David is product manager at HP (Nebraska), and in charge of printers and related accessories. After reviewing his sales figures for the past third quarter, David is worried that he might not hit this year’s annual sales targets. As a consequence, he considers an end-of-year promotion in cooperation with selected retailers in Nebraska. David has been approached by Samantha, owner and managing director of Direct2U, a direct marketing firm in Omaha. Samantha has offered her services in developing and implementing a sales promotion campaign to help boost HP’s end-of-year sales. She suggests an in-store promotional campaign in 10 hypermarkets: Walmart (4 stores), Staples (3 stores), Bestbuy (2 stores) and OfficeDepot (1 store). Samantha suggests placing one booth at the entrance of each hypermarket during the four crucial Saturdays before Christmas. Direct2U’s price quote is $500/day/booth including promotional material and remuneration of a sales promotion specialist. David has to make a decision. Is Samantha’s proposal interesting? The details are as follows:

In HP’s business, customer retention rates are as follows: on average, four customers out of five continue to use their inkjet printer after a full year. In fact, many customers trade up after a while to more sophisticated laserjet printers. After the second year, only half of the remaining customers continue. In other words, two customers out of four defect after year two. After year three, the remaining customers also stop using their printer. Thus, the maximum lifetime of a customer is three years. Consumers typically print 200 pages with a HP 100 ink cartridge. In a consumer household, cartridges thus generally last for 3 months before they need replacing. HP does not capture all replacement cartridge purchases. In reality, 15% of all customers buy HP-compatible low-cost and/or recycled cartridges from specialists or over the internet from vendors such as www.inktechnologies.com. Thus, at a rather conservative estimate, an average household typically buys every seventh replacement cartridge from other sources. To boost sales, David plans to sell a promotional bundle during the holiday season at a retail price of $100.88. The bundle consists of one HP Inkjet Printer ($66.90/unit), one Hi-Speed cable ($7.99/unit) and one HP 100 Black Ink cartridge ($25.99). HP achieves higher margins on cartridges (85% profit margin) and cables (80% profit margin) than on printers, which are sold at a loss (-40% profit margin).

HP forecasts annual price increases for its products of 2% per year. HP price increases come into effect on January 1 each year. The company uses a corporate-wide discount rate of 10%. To know whether he should move forward regarding Samantha’s proposal, David asks you (marketing analyst) the following questions:

Question 3: What could be done to improve the profitability of this direct marketing initiative for HP? In other words, what could HP do to enhance the economic return of acquiring these new customers? Suggest two concrete actions and briefly explain, in 3–4 sentences, how they would impact results.

A not-for-profit hospital signs a contract with an insurance company in which the company agrees to pay the hospital $9 million in capitation fees for the year July 1, 2017, through June 30, 2018. Between July 1, 2017 and December 31, 2017, the hospital provides services that, at its standard rates, would bill at $5.1 million. Between January 1, 2017, and June 30, 2018, it provides services that it would bill at $4.2 million. For the year ending December 31, 2017, the hospital should recognize capitation revenue of

Answer is $4.5 million. Show how to get this answer and explain

Many employees do not like having a position dealing with numbers. However, the video this week is a good illustration of the connection between numbers (dollars!) and the relationship between a small business and the town in which it resides. Marty Doepke states that Pop's is the largest source of tax revenue for the very small town of Arcadia, Oklahoma. Speak on the importance of the accounting and finance functions of business. Be creative in your responses, but address the importance of having managers who appreciate this function, even if they are not strictly accounting/finance types. Tie your answer back to at least one principle you learned from this week's readings.

QUESTION FOUR

4.1 Complete Table 4.1 given below showing quantity, fixed cost, variable cost, total cost and marginal cost.

2. 4.2 Using examples distinguish between fixed costs and variable costs.

3. 4.3 Differentiate between marginal cost and marginal revenue.

4. 4.4 Compare and contrast accounting and economic profits.

Use Minitab to answer the questions. Make sure to copy all output from the Minitab:

The U.S. Bureau of Labor Statistics publishes a variety of unemployment statistics, including the number of individuals who are unemployed and the mean length of time the individuals have been unemployed. For November 1998, the Bureau of Labor Statistics reported that the national mean length of time of unemployment was 14.5 weeks.

The mayor of Chicago has requested the study on the status of unemployment in City of Chicago. A sample of 60 unemployed residents shows the sample mean is 15.7 and the sample standard deviation is 9.0. Test whether the length of time in Chicago is long than national average.

1) Let's think about the house price. According to the Case-Shiller Home Price Indices in August 2009, Chicago and San Francisco have following sample mean and population standard deviations (the sample mean was calculated by daily base, so the sample size was 30):

Using hypothesis test, prove if these house price indices are same.  (Setup a hypothesis, show your works to perform the test, and state your verdict)

2)             Some people argue that San Francisco has higher house price than that of Chicago. Prove/disprove the argument using a hypothesis test.

3)             Let’s assume the population standard deviations are unknown, and the sample standard deviation of for Chicago is 9.2 and that of San Francisco is 11.5. Some people argue that San Francisco has higher variability (higher variance) in house prices than that of Chicago. Setup a hypothesis, perform the test and prove/disprove the argument.

4.     Let’s consider a company’s growth rate of sales.

Find the sample mean and sample standard deviation using Minitab using descriptive statistics.

The store manager found that the average growth rate in 80s was 6.00%. Using the data, prove if the average growth rate for the sample period was same as that of 80s.

Prove if the average growth rate was less than 6%.

Xi ~ Uniform [USD 0, USD 40,000] Population is equally distributed between robust (good health people) and frail people (low health people). Robust population do not demand this insurance contract as they expect to have their health care costs lower than the premium amount P= USD 20,000. On the other hand, Frail population decide to purchase this insurance deal as they expect their health care costs greater than the premium amount P= USD 20,000.

• Please define and explain the market situation that insurance company ABC is exposed to in 2019. Please draw a figure with a uniform distribution and clearly show the regions defining market demand for insurance. Summarize insurance company ABC’s financial statement and find expected profit or loss per customer on average. [Hint: Find receivables from customers and payables to customers for health care].

• You are a consultant and you suggest insurance company ABC to raise its insurance premiums to P= USD 30,000 for 2020. Does this new premium save the insurance company’s cash flow when each custumer’s health care costs is USD 30,000 to an insurance company? Please draw a figure with a uniform distribution and clearly show the regions defining market demand for insurance with the new premium. Summarize insurance company ABC’s financial statement and find expected profit or loss per customer on average. [Hint: Find receivables from customers and payables to customers for health care]. Please define and explain the market situation that insurance company ABC is exposed to in 2020 with the new premium.

Use the following table to answer the next question. The base year is 2007.

Compared to the base year, the rate of inflation for the year 2007 is

The use of heparin versus saline to maintain the patency of peripheral intravenous catheters has been addressed in research for many years. The American Society of Health System Pharmacists (ASHSP) published a position paper in January 2006 advocating its support of the use of 0.9% saline in the maintenance of peripheral catheters in nonpregnant adults. It seems surprising that this position paper references articles that advocate the use of saline over heparin dating from 1991. What do you believe are some of the barriers that would have caused this delay in implementation?

Kimberly has just started her first job and decides to begin saving for a car. She opens a savings account on October 31, 2003 with a deposit of $160, and will continue to make deposits of the same amount at the end of each month until October 31, 2006, when she will make the final deposit. If the account pays 9% interest rate compounded monthly, how much is in the account on October 31, 2009, (when Kimberly will use this money as a down payment for a car), rounded to the nearest dollar?