Playland at Pacific National Exhibition is an amusement park offering 31 different rides (including 4 rollercoasters and 1 water ride). The guests who are 48” or taller can go on any ride they want and so they get more value from visiting the park; let us say their individual demand is given by P = 5 – 0.25qO, where P is the price per ride ($ per ride) and qO is the number of the rides (per day) (the subscript O stands for “One Day;” that’s how the park calls its passes for the guests who are 48” or taller). The guests who are under 48” are not allowed on certain rides so they get less value from visiting the park; let us say their individual demand is given by P = 4 – 0.25qJ, where P is the price per ride ($ per ride) and qJ is the number of the rides (per day) (the subscript J stands for “Jr. One Day;” that’s how the park calls its passes for the guests under 48”). Assume it costs the park flat ¢25 per guest to operate a single ride, and it costs the park flat ¢75 to issue a single ticket to a ride. Assume there are 500 guests 48” or taller and 500 guests under 48” on an average day. We can consider Playland a monopolist in Vancouver

If Playland employed a two-part tariff scheme (the park may choose to ticket each ride, or they may choose to let people go on as many rides [at zero price per ride] as they want and only charge the gate fee for the access to the rides),

6. what would be the gate entry fee for guests 48” or taller ($ per guest)?

7. what would be the gate entry fee for guests under 48” ($ per guest)?

8. what would be the price per ride ($ per ride)?

9. what is Playland’s profit on an average day ($ per day)? Assume zero fixed cost.

Describe the Theory of Constraints (TOC). How might the TOC be used to explain operating conditions at a business organization you frequently visit. supermarket, theater, children's school, local gasoline service station.,airport, department store, etc0

6. Examples of price discrimination

Complete the following table by indicating whether or not each scenario is an example of price discrimination.

Hint: To determine whether a scenario is an example of price discrimination, think about whether the market can be segmented into two groups that pay different prices for the same good.

Duque Vergere manages a Do or Die Theater complex called Cinema I, II, III, and IV. Each of the four auditoriums plays a different film; the schedule staggers starting times to avoid the large crowds that would occur if all four movies started at the same time. The theater has a single ticket booth and a cashier who can maintain an average service rate of 280 patrons per hour. Service times are assumed to follow an exponential distribution. Arrivals on a normally active day are Poisson distributed and average 210 per hour. To determine the efficiency of the current ticket operation, Duque Vergere wishes to examine several queue-operating characteristics.
e.) What is the probability that there are more than two people in the system? More than three people? More than four?

Case 2 Running Free Dog owners constitute a large target market. Most members share something in common: the desire to let the pet run free and unfettered. If other friendly dogs are nearby and want to play—all the better. The Running Free Dog Park was created to meet this need for owners in the greater Atlanta area. Out-of-home advertising can be the critical component of an IMC program and, in some cases, the primary medium. To help launch the new venture, a local advertising agency created a feeling of expectancy and mystery with a “Running Free Dog Park” campaign. The first billboard displayed a dog tied up with a leash; however, it was only a partial picture. The unfinished nature of the image helps capture interest. Next, the same dog is shown with an unfastened leash and the word “running” appears beneath the pet. In the final billboard, the dog appears unfetters, the leash is gone, and the message “Running Free Dog Park” appears. The billboard displays the services offered, the website address of the park, and the location of the park. In addition to billboards, street kiosks and bus wraps were used to get the message out. Three unleashed dogs in the grass of a park. A dog park can be marketed as a place for pets to run free. The early results of the campaign were positive. Many dog owners became aware of the new park. What followed represented common challenges in marketing communications: sustaining initial interest, moving consumers to action, and building repeat business. In this next phase, dog owners needed to be encouraged to try the facility. They should be led to believe that the price of entry was a value. Then, over time, they can be enticed to make return visits and to offer word-of-mouth referrals to other pet owners. Only if these objectives can be attained will the initial success of the Running Free campaign become validated. 7-48.Define the marketing goals for the second phase of the Running Free Dog Park promotional efforts.

7-49.How would the three-exposure hypothesis or recency theory apply to this advertising program in its initial stages? What about the second campaign after consumers are aware of the dog park?

7-50.Which traditional advertising media should the marketing team use for the second campaign? Discuss the pros and cons of each in terms of the Running Free Dog Park campaign and the desire to stimulate trial usage.

7-51.How could social media and nontraditional media be used to supplement a traditional media campaign in this circumstance?

7-52.Design a newspaper ad and an out-of-home ad that will be placed at Little League baseball parks in the area. Explain why having these two ads in different media is better than having two ads within the same media.

Using the HotelDB tables, provide the following result as a screen image.

WRITE SQL to retrieve rows from any hotel with Family room types and price less than $150.

use hoteldb;
CREATE TABLE HOTEL
( hotelNo numeric primary key
, name varchar(40)
, address varchar(40)
, city varchar(200)
);
CREATE TABLE ROOM
( roomNo numeric Primary Key
, hotelNo numeric References HOTEL
, type varchar(20)
, price dec(9,2)
);

CREATE TABLE GUEST
( guestNo numeric primary key
, name varchar(40)
, address varchar(40)
);

CREATE TABLE BOOKING
( hotelNo numeric REFERENCES Hotel
, guestNo numeric REFERENCES Guest
, dateFrom date NOT NULL
, dateTo date
, roomNo numeric REFERENCES ROOM
);

INSERT INTO HOTEL VALUES (1,'Hilton Hotel','123 Main st','New Jersey');
INSERT INTO HOTEL VALUES (2,'Holiday Inn','50 3rd Ave.', 'New York');
INSERT INTO HOTEL VALUES (3,'Governor Hotel','8243 Berkley Sq.','London');
INSERT INTO HOTEL VALUES (4,'New World Hotel','30 East River Rd', 'Hong Kong');
INSERT INTO HOTEL VALUES (5,'Santos Hotel','15 Main Rd', 'Philippines');

insert into room values (1,1,'Family',200);
insert into room values (2,1,'Family',200);
insert into room values (3,1,'Single',100);
insert into room values (4,1,'Single',100);
insert into room values (5,2,'Family',80);
insert into room values (6,2,'Family',85);
insert into room values (7,2,'Family',80);
insert into room values (8,3,'Single',35);
insert into room values (9,3,'Double',115);
insert into room values (10,3,'Double',115);
insert into room values (11,3,'Family',150);
insert into room values (12,4,'Single',30);
insert into room values (13,4,'Single',30);
insert into room values (14,4,'Single',30);
insert into room values (15,4,'Double',90);
insert into room values (16,4,'Double',90);
insert into room values (17,4,'Double',90);
insert into room values (18,4,'Family',110);
insert into room values (19,4,'Family',110);
insert into room values (20,5,'Double',38);
insert into room values (21,5,'Double',38);
insert into room values (22,5,'Single',32);
insert into room values (23,5,'Single',32);

insert into guest values (1,'John Doe','Los Angeles');
insert into guest values (2,'Mary Jane','New York');
insert into guest values (3,'Hank Kim','London');
insert into guest values (4,'Bob Jones','London');
insert into guest values (5,'Paul John','New York');
insert into guest values (6,'Ann Smith','New York');
insert into guest values (7,'James Mann','London');
insert into guest values (8,'Mary Mann','London');
insert into guest values (9,'Jim Jones','New York');
insert into guest values (10,'Tom Jones','Los Angeles');
insert into guest values (11,'Jimmy Johnson','Boston');
insert into guest values (12,'Harry Coleman','Dallas');
insert into guest values (13,'Bob James','Los Angeles');
insert into guest values (18,'John Mary','London');
insert into guest values (21,'Jeff Bridges','London');
insert into guest values (23,'Larry Cohen','New York');

Central Adventures

Fatima Hopkins, the CEO of Central Adventures, is having difficulties with all three of her top management level employees. With one manager making questionable decisions, another threatening to leave, and the third likely ‘in the red’, Fatima is hoping there is a simple answer to all her difficulties. She is asking you (her accountant) for some advice on how to proceed.

Central Adventures owns and operates three amusement parks in Michigan: Funland, Waterworld, and Treetops. Central Adventures has a decentralized organizational structure, where each park is run as an investment center. Park managers meet with the CEO at least once annually to review their performance, where each park manager’s performance is measured by their park’s return on investment (ROI). The park manager then receives a bonus equal to 10% of their base salary for every ROI percentage point above the cost of capital.

Fatima’s first difficulty is with the Funland park. Funland is an outdoor theme park, with twelve roller coaster rides and several other attractions. This park has first opened 1965, and most of the rides have been in operation for 20+ years. Attendance at this park has been relatively stable over the past ten years. The park manager of Funland, Janet Lieberman, recently shared with Fatima a proposal to replace one of their older rides with a new roller coaster, a hybrid steel and wood roller coaster with a 90 degree, 200 foot drop and three inversions. The proposal indicated that the ride would cost $8,000,000 with an estimated life of 20 years. In addition, this new style of coaster would require additional maintenance and insurance, costing $125,000 each year. However, it projected that this new attraction would boost attendance, earning the park an additional $1,190,000 per year in revenues. Janet ultimately decided not to invest in this new attraction. Fatima (doing a quick mental calculation) saw that the investment had a payback period of eight years—much shorter than the life of the roller coaster—and is perplexed at Janet’s decision.

The second dilemma concerns the Waterworld park. Waterworld is an indoor water park, operating year-round. Run by park manager David Copperfield, Waterworld was built in 2016 and has increased attendance by 20% every year since. David recently sent you an email complaining that, based on the current bonus payout schedule, Janet Lieberman’s bonus last year was significantly higher than his. He points to the increasing attendance, and says that his park is being punished for having opened so recently (his park assets are much more recent than the roller coasters at Funland). He currently has an employment offer from another company at the same base pay rate, which he says he will accept if his performance is not appropriately acknowledged. Fatima needs to look at the relative performance across parks to determine how to proceed with David.

Central Treetops includes a high ropes course and has a series of ziplines that criss-cross over the Chippewa River. For many years, it was a popular venue for corporate team-building activities, so it is equipped with a main indoor facility with cafeteria and overnight guest rooms. This park has lost popularity in recent years, and has been ‘in the red’ for the past two years. If the park is not profitable this year, you will need to decide whether to close it - permanently. Included in the ‘Fixed COGS’ for Treetops is a $86,000 mortgage payment on the land and 9,351,510closed. Incidentally, you recently had a conversation with the regional head of the YMCA, who would like to open a summer camp in the central Michigan region. If you decided to close Treetops, you are fairly certain that you could lease that land to the YMCA for $250,000 annually.

A partial report of this year’s financial results for Central Adventures shows the following:

The ‘Selling and administrative costs’ are all incurred directly by each park, and are determined at the beginning of each year (that is, they do not change with the number of tickets sold). In addition to the information above, there are $2,542,920 in corporate costs, which are currently allocated evenly between the three parks. These costs are primarily due to employee benefits costs, which are billed at the corporate level. If the Treetops park is closed, the allocated corporate costs would decrease by $12,000. Central Adventures has a cost of capital of 12 percent (and Fatima uses the cost of capital as their required rate of return) and are subject to 18% income taxes.

Fatima needs to evaluate this year’s performance results before she can make any decisions. Is David’s complaint about the performance evaluation metrics valid? Is that also affecting management decisions in the form of Janet’s rejection of the proposed new rollercoaster? And is the company better off without Treetops? She sets off to the company accountant’s office to help get some answers.

Required:

Write your response in the form of a 1-2 page memo to Fatima Hopkins, from the perspective of the company accountant. Be sure to include all your financial analyses, clearly showing your calculations, to support your conclusions. Be sure to include the following points in your memo, and provide the appropriate financial analysis(es) to support your conclusions.

a.     Create a segmented income statement for Central Adventures.

b.     Calculate the current annual ROI, residual income and EVA for the three parks.

c.     Evaluate Janet Lieberman’s (the Funland park manager) decision. Explain why it was/was not in Central Adventure’s overall best interest for Funland to reject the new rollercoaster.

OPEN SKY

Mr. Jean-C. Lapierre and Mr. Jim Peterson, respectively Minister of Transport and Minister

for International Trade, announced today that the governments of 410 Part Four Businesses

and markets Canada and the United States have reached a transport agreement said to be

"open-air", which widens the scope of the agreement from 1995 and has promising

benefits. So, Canadian passenger and air cargo carriers will have better access to the large

American market, from where they may reach destinations in other countries; the pricing

rules will be relaxed for carriers Canadian and American; Canadian airports will have more

freedom to adopt measures to attract American carriers and offer better prices to

consumers.

"Certainly further liberalization of the Canada-US air transportation relationship will allow

the airlines of both countries to better meet the needs of travelers and freight forwarders,"

said Mr. Lapierre, "I am confident that "This agreement will help create new markets and

new services, lower prices and stimulate competition."

For Peterson, "the movement of people, goods and between Canada and the United States

plays a role crucial to the smooth running of our daily activities [...] The flexibility adopted

here, which goes far beyond eyes of 1995, will improve the functioning of NAFTA and

make North America more competitive. "

Transports Canada, 11 novembre 2005

a. Prior to the entry into force of the open skies agreement, Air Canada was the only

Canadian carrier that operated flights to the United States. What interests did the

company serve: its own or those of society?

b. Describe how price discrimination evolved in the air travel market after the

adoption of the open skies agreement and the entry of airlines offering discount

flights.

c. Explain what consequences the evolution of price discrimination - question (b} -

has had on the price and quantity of air travel.

You have just been appointed to be a U.S. Foreign Service Officer (FSO), employed by the United States Agency for International Development (USAID). Your first assignment is working overseas in an embassy where you may give out millions of dollars in foreign aid loans to an important nation.

This nation has two types of loans from the United States government.

Type I loans for $2,000,000,000 and Type II loans for $34,000,000,000. Type I loans are listed by country in congressional reports, while

Type II loans are buried in one line with other country's repayments and defaults. If the U.S. Congress is clearly informed of a loan default, it will not give out any new loans to that country.

The U.S. Ambassador knows that this country is going to default on all loans to the United States government. However, if the country makes a small payment of $1,000,000 on the Type I loan, the U.S. Congressional report will appear as if the country is in good financial condition. This will make him look good.

You have been instructed by the Ambassador to set up an appointment with the Minister of Finance. During the meeting, you are told to tell the Minister to make the $1,000,000 payment on schedule for the Type I loan. If the nation does make the payment the U.S. Embassy will request another $30,000,000,000 appropriation from the U.S. Congress, which the Ambassador knows he can receive.

The Ambassador believes he will be appointed the next U.S. Secretary of State if this plan is accomplished.

Questions:

What should you do to maintain the LOSS RESERVE?

What are the ethical issues involved here regarding non-payment of loan?

What are the financial issues involved here and how does this related to loan defaulter or fraudulent?

What would you do with this information if you were in charge?

Do you really want this Ambassador as the U.S. Secretary of State?