/2000","01/15/2001"}; char
social[][12] =
{"164-55-0726","948-44-1038","193-74-0274","458-57-2867","093-00-1093","159-56-9731","695-21-2340","753-66-
6482","852-73-4196","648-81-1456","879-61-1829","123-87-0000","000-65-3197","741-85-9632","963-25-7418"};
vector fullName;
vector zombies_zip;
std::map dups;
char buffer[16];
char buffer2[16];
// for (int i = 0; i < 15; ++i)
// {
// //char buffer[16]; // large enough
// //char buffer2[16];
// strcpy(buffer, lName[i]);
// strcat(buffer, fName[i]);
// cout << lName[i] << " " << fName[i] << "
" << buffer << endl;
// cout << buffer << middleInitial[i] <<
endl;
//
// }
for(int i =0; i < 15; i++){
if(zombie[i] == 'Y'){
zombies_zip.push_back(zip[i]);
}
}
sort(zombies_zip.begin(), zombies_zip.end());
// for (int i=0; i // cout << zombies_zip[i] << "\n";
for(int i : zombies_zip)
++dups[i];
for(auto& dup : dups)
cout << dup.first << " has " << dup.second
<< " zombies\n";
//cout<<"Last Name: "<< last_name << ", "<<
"First Name: " << first_name << " ," << "Middle
name: " << middle_name << " ," << "Street
address: "<< street_address << " ," << "City: "
<< city << " ," << "State: " << state
<<" ," << "Zip: " << zip << endl;
//printf("Zombie: %c, ""Gender: %c, Date of Birth: %d-%d-%d, Insurance: %c, Social Security Number %s", gender, date_of_birth[0], date_of_birth[1], date_of_birth[2], insurance, social_security_number);
//cout<<"Zombie?: "<< zombie << ", "<< "Gender: " << gender << " ," << "Date of Birth: " << date_of_birth[0] << "/" << "/" << date_of_birth[1] << date_of_birth[2] << " ," << "Insurance?: "<< insurance << " ," << "Social Security: " << social_security_number<< endl;
cout << "Number of patients: " <<
sizeof(lName)/sizeof(lName[0]) << endl;
cout<<"Number of zombies: " << num_of_zombies <<
endl;
}
New format for patient record: Last Name, First Name, Middle Initial, Address, City, State, Zip, Sex, Date of Birth, SS #, Zombie?
In: Computer Science
Business Case: The “Hack, Pump, and Dump” Scheme1 Criminals have discovered yet another way to steal money. They are combining phishing attacks, Trojan horses, and keyloggers to steal identities for use in investment fraud. The scheme works like this. Hackers first gain the personal information of legitimate investors, including names, account numbers, passwords, and PINs. These criminals then hack into the accounts of unsuspecting investors, selling off their holdings in various companies to purchase shares in penny stocks. As they buy the penny stocks, the share price increases. (A penny stock is a low-priced, speculative stock of a small company.) After a short time, the hackers sell the penny stocks for a profit and transfer the money to offshore accounts. Aleksey Karmardin, for example, used this scheme 14 times to defraud investors of more than $80,000. He and his accomplices allegedly hacked into four legitimate online trading accounts, sold their holdings, and purchased shares in a penny stock. The stock’s price went from 26 cents to 80 cents in less than one day. The hackers promptly sold the shares and moved the profits to an offshore account. The fraud affects not only investors but also companies whose stocks are pumped and then dumped. One firm (Firm X) had its stock price go from 88 cents to $1.28 in one day. The following day, the stock fell to 13 cents, where it remained. TD Ameritrade, an online broker, restricted online trade on the company’s stock. The company’s owner had planned to make a large acquisition, but given the declining stock price canceled the purchase.
TD Ameritrade found out you were taking SRA 365 this semester and would like to capitalize on your high quality services! Ameritrade believes that variations in stock prices can help to determine whether or not the company is being pumped and dumped. You have been tasked with developing models that would flag suspicious trading patterns. This is a difficult task because stock prices fluctuate frequently throughout the day.
After evaluating the patterns in the stock prices of Firm A, you observe the following fluctuations.
Firm A Stock Price Fluctuations
Price $0.51 $0.55 $0.63 $0.74 $0.89 $0.91 $1.01 $1.05 $1.12 $1.33Use Excel spreadsheet from Lesson L01b to calculate and report the following values:
Mean =
Sums of squares =
Variance =
Standard deviation =
NOTE: Please round all values to 2 decimal places. When rounding, remember that you would only add 1 to your second decimal place if your third decimal place is greater than or equal to 5 .
When determining whether or not transactions are fraudulent, Ameritrade has asked that you keep their most recent policy in mind. Ameritrade has instituted a policy in which firms with prices within ~68% of the normal distribution of scores are ignored, outside ~68% (but within ~95%) of the normal distribution of scores are monitored, and outside ~95% of the normal distribution of scores are restricted. This policy is based on the most recent fraudulent activities that took place at Firm X.
Provide the cutoff values you would use to ignore, monitor, or restrict trade for Firm A based on the recent policy implemented by Ameritrade. Use the numeric values in the following graphic as a guide.
HINT: You will need to use the mean and
standard deviation from the previous question and the 68-95-99 rule
to create these cutoffs.
(a):
(b):
(c):
(d):
(e):
(f):
(g):
Given your calculations in the previous question, state the decision you would make (i.e., ignore, monitor, or restrict trade) if the stock price for Firm A changed to each of the five values presented below.
i) $0.33
Group of answer choices
Ignore
Monitor
ii) $1.03
Group of answer choices
Ignore
Monitor
Restrict
iii) $0.01
Group of answer choices
Ignore
Monitor
Restrict
iv) $2.00
Group of answer choices
Ignore
Monitor
Restrict
Ameritrade decided to relax it's policy and only monitor trades within 90% of the normal distribution of scores. Use the zscore tables to provide the z-score that corresponds to the mid-90% of the distribution:
Use this z-score to provide the new cutoffs you would use to monitor trades.
Lower Limit:
Upper Limit:
NOTE: Please round your answers to 2 decimal places.
Calculate the z-score you would use to determine the probability that the stock price for Firm A will fall below a penny (i.e., $0.01).
Complete the blanks below with the values you used in this calculation.
| z = |
- _______________________________ |
= |
NOTE: Please round your final answer to 2 decimal places.
Use this z-score and the z-score tables to determine and report the probability that the stock price for Firm A will fall below a penny (i.e., $0.01).
You examine the price fluctuations for Firm B and find that the trades have a distribution with a mean of $1.11 and a standard deviation of 0.36. Calculate the z-score you would use to determine the probability that the stock price for Firm B will fall below a penny (i.e., $0.01).
Complete the blanks below with the values you used in this calculation.
| z = | - _______________________________ |
= |
NOTE: Please round your final answer to 2 decimal places.
Use this z-score and the z-score tables to determine and report the probability that the stock price for Firm B will fall below a penny (i.e., $0.01).
True/False: It is less likely that the stock price for Firm A will fall below a penny than the stock price for Firm B.
In: Statistics and Probability
Latches are commonly organized into groups of 4-bits, 8-bits or more into registers.
1 point
True
False
An asynchronous counter is one where all stages of the counter trigger together.
1 point
True
False
Pull-up resistors and special interface ICs are typically used as an interface between different logic families.
1 point
True
False
Which logic gate provides a low output only when an odd number of inputs are high?
1 point
and
or
exclusive OR
exclusive NOR
Which of the following measurements is not analog in nature?
1 point
speed
weight
data storage
pressure
Karnaugh mapping is an easy-to-use graphic method of simplifying Boolean expressions.
1 point
True
False
The heart of a voltage comparator is an operational amplifier.
1 point
True
False
Most newly designed electronic devices contain digital circuitry.
1 point
True
False
A mod-8 counter has how many different output states?
1 point
2
4
8
16
Digital-to-analog converters consist of a resistor network and a difference amplifier.
1 point
True
False
How many J-K flip-flops are needed to wire a modulo-16 counter?
1 point
one
two
four
eight
Decoders are _______________ logic circuits with several inputs and outputs.
1 point
inverted
encrypted
combinational
digital
In an unregulated power supply, if load current increases, the output voltage _________
1 point
Remains the same
Decreases
Increases
None of the above.
The clocked R-S flip-flop looks almost like an R-S flip-flop except that it has one extra input labeled CLK.
1 point
True
False
What is the 8421 BCD code equivalent for the decimal number 36?
1 point
0100 0110
0110 0011
0011 0110
0010 0100
A circuit that operates by using only high and low signals is called
1 point
a digital circuit
an analog circuit
a rectifier circuit
a filter circuit
In a synchronous counter it is necessary to have all stages of the counter trigger together.
1 point
True
False
The J-K flip-flop has the features of all the other types of flip-flops.
1 point
True
False
The Boolean expression A ∙ B + C ∙ D = Y is called the sum-of-products or what form?
1 point
maxterm
xor
nand
minterm
Op amps are characterized by high input impedance, low output impedance, and a variable voltage gain that is set
1 point
at the manufacturer
with external resistors
with internal capacitors
with external inductors
Integrated circuits within a logic family are designed to interface easily with one another.
1 point
True
False
A counter that counts from lower to higher numbers is called an up counter.
1 point
True
False
The 8421 binary-coded decimal code is frequently referred to as the BCD code.
1 point
True
False
The LED is nothing like a PN-junction diode.
1 point
True
False
The D/A converter converts analog information to digital data.
1 point
True
False
Excellent noise immunity is a characteristic of which logic family?
1 point
CMOS
DDL
TTL
RTL
Applying 1.6 V to a TTL input is interpreted by the IC as what logic level?
1 point
high
low
undefined
undetermined
Minterm Boolean expressions are used to create which logic circuits?
1 point
nor-nor
nor-nand
nand-nor
and-or
The binary number system is sometimes called the
1 point
base 2 system
base 8 system
base 10 system
base 16 system
Which logic circuit law allows for the back and forth conversion from minterm to maxterm forms of Boolean expressions?
1 point
Kirchhoff
Karnaugh
De Morgan
Fourier
If the light intensity on the photocell is reduced, which of the following results
1 point
resistance of the photocell decreases
resistance of the photocell increases
increase in current through series resistances R2 and R3
an increase in the reading at the binary outputs
The basic building block for sequential logic is the logic gate.
1 point
True
False
Digital signals are composed of two well-defined voltage levels.
1 point
True
False
This is the logic symbol for a(n)
1 point
AND gate
NOT gate (inverter)
OR gate
ANAND gate
What is the decimal number for the BCD number 0010 1001 0111?
1 point
279
479
297
497
The invert bubble at the clock input of a D flip-flop
1 point
shows the triggering occurs on the negative-going edge of the clock
shows the triggering occurs on the positive-going edge of the clock
causes the clock signal to be 180° out of phase
disables the clock signal
The truth table for three variables has how many possible combinations?
1 point
2
4
8
16
The most widely used rectifier is___
1 point
half-wave rectifier
centre-tap full wave rectifier
bridge full-wave rectifier
none of the above
A very common output device used to display decimal numbers is the seven-segment display.
1 point
True
False
The unique output of the NAND function is a low output only when all inputs are low.
1 point
True
False
The D flip-flop has only one data input and a clock input.
1 point
True
False
4. Which of the following is not related to digital systems?
1 point
calculations
data manipulation
alphanumeric outputs
position measurements
In: Electrical Engineering
Question: What is the annual difference in cash spent on publishing work if Horizon Insurance outsources to G-Art? Do not consider the gain or loss from the sale of special materials or equipment in this calculation.
Use the following case to help determine the answer to this question:
Horizon Insurance (HI) was a full-service regional insurance agency that has done all the printing and publishing of its own promotional brochures, newsletters, informational pamphlets, and required regulatory reports. Linda Wolfe, the business manager of the agency, had for some time thought that the firm might save money and get equally good services by contracting the publishing work G-Art Inc. She asked G-Art Inc. to give her a quote at the same time she asked Bob Myer her controller to prepare an up-to-date statement of the cost of operating Horizon’s publishing department.
Within a few days, the quote from G-Art Inc. arrived. The firm was prepared to provide all the required publications work for $ 410,000 a year with the contract running a guaranteed term of 4 years with annual renewals thereafter. If the estimated number or assumed mix of publications changed in any given year beyond the baseline planning estimates, the contract price would be adjusted accordingly. Wolfe compared G-Art’s quote with the internal cost figures prepared by Myer:
Table 1; Annual cost of operating HI’s publications department: Myer’s figures.
Materials $40,000
Labor $290,000
Department overhead
Manager’s salary $48,000
Allocated cost of office space $10,000
Depreciation of equipment $32,500
Other expenses (travel, education, ect.) $25,000
$115,500
$445,500
Share of company administrative overhead $30,000
Total cost of department for year $475,000
Wolfe’s initial conclusion was to close Horizon’s publications department and immediately sign the contact offered by G-Art. However, she felt it prudent to give the manager of the department, George Richards, an opportunity to question that tentative conclusion. She called him in and put the facts before him, while at the same time making it clear that Richards’ own job at the agency was not in jeopardy.
Richard came up with the following to keep in mind before his department was closed:
For instance, what will you do with the customed graphic design and printing equipment? It cost $260,000 four years ago, but you’d be lucky if you got $80,000 for it now, even though we had planned on using it for another four years at least. Andthen there is the sizable supply of print materials that includes a lot of specialized ink, specialty card stock, paper, envelopes ect. We bought the custom supplies a year ago when we were pretty flush with cash. At that time it cost us about 125,000 and at the rate we are using it now, it will last us another four years. We used up about one-fifth of it last year. As best as I an tell, Myer’s figure of $40,000 for materials includes about $25,000 for these customized sipplies and $15,000 for generic supplies we use on a regular basis. If we were to buy these custom supplies today it would probably cost us 110% of what we paid for it. But if we try to sell it, we would probably get only 60% of what we paid for it.
Wolf thought that Myer ought to be present during this discussion. She called him in and put Richard’s points to him. Myer said:
If we are going to have all of this talk about “what will happen if” don’t forget the problem of space we’re faced with. We’re paying 12,000 a year in outside office space. If we close Richard’s department we could use of the freed-up space as office space and not need to rent it on the outside.
Wolfe replied:
That’s a good point, though I must say I’m a bit worried about the people if we close the publications department. I don’t think we can find room for any of them elsewhere in the firm. I could see whether G-rt can take any of them, but some of them are getting odler. There’s Walters and Hines, for example. They’ve been with us since they left school 40 years ago, and I think their contract requires us to give them a total severance payoff of about $60,000 each, payable in equal amounts over four years.
Richards showed some relief at this. “ But I still don’t like Myer’s figures” he said. “What about the $30,000 for general administrative overhead. You surely don’t expect to fire anyone in the corporate office if Im closed, do you?
“Probably not” said Myer, but someone has to pay for those costs. We can’t ignore them when we look at an individual department, because fi we do that with each department in turn, we will convince ourselves that accountants, laywers, vice presidents, and the like don’t’ have to be paid for. And they do, believe me”
|
Myer’s figures |
Total cost inside |
Total cost with G-Art Contract |
Savings (higher cost) contracting outside |
|
|
Material: Generic supplies |
$15,000 |
|||
|
Custom supplies |
$25,000 |
|||
|
Labor: Wages |
$290,000 |
|||
|
Severance |
||||
|
Overhead: Manger’s Salary |
$48,000 |
|||
|
Office (internal) |
$10,000 |
|||
|
Office rental |
||||
|
Equipment deprec. |
$32,500 |
|||
|
Other |
$25,000 |
|||
|
Share of general and administrative |
$30,000 |
|||
|
Total |
475,000 |
|||
|
G-Art Contract |
410,000 |
|||
|
Net Difference |
65,500 |
Clarification: In the fact set, Custom Supplies are expected to sell for 60% of what the company paid for them. Assume (to make numbers cleaner), that this is 60% of their 'current' book value of $100,000 (derived from the fact set), not the original cost..
In: Accounting
Question: What is the recognized gain (loss) on sale of equipment if Horizon Insurance elects to outsource publishing to G-Art? please use a dash "-" for a loss on sale.
Use the following case to help answer this question:
Horizon Insurance (HI) was a full-service regional insurance agency that has done all the printing and publishing of its own promotional brochures, newsletters, informational pamphlets, and required regulatory reports. Linda Wolfe, the business manager of the agency, had for some time thought that the firm might save money and get equally good services by contracting the publishing work G-Art Inc. She asked G-Art Inc. to give her a quote at the same time she asked Bob Myer her controller to prepare an up-to-date statement of the cost of operating Horizon’s publishing department.
Within a few days, the quote from G-Art Inc. arrived. The firm was prepared to provide all the required publications work for $ 410,000 a year with the contract running a guaranteed term of 4 years with annual renewals thereafter. If the estimated number or assumed mix of publications changed in any given year beyond the baseline planning estimates, the contract price would be adjusted accordingly. Wolfe compared G-Art’s quote with the internal cost figures prepared by Myer:
Table 1; Annual cost of operating HI’s publications department: Myer’s figures.
Materials $40,000
Labor $290,000
Department overhead
Manager’s salary $48,000
Allocated cost of office space $10,000
Depreciation of equipment $32,500
Other expenses (travel, education, ect.) $25,000
$115,500
$445,500
Share of company administrative overhead $30,000
Total cost of department for year $475,000
Wolfe’s initial conclusion was to close Horizon’s publications department and immediately sign the contact offered by G-Art. However, she felt it prudent to give the manager of the department, George Richards, an opportunity to question that tentative conclusion. She called him in and put the facts before him, while at the same time making it clear that Richards’ own job at the agency was not in jeopardy.
Richard came up with the following to keep in mind before his department was closed:
For instance, what will you do with the customed graphic design and printing equipment? It cost $260,000 four years ago, but you’d be lucky if you got $80,000 for it now, even though we had planned on using it for another four years at least. Andthen there is the sizable supply of print materials that includes a lot of specialized ink, specialty card stock, paper, envelopes ect. We bought the custom supplies a year ago when we were pretty flush with cash. At that time it cost us about 125,000 and at the rate we are using it now, it will last us another four years. We used up about one-fifth of it last year. As best as I an tell, Myer’s figure of $40,000 for materials includes about $25,000 for these customized sipplies and $15,000 for generic supplies we use on a regular basis. If we were to buy these custom supplies today it would probably cost us 110% of what we paid for it. But if we try to sell it, we would probably get only 60% of what we paid for it.
Wolf thought that Myer ought to be present during this discussion. She called him in and put Richard’s points to him. Myer said:
If we are going to have all of this talk about “what will happen if” don’t forget the problem of space we’re faced with. We’re paying 12,000 a year in outside office space. If we close Richard’s department we could use of the freed-up space as office space and not need to rent it on the outside.
Wolfe replied:
That’s a good point, though I must say I’m a bit worried about the people if we close the publications department. I don’t think we can find room for any of them elsewhere in the firm. I could see whether G-rt can take any of them, but some of them are getting odler. There’s Walters and Hines, for example. They’ve been with us since they left school 40 years ago, and I think their contract requires us to give them a total severance payoff of about $60,000 each, payable in equal amounts over four years.
Richards showed some relief at this. “ But I still don’t like Myer’s figures” he said. “What about the $30,000 for general administrative overhead. You surely don’t expect to fire anyone in the corporate office if Im closed, do you?
“Probably not” said Myer, but someone has to pay for those costs. We can’t ignore them when we look at an individual department, because fi we do that with each department in turn, we will convince ourselves that accountants, laywers, vice presidents, and the like don’t’ have to be paid for. And they do, believe me”
|
Myer’s figures |
Total cost inside |
Total cost with G-Art Contract |
Savings (higher cost) contracting outside |
|
|
Material: Generic supplies |
$15,000 |
|||
|
Custom supplies |
$25,000 |
|||
|
Labor: Wages |
$290,000 |
|||
|
Severance |
||||
|
Overhead: Manger’s Salary |
$48,000 |
|||
|
Office (internal) |
$10,000 |
|||
|
Office rental |
||||
|
Equipment deprec. |
$32,500 |
|||
|
Other |
$25,000 |
|||
|
Share of general and administrative |
$30,000 |
|||
|
Total |
475,000 |
|||
|
G-Art Contract |
410,000 |
|||
|
Net Difference |
65,500 |
Clarification: In the fact set, Custom Supplies are expected to sell for 60% of what the company paid for them. Assume (to make numbers cleaner), that this is 60% of their 'current' book value of $100,000 (derived from the fact set), not the original cost.
In: Accounting
Question: What is the recognized gain (loss) on sale of special materials if Horizon Insurance elects to outsource publishing to G-Art? please use a dash "-" for a loss on sale.
Use the following case to help determine the answer to this question:
Horizon Insurance (HI) was a full-service regional insurance agency that has done all the printing and publishing of its own promotional brochures, newsletters, informational pamphlets, and required regulatory reports. Linda Wolfe, the business manager of the agency, had for some time thought that the firm might save money and get equally good services by contracting the publishing work G-Art Inc. She asked G-Art Inc. to give her a quote at the same time she asked Bob Myer her controller to prepare an up-to-date statement of the cost of operating Horizon’s publishing department.
Within a few days, the quote from G-Art Inc. arrived. The firm was prepared to provide all the required publications work for $ 410,000 a year with the contract running a guaranteed term of 4 years with annual renewals thereafter. If the estimated number or assumed mix of publications changed in any given year beyond the baseline planning estimates, the contract price would be adjusted accordingly. Wolfe compared G-Art’s quote with the internal cost figures prepared by Myer:
Table 1; Annual cost of operating HI’s publications department: Myer’s figures.
Materials $40,000
Labor $290,000
Department overhead
Manager’s salary $48,000
Allocated cost of office space $10,000
Depreciation of equipment $32,500
Other expenses (travel, education, ect.) $25,000
$115,500
$445,500
Share of company administrative overhead $30,000
Total cost of department for year $475,000
Wolfe’s initial conclusion was to close Horizon’s publications department and immediately sign the contact offered by G-Art. However, she felt it prudent to give the manager of the department, George Richards, an opportunity to question that tentative conclusion. She called him in and put the facts before him, while at the same time making it clear that Richards’ own job at the agency was not in jeopardy.
Richard came up with the following to keep in mind before his department was closed:
For instance, what will you do with the customed graphic design and printing equipment? It cost $260,000 four years ago, but you’d be lucky if you got $80,000 for it now, even though we had planned on using it for another four years at least. Andthen there is the sizable supply of print materials that includes a lot of specialized ink, specialty card stock, paper, envelopes ect. We bought the custom supplies a year ago when we were pretty flush with cash. At that time it cost us about 125,000 and at the rate we are using it now, it will last us another four years. We used up about one-fifth of it last year. As best as I an tell, Myer’s figure of $40,000 for materials includes about $25,000 for these customized sipplies and $15,000 for generic supplies we use on a regular basis. If we were to buy these custom supplies today it would probably cost us 110% of what we paid for it. But if we try to sell it, we would probably get only 60% of what we paid for it.
Wolf thought that Myer ought to be present during this discussion. She called him in and put Richard’s points to him. Myer said:
If we are going to have all of this talk about “what will happen if” don’t forget the problem of space we’re faced with. We’re paying 12,000 a year in outside office space. If we close Richard’s department we could use of the freed-up space as office space and not need to rent it on the outside.
Wolfe replied:
That’s a good point, though I must say I’m a bit worried about the people if we close the publications department. I don’t think we can find room for any of them elsewhere in the firm. I could see whether G-rt can take any of them, but some of them are getting odler. There’s Walters and Hines, for example. They’ve been with us since they left school 40 years ago, and I think their contract requires us to give them a total severance payoff of about $60,000 each, payable in equal amounts over four years.
Richards showed some relief at this. “ But I still don’t like Myer’s figures” he said. “What about the $30,000 for general administrative overhead. You surely don’t expect to fire anyone in the corporate office if Im closed, do you?
“Probably not” said Myer, but someone has to pay for those costs. We can’t ignore them when we look at an individual department, because fi we do that with each department in turn, we will convince ourselves that accountants, laywers, vice presidents, and the like don’t’ have to be paid for. And they do, believe me”
|
Myer’s figures |
Total cost inside |
Total cost with G-Art Contract |
Savings (higher cost) contracting outside |
|
|
Material: Generic supplies |
$15,000 |
|||
|
Custom supplies |
$25,000 |
|||
|
Labor: Wages |
$290,000 |
|||
|
Severance |
||||
|
Overhead: Manger’s Salary |
$48,000 |
|||
|
Office (internal) |
$10,000 |
|||
|
Office rental |
||||
|
Equipment deprec. |
$32,500 |
|||
|
Other |
$25,000 |
|||
|
Share of general and administrative |
$30,000 |
|||
|
Total |
475,000 |
|||
|
G-Art Contract |
410,000 |
|||
|
Net Difference |
65,500 |
Clarification: In the fact set, Custom Supplies are expected to sell for 60% of what the company paid for them. Assume (to make numbers cleaner), that this is 60% of their 'current' book value of $100,000 (derived from the fact set), not the original cost.
In: Accounting
Question: What is the amount of cash received from the sale of special materials if Horizon Insurance elects to outsource publishing to G-Art?
Use the following case to help answer this question:
Horizon Insurance (HI) was a full-service regional insurance agency that has done all the printing and publishing of its own promotional brochures, newsletters, informational pamphlets, and required regulatory reports. Linda Wolfe, the business manager of the agency, had for some time thought that the firm might save money and get equally good services by contracting the publishing work G-Art Inc. She asked G-Art Inc. to give her a quote at the same time she asked Bob Myer her controller to prepare an up-to-date statement of the cost of operating Horizon’s publishing department.
Within a few days, the quote from G-Art Inc. arrived. The firm was prepared to provide all the required publications work for $ 410,000 a year with the contract running a guaranteed term of 4 years with annual renewals thereafter. If the estimated number or assumed mix of publications changed in any given year beyond the baseline planning estimates, the contract price would be adjusted accordingly. Wolfe compared G-Art’s quote with the internal cost figures prepared by Myer:
Table 1; Annual cost of operating HI’s publications department: Myer’s figures.
Materials $40,000
Labor $290,000
Department overhead
Manager’s salary $48,000
Allocated cost of office space $10,000
Depreciation of equipment $32,500
Other expenses (travel, education, ect.) $25,000
$115,500
$445,500
Share of company administrative overhead $30,000
Total cost of department for year $475,000
Wolfe’s initial conclusion was to close Horizon’s publications department and immediately sign the contact offered by G-Art. However, she felt it prudent to give the manager of the department, George Richards, an opportunity to question that tentative conclusion. She called him in and put the facts before him, while at the same time making it clear that Richards’ own job at the agency was not in jeopardy.
Richard came up with the following to keep in mind before his department was closed:
For instance, what will you do with the customed graphic design and printing equipment? It cost $260,000 four years ago, but you’d be lucky if you got $80,000 for it now, even though we had planned on using it for another four years at least. Andthen there is the sizable supply of print materials that includes a lot of specialized ink, specialty card stock, paper, envelopes ect. We bought the custom supplies a year ago when we were pretty flush with cash. At that time it cost us about 125,000 and at the rate we are using it now, it will last us another four years. We used up about one-fifth of it last year. As best as I an tell, Myer’s figure of $40,000 for materials includes about $25,000 for these customized sipplies and $15,000 for generic supplies we use on a regular basis. If we were to buy these custom supplies today it would probably cost us 110% of what we paid for it. But if we try to sell it, we would probably get only 60% of what we paid for it.
Wolf thought that Myer ought to be present during this discussion. She called him in and put Richard’s points to him. Myer said:
If we are going to have all of this talk about “what will happen if” don’t forget the problem of space we’re faced with. We’re paying 12,000 a year in outside office space. If we close Richard’s department we could use of the freed-up space as office space and not need to rent it on the outside.
Wolfe replied:
That’s a good point, though I must say I’m a bit worried about the people if we close the publications department. I don’t think we can find room for any of them elsewhere in the firm. I could see whether G-rt can take any of them, but some of them are getting odler. There’s Walters and Hines, for example. They’ve been with us since they left school 40 years ago, and I think their contract requires us to give them a total severance payoff of about $60,000 each, payable in equal amounts over four years.
Richards showed some relief at this. “ But I still don’t like Myer’s figures” he said. “What about the $30,000 for general administrative overhead. You surely don’t expect to fire anyone in the corporate office if Im closed, do you?
“Probably not” said Myer, but someone has to pay for those costs. We can’t ignore them when we look at an individual department, because fi we do that with each department in turn, we will convince ourselves that accountants, laywers, vice presidents, and the like don’t’ have to be paid for. And they do, believe me”
|
Myer’s figures |
Total cost inside |
Total cost with G-Art Contract |
Savings (higher cost) contracting outside |
|
|
Material: Generic supplies |
$15,000 |
|||
|
Custom supplies |
$25,000 |
|||
|
Labor: Wages |
$290,000 |
|||
|
Severance |
||||
|
Overhead: Manger’s Salary |
$48,000 |
|||
|
Office (internal) |
$10,000 |
|||
|
Office rental |
||||
|
Equipment deprec. |
$32,500 |
|||
|
Other |
$25,000 |
|||
|
Share of general and administrative |
$30,000 |
|||
|
Total |
475,000 |
|||
|
G-Art Contract |
410,000 |
|||
|
Net Difference |
65,500 |
Clarification: In the fact set, Custom Supplies are expected to sell for 60% of what the company paid for them. Assume (to make numbers cleaner), that this is 60% of their 'current' book value of $100,000 (derived from the fact set), not the original cost.
In: Accounting
AN OUNCE OF CURE QUESTIONS:
QUESTION 1
Connie, the 15-year old protagonist, in Oates's story is both fascinated and a bit frightened of Arnold when he first drives up to her house and talks to her.
True
False
2.5 points
QUESTION 2
In Oates's story, Connie first notices Arnold Friend in his convertible jalopy painted gold:
| a. |
on her driveway |
|
| b. |
at the movie theatre |
|
| c. |
in the restaurant parking lot |
|
| d. |
at a friend's party |
2.5 points
QUESTION 3
Why does Arnold tell Connie this: “The place where you came from ain’t there anymore, and where you had in mind to go is cancelled out”?
| a. |
Connie wants to go to the family barbecue and Arnold won’t take her. |
|
| b. |
Arnold is telling her to go to hell because she won’t go on a ride with him. |
|
| c. |
Arnold is wielding his mental and physical power over Connie and her innocent and naïve protests. |
|
| d. |
Connie wants to go with Arnold on a ride, but he’s angry with her stalling tactics and refuses to take her. |
3 points
QUESTION 4
What does Oates think about director Joyce Chopra’s decision to have the movie version of Connie survive in the end?
| a. |
She is uncomfortable with a director re-interpreting one of the major actions of her story, and thus changing the themes. |
|
| b. |
She was quietly displeased with the ending, but knew that the director had the authority to rewrite it as she wished. |
|
| c. |
She doesn’t really care what happens to Connie on the screen version. |
|
| d. |
She deferred to the ending because Dern’s Connie is a more assertive and strong-willed girl of the 1980s, not the 1960s. |
3 points
QUESTION 5
In "Where Are You Going…" Connie’s older sister is named ___________ and she works at the ________.
| a. |
Madge/A & P |
|
| b. |
June/high school |
|
| c. |
Betty/drive-in restaurant |
|
| d. |
June/movie theatre |
3 points
QUESTION 6
What was another fairy tale allusion for Smitty, alias Arnold Friend, which involved a musician who used his hypnotic musical powers to lure children?
| a. |
Peter Pan |
|
| b. |
Pied Piper of Hamelin |
|
| c. |
Hansel and Gretel |
|
| d. |
Rumpelstiltskin |
3 points
QUESTION 7
Who says this and why? “Don’t hem in on me. Don’t hog. Don’t crush. Don’t bird dog. Don’t trail me . . . Don’t crawl under my fence, don’t squeeze in my chipmunk hole, don’t sniff my glue, suck my popsicle, keep your own greasy fingers on yourself.”
| a. |
Connie says it to her friends to act cool |
|
| b. |
Connie’s sister says it mockingly to Connie |
|
| c. |
Arnold Friend says it when he is becoming more impatient with Ellie and Connie |
|
| d. |
Ellie says it to Arnold when he suggests they pull out the phone |
3 points
QUESTION 8
Joyce Carol Oates’ story "Where Are You Going, Where Have You Been?" is considered psychological realism partly because Oates blends dream (fiction) and reality in her story.
True
False
2.5 points
QUESTION 9
According to journalist Don Moser, Tucson’s primary problem wasn’t that Schmid was a mass murderer, but that for years he had successfully functioned as a welcomed member/leader of Tucson’s _______society.
| a. |
upper class, moneyed |
|
| b. |
teen |
|
| c. |
working class |
|
| d. |
leisure class |
3 points
QUESTION 10
Identify the part of the story where this description is found: “bathed in a glow of slow-pulsed joy that seemed to rise mysteriously out of the music itself and lay languidly about the airless little room, breathed in and breathed out with each gentle rise and fall of her chest.”
| a. |
After Connie has been with Eddie who she met at the restaurant. |
|
| b. |
When Connie is with her best friend at the restaurant. |
|
| c. |
When Connie is inside the house awhile before she hears Arnold driving up her driveway. |
|
| d. |
At the end of the story when Connie goes with Arnold. |
3 points
QUESTION 11
If Arnold Friend is symbolically the Devil, as deceiver and seducer, why doesn’t he just walk into the house to grab Connie?
| a. |
The Devil, as a fallen creature from Heaven, can still be civil. |
|
| b. |
He wants Connie to ask him in so he can’t be accused of illegal entry. |
|
| c. |
He is secretly afraid of Connie and her threats to call the police. |
|
| d. |
The Devil as evil spirit cannot cross a threshold uninvited. |
3 points
QUESTION 12
According to author Oates, Connie’s final act can be considered:
| a. |
a hopeless giving in to a ruthless rapist |
|
| b. |
an unexpected gesture of heroism |
|
| c. |
an acceptance of becoming evil like Arnold Friend |
|
| d. |
a girl’s punishment for being sexually promiscuous |
3 points
QUESTION 13
Oates explains that a film adaptation of her story, "Where Are You Going . . . ?" starring Laura Dern was entitled Smooth Talk.
True
False
2.5 points
QUESTION 14
At the story’s climax, Arnold warns Connie, “It’s all over for you here, so come on out,” or else he will:
| a. |
set her house on fire |
|
| b. |
do something bad to the old lady who lives down the road |
|
| c. |
call the police |
|
| d. |
shoot her |
3 points
QUESTION 15
In Oates's story, Connie’s sister June continually nags Connie about her vanity: “Stop gawking at yourself!”
True
False
2.5 points
QUESTION 16
In Oates's story, at what point does Arnold’s smile make Connie uncomfortable, as when “these things did not come together”?
| a. |
when he grins like the Big Bad Wolf |
|
| b. |
when he smiles reassuringly like everything was fine |
|
| c. |
his "slippery friendly" and "sleepy dreamy" smile that boys use to let a girl know what they're thinking about, but won't say aloud. |
|
| d. |
his smile came as if he were smiling "from inside a mask." |
3 points
QUESTION 17
Oates dedicated this story to Bob Dylan who wrote the song, “It’s All Over Now Baby Blue,” and Arnold Friend mentions Connie’s “blue eyes.” What is most ironic about the song, the statement, and the character Connie?
| a. |
Her movie version played James Taylor's music. |
|
| b. |
Connie has brown eyes, not blue. |
|
| c. |
Bob Dylan was not the monster that Arnold Friend was. |
|
| d. |
Oates and Dylan had a romantic relationship in the early 60s. |
3 points
QUESTION 18
Arnold’s self-proclaimed symbolic and mysterious sign was ___________drawn in the air.
| a. |
a peace sign |
|
| b. |
a circle |
|
| c. |
a figure eight |
|
| d. |
an X |
3 points
QUESTION 19
Music plays a major background part in this 60’s teenage story. What disc jockey does Connie and Arnold mention?
| a. |
Bobby Darin |
|
| b. |
Bob Dylan |
|
| c. |
Bobby Evans |
|
| d. |
Bobby King |
3 points
QUESTION 20
According to Oates’ written narrative at the final moments of the ending, how did Connie really feel?
| a. |
angry and repentant |
|
| b. |
empty and resigned |
|
| c. |
confused and mad |
|
| d. |
curious and sexual |
3 points
QUESTION 21
Author Oates explains that in the story’s ending Connie finally “crosses over” and heroically sacrifices herself; but the nature of the sacrifice is unclear.
True
False
3 points
QUESTION 22
Why doesn’t Connie just pick up the phone and call the police when Arnold is threatening her?
| a. |
She isn’t near the phone since it’s in the living room. |
|
| b. |
She is still intrigued with this strange guy, Arnold. |
|
| c. |
Arnold tells her that as soon as she touches the phone, he will come inside. |
|
| d. |
Connie doesn’t think the police will get to her in time, and she’d rather make a run for it out the back. |
3 points
QUESTION 23
What character speaks this in the story? “She makes me want to throw up sometimes.”
| a. |
Connie’s mother |
|
| b. |
Ellie |
|
| c. |
June |
|
| d. |
Connie |
3 points
QUESTION 24
In Oates's story, Arnold Friend reveals “devil-like” characteristics when he strangely questions Connie about the old lady who lived down the road, while Connie keeps telling him, “She’s dead--.”
True
False
2.5 points
QUESTION 25
Identify the character in this description: “wore a bright orange shirt unbuttoned halfway to show his chest, which was a pale, bluish chest and not muscular . . . shirt collar was turned up.”
| a. |
Arnold Friend |
|
| b. |
a boy named Eddie |
|
| c. |
Ellie |
|
| d. |
Connie's father |
3 points
QUESTION 26
Smitty, the real life “Pied Piper” of Tucson, was sort of a folk hero to adolescents, particularly the bored and lonely delinquents (read Moser's article).
True
False
2.5 points
QUESTION 27
In Oates's story, what are Arnold’s first words to Connie at her house?
| a. |
"Dontcha want to go for a ride?" |
|
| b. |
"I ain't late, am I?" |
|
| c. |
"You're cute" |
|
| d. |
"Just for a ride, Connie sweetheart" |
3 points
QUESTION 28
The fairy tale titled ______________ is a literary allusion to when Arnold Friend looks at Connie: “He grinned to reassure her and lines appeared at the corners of his mouth. His teeth were big and white.”
| a. |
Little Red Riding Hood |
|
| b. |
The Big Bad Wolf |
|
| c. |
Hansel and Gretel |
|
| d. |
The Pied Piper of Hamlin |
3 points
QUESTION 29
Similar to the real-life murderer Smitty, what did Arnold Friend change of his appearance to make himself seem taller?
| a. |
wore high heeled boots |
|
| b. |
stuffed his boots |
|
| c. |
wore metallic sunglasses |
|
| d. |
had big shaggy hair |
3 points
QUESTION 30
At the story’s end, Connie spares her family a possibly violent encounter by calling the police.
True
False
2.5 points
QUESTION 31
In Oates's story, a most likely description of Connie’s and her mother’s relationship in the written narrative is that:
| a. |
share an on-going hate for each other |
|
| b. |
they argue frequently, but still like each other sometimes |
|
| c. |
they ignore each other all of the time |
|
| d. |
her mother worries about her constantly, but Connie doesn't care |
3 points
QUESTION 32
In Oates's story, when Arnold visits Connie at her house, AT FIRST she notices:
| a. |
the way he dressed was appealing although he stood strangely |
|
| b. |
his verbal and the written phrases on his car are outdated |
|
| c. |
that neither he nor Ellie are teenagers |
|
| d. |
his voice becomes controlling and menacing |
3 points
QUESTION 33
In "Where Are You Going," At the story’s end, Arnold and his friend Ellie kill Connie in her house.
True
False
2.5 points
QUESTION 34
In Oates' story, Arnold Friend represents the evil side of the famous songwriter, Bob Dylan
True
False
2.5 points
QUESTION 35
According to Don Moser's article, Charles Schmid, Oates’ prototype for Arnold Friend, bragged to Tucson girls that he knew a hundred ways to make love, ran dope, and that he was a Hell’s Angel.
True
False
In: Psychology
Read and study all the material and the Case Study: American Investment Management Services
Read and study all the material and the Case Study: American Investment Management Services in Week 9 before beginning the final exam. “Exhibits” are found in that Case. Then answer the following questions about the Case Study: American Investment Management Services:
#3. Noting that excess capacity is charged back to active accounts, if AIMS scaled back to 3,000,000 active households and planned only a 10% excess capacity reserve for future growth, a large proportion of cost could be eliminated. Estimate how much of total cost for 1999 could be eliminated, based on facts presented in the case.
American Investment Management Services (AIMS)
Kim Davis, Executive Vice President ofAIMS, sat in her 43rdfloor corner office overlooking the Manhattan skyline, reflecting on the challenges facing the investment services business in 2000. Profits had come easily during the longest economic expansion ofthe century. However, signs ofweakness in the economy,
financial market volatility, intense competition for high net worth customers, and the proliferationofcomplex technology-dependent products were all making her life much more complicated AIMS had recently invested in new analytic tools to help think more strategically about its operations and customers. Kim wondered how much the new analytic approach would really impact business decision-making. Was intensive customer segment analysis a real opportunity orjust another "shot in the dark?"
AIMS is one of the larger investment services providers in the U.S., approaching $500 billion in assets in 2000. Ofthis total, a little more than halfwas in mutual funds and the balance in brokerage accounts. This case deals with customer profitability assessment for AIMS' 3.9 million households, up from 1.8 million in just four years. Until I999, AIMS had no system for measuring the profitability of any specific customer.
SEGMENT A TION
AIMS spanned two separate and very different product lines (mutual funds and full-line brokerage services), but that was only one element of the complexity it faced. In addition to this product complexity, it also spanned three distinct "distribution channels" (Call Centers, Full Service Branches, and E-business), and a complex array of customers with diverse asset holdings, trading patterns, investment objectives and service requirements. There was no particularly sharp focus on what kind of households to add. The basic idea was high wealth, but that was not pushed exclusively at all. Basically, AIMS wanted to do business with the same 2 million American households (over $1 million in invested assets) that 2 I other major financial services firms were pursuing.
In I999, AIMS introduced segment analysis, starting with a four-way segmentation that mixed three different dimensions: asset holdings, trading activity and age (as a proxy for investment objectives). The first segment was any household with more than $500,000 in assets under management at AIMS ("High Net Worth," or "HNW''). Failing this test, the second segment was households trading more than 36 times in I998 ("Active Traders," or "AT"). Failing this test as well, the third segment was households where the principal customer was already retirement age (60 years old). Finally, customers failing all three of these tests comprised the fourth segment-all other, termed "Core" customers. "Core," with more than 70% of all households, was the largest segment.
The primary role of any segmentation is to facilitate analysis leading to management actions tailored to the specific needs of defined customer subgroups. No particular segmentation is ever beyond dispute. Whatever approach is chosen necessarily emphasizes some distinctions and de emphasizes others. But, the AIMS segmentation was particularly contentious on two grounds: I) it segmented current customers rather than a market. It is as if Procter & Gamble were to segment the detergent market based on how many pounds of Tide are purchased; 2) the sequence specific classification scheme meant that labels could be misleading: for example, the segment Active Trader applies only to households which are not each HNW. And, "Retiree" applied only to households which were not each HNW or AT.
2
AIMS
FINANCIAL RESULTS
As shown in Exhibit I, AIMS did quite well in 1999. Net margin afteJ tax was about $156 million on an underlying equity investment of about $625 million. But, 1999 represented the height of the prolonged bull market. The year 2000 was projected to be much less bullish, and most Wall Street observers envisioned the next few years to be much less rosy than the previous ten.
Even in 1999, performance was not consistent across all the customer segments. Pre-tax margin ranged from a high of48% for HNW, to only 6% for Retirees and minus 4% for Core.
The revenue breakdown across segments in Exhibit I is based on actual identification with individual customers. The expense breakdown starts with an annual "unit cost" study that uses "Activity-Based Costing" (ABC) principles. The study first assigned all operating costs from the General Ledger to specific processes or "activities." Then, the activity costs were divided by throughput measures for each activity, to create "cost per unit of activity" for each sub-stage of each process. This process is illustrated in Exhibit 2 for estimated costs for 2000. Individual unit costs were then multiplied by throughput totals for each segment and aggregated to provide total expenses per segment as shown in Exhibit I, a report format which was new at AIMS in 1999.
THE, CUSTOMER/PRODUCT PROFITABILITY INITIA TIVE
As a management report, Exhibit I was too aggregated to identify actionable issues. In 2000, AIMS undertook a project to take customer/product profitability reporting down to the individual household level to provide more useable, timely, and integrated information for decision making. The new system combined unit costs from the annual ABC study with current actual household activity and attributes (e.g., products held, services used, number of trades, number of rep-assisted phone calls) extracted from the Marketing Database to generate profitability by household. The data then were exported into easily queried online analytical processing (OLAP) "cubes." OLAP cubes allow profitability analysis of the intersections among customer attributes, product/service attributes, and channels ofdistribution.
Exhibit 2, which illustrates the first step in this n.ew .system (unit costs across processes), is highly s1mpltfied for purposes of the case. As shown, a "driver" was chosen to proxy the activity in each process telephone calls as the driver of activity in the Call Center, for example. Next, a count was made of the total estimated units of the activity for 2000 for each driver 7~.l million calls for the Call Center, for example. Fmally, the total cost for the process was divided by the total activity count to calculate cost per unit of activity for that process.
Some ofthe assignments ofcosts to activities and some of the activity measures are "soft," but the activity costs tagged to individual households based on actual household activity are conceptually plausible and at least directionally correct. Similarly, product-specific and service-specific revenues are driven down to a household level. Household profitability calculations are thus based on actual asset holdings, fee-based services consumed and activity usage. The actual system in use allows for 11 categories o f customer revenue and 70 categories o f process cost.
Conceptually, Exhibit 2 represents "long-run average cost" for each activity. It does not attempt to portray marginal or incremental cost because it is not intended for use in short-run cost-volume-profit (CVP) analyses. Since very little cost at AIMS is variable with short-run volume fluctuations anyway, short-run CVP analysis is really just based on revenue changes.
Almost all costs are "step costs" which go up (or down), in chunks as capacity is added to (or deleted from) the system. In a business as fast-growing as AIMS has been in recent years, capacity is typically being added every year in many places across the process value chain ahead o f usage requirements. Thus, there is almost always excess capacity in the system. And, the extent of excess capacity varies across processes, depending on where growth has been fastest and where recent expansions have been made. The analysis in Exhibit 2 divides current cost by current throughput to calculate unit cost. The analysis thus charges any excess capacity to the current users of the process. This is debatable, conceptually, but is not recognized as a practical problem at AIMS.
The expense base grew substantially faster than throughput volume between 1995 and 1999 in anticipation of even greater future growth. In 1995, ~here was about 10% excess capacity (on average) in the operating expense base. Capacity grew at a compound rate of about 26% from 1995 to 1999, versus households growth at about 21%. As a result, excess capacity in 1999 was a much larger percentage of the expense base, across branches, the call center, on-line activity, transactions processing and account maintenance activity. Kim wondered how much of operating capacity was devoted to unprofitable customers.
THE SEGMENTATION REFINEMENT
INITIATIVE
Another new initiative in 2000 to enhance customer profitability analysis involved further refining the segmentation. The goal was to better identify customer clusters that would be responsive to specific managerial actions. Kim Davis was chairing the task force coordinati~g this effort. The primary four-way segmentation was expanded to 11 categories as shown below.
AIMS
3
High Net Worth(> $500,000 ofassets under management) I. (16,000 Households)> $2,000,000 in assets under
management
2. (141,000 Households) - $500,000 to $2,000,000
Active Traders(> 36 trades per year)
3. ( 9,000 Households) - more than 200 trades 4. (12,000
Households) - 60 to 200 trades
5. (19,000 Households)- 36 to 60 trades
Retirees
6. (262,000 Households)- $100,000 to $500,000 in
assets under management
7. (607,000 Households)< $100,000
Core
8. (426,000 Households)- $100,000 to $500,000 in
assets under management
9. (1,762,000 Households) - "Boomers" (40 to 59 years
o f age)
10. (434,000 Households)- "Young Professionals"
(under 40 years o f age)
11. (192,000 Households) - All Other, including
employees
CUSTOMER PROFITABILITY ANAL YSIS
As noted earlier, although the company was very profitable in 1999 as the ten-year bull market continued, the senior management group was concerned about the tremendous range o f profitability across customer segments and about the potential for substantial profit erosion when overall markets slowed down, as was widely anticipated over the next few years. Kim challenged the management team to analyze customer mix carefully to identify problem areas and potential corrective actions.
One new management report now being produced each quarter showed income statements for each of he eleven segments broken down by deciles, starting with the most profitable 10% of households and ending with the least profitable 10%. Not surprisingly, the tenth decile in all eleven segments was unprofitable, even before considering any allocation of marketing expenses directed at acquisition of new customers. It was generally agreed that profitability analysis of current households should exclude all expenditures directly related to new households-either "prospecting" expenses in marketing
or new account set-up expenses in the back office. When the segmentation was ignored, 75% of the bottom decile customers were in the Core segment and 80% had less than $100,000 in assets under management.
The wide range ofprofitability across deciles and segments is summarized in Exhibit 3 for 1999. The aggregate loss on all unprofitable households in 1999 was $248 million. Obviously, unprofitable households are an important concern for AIMS. Kim Davis wanted to identify the roots ofthe problem as clearly as possible.
At a casual level of analysis, an unprofitable household suggests one oftwo responses:
• "Fire" them, because AIMS does not want customers on whom it loses money.
• "Do nothing," because there is usually some compensating business reason for keeping .them-the "loss leader" concept. It is possible to construct a long list of reasons to choose to
keep any one currently unprofitable household. At a deeper level of analysis, an unprofitable household suggests that AIMS change its behavior (or the household's behavior) to convert the household to profitable status. In general, there are three ways to convert unprofitable households into profitable ones:
• Raise prices.
• Substitute less expensive for more expensive
services.
• Reduce the cost of delivering some (or all)
services.
Exhibit 4 presents activity profiles o f six
individual tenth decile households chosen to highlight management problems across different segments. Each household presented in Exhibit 4 proxies for thousands of households with the same general profile. The activity profile of the "average" account is also shown for comparison.
Preliminary discussions about "improving customer profitability" focused on the 2000 forecast for representative "problem households" such as those depicted in Exhibit 4. Management wanted to consider both revenue enhancement proposals and service containment proposals.
Potential Account Profitability Enhancement Programs
l)
2) 3)
4)
5) 6) 7)
Charge $15. per rep-assisted call, over 50 calls per year
(22,000 l0th Decile Households generate more than 50
calls/year)
Charge $.02 per quote over 100 per transaction Charge a minimum
annual fee on brokerage assets or mutual fund assets of $200 or 20
BP, whichever is greater (a fee for the right to trade, even when
trading is very inactive)
For customers who generate less than $560. revenue per year (the average), limit access to branches and customer representatives:
charge $100. for branch consultations
- route all incoming calls to the automated
answering service, bypassing account reps Charge $.75 for automated calls over 300 per year.
Charge $1.25 for on-line visits over 10 per transaction.
Set a minimum balance for all new accounts of $50,000 of assets
invested (perhaps exempt persons under 35 years old), and a minimum
balance of $75,000 of assets invested for persons over 45 years
old.
4 AIMS
(Research indicated that AIMS only had about 40% of the invested assets of its custo)llers, on average. The other 60% was invested elsewhere.)
Each ofthese proposals was modeled on charges levied by one or another of AIMS' major competitors, including Charles Squibb, Morton Staley Dan Withers, Merry Lurch, or United Express. Other competitors such as Towncorp Bank or County Road Financial Services approached this problem by limiting their offer of investment advisory services to customers with more than $1 million in invested assets. A good question was why AIMS bothered at all with low net worth customers when so many of them were unprofitable now and likely to remain so.
Questions:
Which are the potential sources of “hidden profitability” that you detect for AIMS?
Why is the firm facing this situation? How can this be prevented towards the future?
What is your opinion of the process the firm followed to assess the customer profitability?
How would you use this information to improve your business?
In: Economics
Typhoid Mary’s Pandemic The City of Covid, located in Corona County, in the province of Ontario, was having a contagion outbreak. A novel disease had been spreading around the world. Although the death rate was very low and was restricted to the elderly, this disease was very contagious and spread through aerosol contact. Which meant that the moisture that people exhale could carry this virus to anyone. The virus had been found to be potentially deadly to the elderly and people who suffered from untreated diabetes, lung conditions such as asthma or immune-compromised due to other medical treatment. The result was that, although most people would suffer only flu like symptoms, some people with family members who were over the age of 50, could bring the virus home and expose the vulnerable people to the disease. Under the provincial legislation, the Health Protection and Promotion Act, R.S.O. 1990, c. H.7, the government can establish regional Public Health Boards who have the jurisdiction to establish Public Health Standards and Practices to protect the public from many things, including contagious diseases. Because of this most recent novel virus outbreak, Corona County’s Public Health Board has established rules for the opening and closing of certain businesses, the daily practices of certain businesses, and the requirement that people can only gather in small groups of 10 or less and requires everyone to wear a mask or face protection of some kind when in public and in stores, schools and shopping malls. All businesses that have been allowed to remain open are required to post signs explaining the rules, post staff at the door to ensure compliance, and provide disinfecting stations and free masks to those who enter their premises. Everyone in Corona County is aware of the disease’s signs and symptoms and the high incidence of the disease in their county. The Public Health Board’s Rules are published everywhere in the county. The Public Health Board had shut down the town for weeks. Everyone was required to stay home, and most people were either working from home or unemployed, collecting a government subsidy (which actually worked out to be better than working for minimum wage.) Then they eased restrictions. Typhoid Mary woke up Monday with a fever and a cough. She remembered that she had been at a private party last weekend. It was a huge party with well over 100 people. Everyone was so tired of being cooped up at home so long that when they saw Ronny Rebel’s post on Instagram about a little bonfire he was having at his cottage, just outside Covid City, everyone wanted to go. Although the plan was to be outside with only 10 of his friends, it rained that night. So all 147 people who arrived were in the tiny cottage for the night. All of the expected activities took place as if there was no such thing as a pandemic. The few partiers who wore masks had them off within the first hour. Mary vaguely remembers that she spent a lot of time dancing with some very drunk people. The music was loud, and people were shouting just to hear each other. Because the government subsidy had been cancelled, Mary knew she had to go to work. Her rent was due, and she was overdrawn at her bank. She was stressed about money. She thought that maybe a coffee would make her feel better, so she went to her local coffee shop owned by her friend Sonny Survivor. Sonny had been willing to break the rules from the start. He was determined not to lose his business and life savings so he found ways to stay open using drive-up door service and Fluber Eats (a food delivery app.) He had a hand sanitizer station at the door, but he knew the bottle had been empty for days. He could not afford to refill it. And he thought in principle he should not have to supply everyone with hand sanitizer. Although he had the mask sign posted on the door, his employees all agreed that the government had gone too far to create the mask law so they never enforced the mask rule and many customers came in without one. Often customers would have their masks under their chin or under their nose because they knew Sonny and his employees would not say anything. While Mary stood in the line up for almost 5 minutes, she wore her mask a little while. Soon she was too hot, and she lowered it. Belligerent Bob was in line behind Mary the whole time with his mask down around his neck. Although he did not know her, he spoke loudly to Mary and everyone else in the place, a few times about crazy this whole mask thing was. He explained the conspiracy theories for everyone to hear. Mary smiled because she wasn’t sure, but she thought she recognized him from Ronny’s party. Bob got his coffee and headed off to his job as a janitor at the Weary Wrecks Retirement Home and Hospital. When Bob got to work, they did his daily health screening as required by the new rules. They would ask him about how he felt and if he had been at any large gatherings or had been travelling. Everyday he did this and everyday he said “No.” Everyone knew Bob had just come back from a three-week vacation in Italy. But he seemed fine and his boss, Haggard Hal, was having a hard time finding people who would work for minimum wage, so he really didn’t pay attention to the screening process. He was just happy people came to work. There were a lot of hand sanitizing stations in the Home and he supplied free masks, so he thought it was taken care of. Many family members of the residents complained about the masks and refused to wear them when they visited. When Mary got to work as a cashier at the Drug Store, she put on a fresh mask and went quickly past her boss Sue Scramble. Sue was trying to clean the cash stations and screen her employees at the same time. She was in a hurry and had to get the store opened on time. She had run out of her disinfecting spray but didn’t want to take any off the shelf for fear the owner would be mad. So, she just used water with a little bit of soap. She forgot to screen Mary. Mary served 112 people that day. Some wore masks and some didn’t. She shared the cash register with Vicky Victim. Vicky was a 62 year old woman who lived with her mother who suffered from an immune deficiency. But Vicky hated the smell of hand sanitizer and so she didn’t use it often. Mary did some shelf stocking when the store slowed down. Sue was just happy when people pitched in. When leaving work, Mary stopped at the grocery store because she thought she would benefit from some healthy soup. The store was crowded, and the owner, Greedy Gus was watching the door to keep the numbers under the 10 he was allowed to have in the store at once. He asked Mary what she was there for. She said just some soup. So, he let her in even though there were already 15 people in the store. Some refused to wear a mask. Gus didn’t fight them on it. Mary walked right by the hand sanitizing station and started picking up cans of soup to read ingredients because she was vegan. The next day Mary called in sick and told Sue she “might have been a little sick yesterday.” Sue had been having difficulties with the owner of the store, Tyrannical Tom. She was afraid he was going to fire her. She thought she might have had to tell him about the illness according to the Health rules, and he would have to tell the Public Health Office. But she told Mary to go get a test, and she decided to wait until that test came back before she told Tom. Mary felt better after a few days. Although she tested positive for the virus, she was young and rebounded well. She had to remain quarantined however, for another 10 days and she was bored again. So, she turned on the TV. The local news station was talking about an outbreak in her town. Four people had died at the retirement home. Another seven were sick. The police were looking for information about a big party at a cottage. The local drug store had been shut down. The Public Health had issued a statement that backward tracing had isolated a problematic grocery store and anyone who had been there was being told to get a test. People in the neighbourhood were talking about the days they were in the stores and were hearing about the backward tracing leading to the sick people who spread the disease. She got a text from her colleague Vicky saying her mother was taken to the hospital and was on a ventilator. Her friends messaged her saying that Sonny at the coffee shop was sick and he was closed down. Mary began to wonder…..
Template Questions for the Week 3 Case Study In the attached scenario there are many examples of negligence. We all know Mary was negligent, but there is no point in suing her because she has no money. So, like a good lawyer, focus on the other examples of negligence where you have someone worth suing. Do not use Mary’s negligence to answer these questions.
Describe in detail TWO (2) of the examples of Negligence in the above scenario. Use the following points/questions to guide your detailed description for each Tort: Pick two examples of negligence from the scenario. State them. Explain in detail the elements of negligence. Explain in detail the Facts from the scenario that give rise to negligence and satisfy each of the elements Explain in detail if there is any Defense or Contributory Negligence which could reduce the damages. Explain in detail the types of damages arising from the negligence and what they might be worth.
In: Economics