Westerville Company reported the following results from last year’s operations:

At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics:

The company’s minimum required rate of return is 15%.

1. What is the ROI related to this year’s investment opportunity?

2. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year?

3. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?

4. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year?

5. What is last year’s residual income?

6. What is the residual income of this year’s investment opportunity?

Please read the background information and answer the following questions

Background: Country Table Potato Chip Company is a small, privately owned company that produces a limited line of snack foods sold in a three-state range including most of Illinois, Indiana, and Iowa. The company has been in business for 57 years and was started by Franklin Brewster. Frank developed a faithful following for his chips as a result of a cooking process that sealed in flavor. The brand name is well respected in the region. The company was run by George Brewster (third generation) for the past 31 years until his recent death. The company has been handed over to the fourth generation of the Brewster family, Ms. Emily Brewster. Emily has a financial background and has worked in the company in the accounting department for the past eight years.

She wants to take the company in a new direction, knowing from her accounting knowledge of the company that some changes need to be made. She admittedly understands the “bottom line”, but little else about running a business. She has brought in a new team to assist her. You have been hired as the marketing team member to develop the new direction for the company.

From background interviews, you have learned the basics of the company’s history. The company has been regional since its inception. There was some interest in a potential buyout of the company by Frito-Lay five years ago, but the negotiations stalled and Frito-Lay lost interest. Emily has expressed interest for some sort of merger of the company in the future.

The company’s product line consists of six types of potato chips (regular, barbeque, and cheddar cheese flavors all in a thin chip and ruffled chip texture). In addition, the company has regular and cheese flavored popcorn, pretzels, and peanuts. All potato chip products are fried in peanut oil while the other products are baked. Ten products in all, with no change to the product line in the past eight years. Products are packaged in “family sized” bags of seven to ten ounces, depending upon the product.

Years ago, Country Table chips were seen as a “premium” product and priced above other competitors. In the last five years, retail prices to consumers have decreased in response to competition and to the large grocery chains pushing for lower prices to them. Originally, the company sourced their potatoes from a premium supplier in Idaho. Those potatoes were part of the original “flavor formula” that gave their chips a distinctive taste. A few years ago, George Brewster decided to source potatoes from a co-op in order to lower costs. These potatoes were indeed cheaper, but the quality and flavor profile were not as good.

All products are made in five factories, spread out across the three states mentioned above. All distribution is done through a fleet of company owned trucks and delivery vehicles working out of a total of 27 regional offices. Frank Brewster relied on “word of mouth” advertising based on the company’s brand. Also, their fleet of company trucks acted as rolling billboards for the products. Country Table has concentrated on placing their products in grocery store chains and larger convenience stores.

The company is “old school” in that very little has been done to keep up with technology. The company does have a website and offers customers a way to suggest improvements. One consistent theme from customers is a need to expand the flavors of potato chips to keep up with competitor product offerings.

Overall, the industry for snack foods has been increasing. In the past five years, industry sales have increased at a rate of 3% per year. However, the mix of product lines has been shifting. Traditional fried chip products have seen an annual decrease of 4% over the same period. Other new, more healthy snack products have seen a growth rate of over 6% a year.

Country Tables’ unit sales have been essentially flat for the past three years. Profits have been decreasing about 3% per year as a result of higher costs and lower prices. Lower prices have been offered in order to offset competitive efforts to take sales away from Country Table.

Questions:

• If you proposed any new products in the product section, what promotional activities would you recommend for those new products?
• Emily has a financial background. What stage(s) of the product development process do you think she would be most interested in?
• If you proposed new products in the product section, what impact does that addition have on distribution?
• Are there any packaging changes you would recommend?

create a regression model for the Wedding Cost data set, using Wedding Cost as the dependent variable, and all other variables as independent variables. Try whether the Bride and Groom were payors for the wedding, and at least one additional interaction term in the model. Do that by Excel

Using the Excel file Weddings, apply the Regression tool using the wedding cost as the dependent variable and attendance as the independent variable.

1. What is the regression model?

2. Interpret all key regression results, hypothesis tests, and confidence intervals in the output.

3. If a couple is planning a wedding for 175 guests, how much should they budget?

4. Couple's Income	Bride's age	Payor	Wedding cost	Attendance	Value Rating
   $130,000	22	Bride's Parents	$60,700.00	300	3
   $157,000	23	Bride's Parents	$52,000.00	350	1
   $98,000	27	Bride & Groom	$47,000.00	150	3
   $72,000	29	Bride & Groom	$42,000.00	200	5
   $86,000	25	Bride's Parents	$34,000.00	250	3
   $90,000	28	Bride & Groom	$30,500.00	150	3
   $43,000	19	Bride & Groom	$30,000.00	250	3
   $100,000	30	Bride & Groom	$30,000.00	300	3
   $65,000	24	Bride's Parents	$28,000.00	250	3
   $78,000	35	Bride & Groom	$26,000.00	200	5
   $73,000	25	Bride's Parents	$25,000.00	150	5
   $75,000	27	Bride & Groom	$24,000.00	200	5
   $64,000	25	Bride's Parents	$24,000.00	200	1
   $67,000	27	Groom's Parents	$22,000.00	200	5
   $75,000	25	Bride's Parents	$20,000.00	200	5
   $67,000	30	Bride's Parents	$20,000.00	200	5
   $62,000	21	Groom's Parents	$20,000.00	100	1
   $75,000	19	Bride's Parents	$19,000.00	150	3
   $52,000	23	Bride's Parents	$19,000.00	200	1
   $64,000	22	Bride's Parents	$18,000.00	150	1
   $55,000	28	Bride's Parents	$16,000.00	100	5
   $53,000	31	Bride & Groom	$14,000.00	100	1
   $62,000	24	Bride's Parents	$13,000.00	150	1
   $40,000	26	Bride's Parents	$7,000.00	50	3
   $45,000	32	Bride & Groom	$5,000.00	50	5

Consider a taxi stand where inter-arrival times of the taxis and the customers are both exponential with means of 0.5 and 1 minutes, respectively. Stand has 3 spots that taxis can park while waiting for the arriving customers. Arriving taxis leaves the stand when all the spots are occupied. Similarly, arriving customers are also lost when there is no taxi in the stand.

a. Model this system as a birth and death process by defining the state and the state space, and drawing the rate diagram.
b. Compute the steady-state probabilities.
c. What is the expected number of taxis waiting at the stand in the long run?

Consider a taxi stand where inter-arrival times of the taxis and the customers are both exponential with means of 0.5 and 1 minutes, respectively. Stand has 3 spots that taxis can park while waiting for the arriving customers. Arriving taxis leaves the stand when all the spots are occupied. Similarly, arriving customers are also lost when there is no taxi in the stand.

a. Model this system as a birth and death process by defining the state and the state space, and drawing the rate diagram.

b. Compute the steady-state probabilities.

c. What is the expected number of taxis waiting at the stand in the long run?

Frost Bank finds that 24 customers arrive at the single drive-through per hour. The teller is able to complete 32 transactions per hour. Assume M/M/1 operating characteristics.

1. What is the average time a customer spends waiting?

2. What is the probability that the system is idle?

3. What is the probability that there are more than 4 customers in line?

4. What is the average number of customers in line?

5. How long does the average customer spend in the system?

6. What is the utilization factor?

7. What is the probability that a customer will have to wait?

Use Excel: A financial consultant has an average of seven customers he consults with each​ day; assume a Poisson distribution. The​ consultant's overhead requires that he consult with at least five customers per day for his fees to cover his expenses. Use the Excel Random Number Generation tool to generate 100 samples of the number of customers that the financial consultant will have on a daily basis. What percentage of these will meet his target of at least​ five? Use a seed of 3.

According to the​ simulation, the consultant will meet his target _______% of the time.

​(Round to the nearest whole number as​ needed.)

Question 5

Judging independence of two categorical datas.

Use the information below to perform a statistical test on whether a customer would recommend the bank is dependent on the gender of the customer. (Hint: use the chi square test for association)

1. There are 152 customers. Of which 77/152 are female and 75/152 are male

2. Of the female customers, 52/77 recommended the bank whilst 25/77 did not recommend the bank.

3. Of the male customers. 45/75 recommended the bank whilst 30/75 did not recommend the bank.

Is the result of the bank recommendation dependent on gender?

In 2010, Ticketmaster found out the hard way that the
entertainment industry is not, in fact, as recession-proof as
it was once widely believed to be. Th e company, which sells
tickets for live music, sports, and cultural events, and which
represents a signifi cant chunk of parent company’s Live
Nation Entertainment’s business, saw a drop in ticket sales
that year of a disconcerting 15 percent. Th en there was the
mounting negative press, including artist boycotts, the vitriol
of thousands of vocal customers, and a number of major
venues refusing to do business with Ticketmaster.
Yet 2012 has been more friendly to the company—under

the leadership of former musician and Stanford MBA-
educated CEO Nathan Hubbard, who took over in 2010

when Ticketmaster merged with Live Nation, the country’s
largest concert promoter. Th ird-quarter earnings were
strong, with just under $2 billion in revenue, a 10 percent
boost from the same period last year, driven largely by Live
Nation’s ticketing and sponsorship divisions. Ticketmaster
was largely responsible as well, thanks to the sale of 36 million
tickets worth $2.1 billion, generating $82.1 million in adjusted
operating income, which translates to an increase of
51 percent for the year.
Th at’s because Hubbard knows how to listen, and read the
writing on the wall, “If we don’t disrupt ourselves, someone
else will,” he said, “I’m not worried about other ticketing
companies. Th e Googles and Apples of the world are our
competition.”
Some of the steps he took to achieve this included to
the creation of LiveAnalytics, a team charged with mining
the information (and related opportunities) surrounding
200 million customers and the 26 million monthly site visitors,
a gold mine that he thought was being ignored. Moreover
Hubbard redirected the company from being an infamously
opaque, rigid and infl exible transaction machine for ticket
sales to a more transparent, fan-centered e-commerce
company, one that listens to the wants and needs of customers
and responds accordingly. A few of the new innovations rolled
out in recent years to achieve this include an interactive venue
map that allows customers to choose their seats (instead of
Ticketmaster selecting the “best available”) and the ability to
buy tickets on iTunes.
Hubbard eliminated certain highly unpopular service
fees, like the $2.50 fee for printing one’s own tickets, which
he announced in the inaugural Ticketmaster blog he created.

Much to the delight of event goers—and the simultaneous
chagrin of promoters and venue owners, who feared that the
move would deter sales—other eff orts toward transparency

included announcing fees on Ticketmaster’s fi rst transaction-
dedicated page, instead of surprising customers with them at

the end, while consolidating others. “I had clients say, ‘What
are you doing? We’ve been doing it this way for 35 years,’”
Hubbard recalled, “I told them, ‘You sound like the record
labels.’”
Social media is an integral part of listening, and of course,
“sharing.” Ticketmaster alerts on Facebook shows friends of
purchasers who is going to what show. An app is in the works
that will even show them where their concertgoing friends
will be seated. Not that it’s all roses for Ticketmaster—yet.
Growth and change always involve, well, growing pains,
and while goodwill for the company is building, it will take
some time to shed the unfortunate reputation of being the
company that “everyone loves to hate.” Ticketmaster made
embarrassing headlines in the fi rst month of 2013 after
prematurely announcing the sale of the president’s Inaugural
Ball and selling out a day early as a result, disappointing
thousands. But as the biggest online seller of tickets for
everything from golf tournaments to operas to theater to
rock concerts, and with Hubbard’s more customer-friendly
focus, Ticketmaster should have plenty of opportunity to
repent their mistakes.

Question:

1. Identify the problems that Ticketmaster was facing, using cause and effect analysis. What were the Symptomatic Effects? What were the Underlying Causes?

2. What process(es) did Nathan Hubbard use to Generate Alternatives? What alternatives were available to Mr. Hubbard? What types of Uncertainty did he experience?